Suzanne, there is a need to finance accounts receivable and inventories, for instance, the Lifetime learning deal involve many schools. Schools are not going to prepay, they will wait until the kids have sold the cards, do their accounting and then disburse the funds back to TSIG, that process may take between one to three months, and thus create "accounts receivable", that need to be financed. Similarly, each charity will have to have its cards designed according to its special needs and thus until these cards are shipped to the schools, the company will have to carry inventories that need to be financed., all these come under the general term of working capital, and typically, in most businesses, for each additional dollar in sales (YOY) one needs to have about $.30 in additional working capital. TSIG does not have at this point any working capital and the timing of their "expected receipts", will determine how much working capital is needed.
Zeev |
