KGIC Inc LGLTF

What is likely going on

[mrmoribund]

I'm somewhat surprised that the market has reacted so negatively to the clarifying press release out this morning (Wednesday) because it seemed to me quite positive. When you factor in the amount of Q1 revenue shortfall that got parked in deferred revenue, the result was not anywhere so bad as the actual numbers suggest. The $5 million boost in deferred revenue was still less than the $6 million loss, so it would have been a bad quarter regardless, but if that difference were placed in revenues then the result would not have been anything like the catastrophy that it looked to be on the surface.

Also, 85% of this huge lump of deferred revenue will go into actual revenue in Q2 and Q3. Add in the cost cutting and it is entirely possible--I don't see why not--that LOY will snap back to modest profitability in Q2.

Yes, the bank could call the loan, but given what has happened, if they were going to do so anytime soon, they would have done it already. Most likely, the bank was heavily involved in making the current restructuring happen. Part of the arrangement will likely be that LOY will get a chunk of time to show it can straighten things out. My guess: 6-9 months.

LOY is doing what has to be done. It's already passed one of the key tests of a company that needs to be fixed: ability to fire the CEO. Many small companies can't or won't, and you're much worse off with one of them.

As for Fabrice, maybe inspired by some big hits a while back, he's more recently wandered into ever riskier territory and gotten badly burned (think CBX-V). And now he just seems to be losing his head. Notice how he blames LOY this way and that but it doesn't seem to occur to him that he should blame himself for any of what's happened to his subscribers?

[JeffCourteau]

I totally agree with you mrmoribund. Profitability is likely not much close ahead, but they can and will stop the bleed. The only fact that they wrote their goodwill off all at once will sure make them cut the loss heavily next quarter. This stock is not toxic anymore at 0.12, it's a steal in fact, and in the coming month, if the good news start flowing and the company stays transparent with

[60606060]

I totally agree with both of you. Also, any sign of improvement in the core business and someone interested in banking the housing spin-off for thousands of students then we have profit and cash flow back as well as a growing SP.