RE:RE:Stumble across this Sure.
The Company's core operations burned $1.4M in cash in three months (look at the statement of cash flow). The Company has $6.2M in cash on its balance sheet as at March 31, 2021.
Meaning, status quo, the Company would have one year's worth of cash on hand. BUT WAIT - the Company also has $3.4M of Trade AP at March 31 - those are accounts due, typically in less than 90 days. The Company also has $2.0M of debt and lease obligations to be paid.
You can only trail AP and lease payments for so long, and debt even less so. As suppliers start to clamour for the money they are owed, this will drain cash reserves even faster.
This is why there is a going concern note highlighted in the Financials - THERE IS MATERIAL (large) UNCERTAINTY THAT THIS COMPANY HAS THE CASH, CASHFLOW, AND ASSETS TO SUSTAIN OPERATIONS.
The Company has a few options here:
• Trail payables and debt (they are already doing this);
• Break or default on leases (they are already doing this);
• Reduce expenses (professional fees are insane, but a function of how much of a mess these financials are), management is WAY overpaid;
• Increase revenues - Kai Labs isn't producing revenue. Their only hope is that they scale clinic revenue. It's unclear how they plan to do that when they are defaulting on leases.;
• Take on additional Debt (they can't they are already leveraged too high, noone is going to loan to them);
• Sell assets (they have none that are worth anything aside from Cash; all their acquisitions are not producing money and are being impaired by the accountants. Accounts Receivable is money owed from Steve (note 18).
• Pay off liabilities with equity/warrants (they've already done this in the past to stay afloat; and it's dilutive to the shareholders)
• And finally - issue a very large equity round - which is dilutive to all current shareholders.
If they continue to fail to execute on the clinic scaling strategy, these guys are out of cash unless they can milk more from retail investors.
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