I see cash liquidity problems in the 10Q, and the co says it seeks to raise cash from LFT ahead of schedule, in fact this month. It appears to me, from my reading of the financial statements, that HITT likely does not have the cash to continue operating at this point.
Comparing the 10Q's for the periods ending June 30 and Sept. 30, I see that they burned $342 k cash in operations, in Q3. That left them with only $272 k cash Sept. 30.
If nothing has changed, they should have run out of cash completely before Dec. 31.
Working capital (normally defined as current assets minus current liabilities, but which I further modify in this case by excluding accounts receivable since I assume they may be uncollectable) has worsened from a negative ($389 k) on June 30 to a hugely negativbe ($2.265 M) on Sept. 30.
Based on my experience in following companies experiencing cash liquidity problems, Hitsgalore didn't have the capital to continue operating much beyond Sept. 30.
The liquidity section of the 10Q has this shocker:
Until the Company receives the cash payments from the LFT transactions, the
possibility exists that cash flow difficulties could arise. Therefore, the
Company has re-opened negotiations with LFT to provide part or full payment in
January 2000. The Company plans to make public the results of its negotiations
as soon as an agreement in principle is reached. In the mean time, the Company
anticipates meeting its cash flow short falls from operations by entering into
short-term borrowing or other financing facilities pending receipt of the LFT
monies. |
