RE:Q2 FinancialsQ2 results out today and I had a quick scan. Nothing surprising in them. I read the news release too and note they are laying, or have laid off, some staff. Weird to hire then downsize in such a short period of time. I wrote about this in past I didn't get the aggressive hiring going on and I couldn't follow the org chart if I tried. The staffing levels compared to earnings (nil) showed an obvious problem in my view which is why I wrote about it. Maybe some deals did not transpire.
To keep things simple, end Q1 cash was ~12.8MM. They did a financing deal that closed June 2 for Q2 reporting. End Q2 cash was ~11.766MM. The financing (June 2 closing) net inflow of cash was 3,671,140 for the dilutive portion and 5,930,330 for the debt portion for a total cash infusion of 9,601,470. Does anyone see a problem with this? They only had 11,766,681 in cash end of Q2...1.5 months ago now. So, if they had not completed the financing they'd have had 11,766,681.00 - 9,601,470 = 2,165,211 cash to work with for Q2. When the G&A alone for Q2 was 4,089,401, it seems to be a glaring problem in my view.
I won't get in to the numbers too deep in this writing, but it doesn't look positive at the moment. Net cash used from the cash flow statement used in operating activities was $14,724,684 outflow. These are just Q2 results and that cash on the balace sheet was end of June. Today is August 15. The payables as of end of Q2 were ~$4.8MM. Receivables were ~$1.723MM and I note aging receivables:
7. Trade and other receivables (continued) Aging The aging of trade accounts receivable and provision for expected credit loss is summarized as follows:
Current or under 30 days 159,143
Past due 31 to 90 days 140,063
Past due 91 to 360 days 1,296,704
Past due more than 360 days 894,787
I don't know what to say about the revenue statement but it was about a ~$9.09MM loss for Q2 alone.
In my opinion, based on what I see in the Q2 fins, I don't think there's enough cash to satisfy this burn rate. How will that gap be filled? some revenues coming in? when will the cheques be in the bank? I would say odds are again elevated to expect some kind of financing but in a rising rate environment maybe capital isn't flowing so freely so I expect it's gonna hurt if (when?) it happens. Only time will tell but I think the time isn't far off but just my opinion based on what I see.
The sad part for me is that I am rooting for this to hit it's stride. I like what the equipment can do but I made my money here last year. But if only a few are bringing long dated cheques then it's gonna be rough as the market is telling us.