John, I didn't say lack of money was the "only" reason. The absence of money is a symptom of the almost universal loss of trust in Bill, who has had to keep things going for much of the last two years on Mary Ann's money and issuing stock. Neither the company nor Bill has the ability to borrow from anybody--not even the legal loansharks, who demand a 10% discount off the top and 50% interest. Without adequate financial statements or a proven track record for the processor, nobody will even look at the situation. That is equally true for the current LPs, who could and would have raised much more than $75K if they had the evidence of success that everybody else demands. Otherwise, it looks like pouring more money down a rathole. Incidently, to produce 4 10-Q's and a 10-K and distribute them to stockholders runs about $80-100K.
The $75K gets the machine started and buys maybe 35K gallons of waste oil locally, at the inflated SC price (high local demand from hiway contractors). To get really cheap waste oil (save at least ten cents per gallon) you have to buy in barge lots, say $800K for the oil and storage in Allied's tanks; a 400 gph processor would go through such a lot in about one year. For obvious reasons, nobody sells anything to GOE or Bill unless it is paid by cash in advance. With a working processor and good credit, you can finance that kind of inventory, but we don't have that condition here.
Also I have learned that the original fuel oil filtering system (fuller's earth) never has worked properly (always failed at flow rates above about 175 gph) and has been removed. I have had several explanations given to me about the consequence for fuel quality, some of them contradictory, so I am unwilling to speculate. The real solution is hydrogenation instead of filters, a process with the added benefit of removing most of the sulfur, so the product can be sold as #1 diesel fuel. Cost to buy and install: about $250K.
Alas, things are never as simple as they sometimes seem. I only found out about the filtration problem last summer, and LPs have never been formally notified of it, though Bill and Pete have known about it since at least April 1997. This is certainly a "material event" that would have required a press release had the processor still belonged to GOE at that time. You may recall that it was the lawsuit against GOE (Bill) last summer that prodded him to file the tax returns and provide LPs with the IRS required documents. Expenses were reported, as they had been before, by a single lump sum that made it impossible to determine how the funds had been used. Since early summer 1997, Bill has sent five letters promising that the processor will be put into full production within the next 30-45 days (some of the latest conditioned on the money problem, but not on equipment problems). Most of the remaining LPs still trust the processor, but situations like these show why nobody trusts the general partner.
So I think it likely that Charles and I are both pretty much right.
=+=+=Norm |
