Analysis of financials and burn rate equation - Corrected I am reposting to correct something..
Looking at the financials:
JWCA will need to quadruple its annual REVENUES to break even. Until then, they will need to keep borrowing. How many months do they have before they will need to borrow more money because the money they've already borrowed has ran out?
To find the answer, we need to isolate the variables:
Their cash on hand is ($1,266,611), Their monthly revenue is ($2,821,267 / 12 = $235,000), How much money from the loan they've already signed for is left?
"The Company has received the first tranche in the amount of $2.85 million. [When exactly was this so we can determine how much is still left?] The second tranche in the amount of $1.15 million will be advanced to the Company upon completion of certain conditions precedent set out in the loan agreement." [What are there conditions?]
For argument's sake, let's assume they got the $2.85 million 2 months ago and have $1,850,000 left. So the total loan available is $3,000,000.
What is their burn rate? $9,252,253 / 12 = $770,000 per month
IF in the next 12 months they got no more sales than what they currently have ($2,821,267), with the cash on hand ($1,266,611) and loan money ($3,000,000) they will have $7,087,878 or $590,656 per month... which is 8 months considering monthly burn rate of $770,000 and revenues of $235,000 per month ($235,000 x 8 + $1,266,611 + $3,000,00 / 770,000)
That gives them 8 months to convert that $6,026,988 in inventory to a tune greater than $235,000 in monthly revenues. If they doubled their sales as of today (to $470,000 per month), that would give them an additional 6 months before they run out of money. So, in 14 months they would need to borrow again to cover this theoretical monthly deficit of (770,000 - 470,000) = 300,000.
They need to start announcing some major new medical sales contracts within the next 3 months for me to maintain faith in this trade. The Conestoga store helps. When is it expected to be operational?
| FY2019 | FY2018 | % Change | | |
| Net Revenues | 2,821,267 | 57,612 | 4,797% | | |
| Operating expenses | 10,077,616 | 9,866,095 | 2% | | |
| Loss from operations | (8,956,109) | (9,005,596) | 1% | | |
| Net and comprehensive loss | (9,252,253) | (10,313,920) | 10% | |
| | Sept. 30, 2019 | Sept. 30, 2018 | % Change | | |
| Cash & cash equivalents | 1,266,611 | 8,504,790 | -85% | | |
| Agriculture produce & biological assets | 6,026,988 | 2,607,433 | 131% | | |
| Other working capital | 1,668,867 | 604,172 | 176% | | |
| Non-current assets | 19,057,907 | 5,475,701 | 248% | | |
| Other liabilities and long-term debt | 7,172,475 | 3,411,615 | 110% | | |
| Shareholder's equity | 15,111,888 | 19,639,468 | -23%
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