Wow, a few highlights from ELSI's 10K...
--$2.2 million revenue for the full year, $3.5 million loss. Wow!
--Battery sales $490K for the whole year, down almost 50% from 1998.
--ELSI is burning $900K cash per quarter and has just $157K in the bank.
--The new auditors included a going concern qualification in their report. The old ones, E&Y, already resigned.
The Company has incurred recurring operating losses, has a working capital deficit and revenues have not resulted in sufficient cash flow to sustain operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern.
--Nasdaq is requiring monthly balance sheet reporting because they are so close to the threshold of being delisted ($2 million net tangible assets).
--ELSI is only surviving on additional cash infusions from Kamkorp, which already owns 70% of the company. Kamkorp has another 3 million options priced at $1. If this company survives, Kamkorp will have diluted virtually all of the value out of the common shareholders.
existing battery orders and contract work have not been adequate to sustain the Company on an ongoing basis and the Company continues to be dependent on cash payments from Kamkorp and its affiliates to continue operations on a day-to-day basis. The Company anticipates that funds will be available from Kamkorp in an amount sufficient to sustain operations; however, Kamkorp is not obligated to provide this funding.
(Translation: if they do, it will be on terms favorable to Kamkorp.)
--If ELSI does get a big battery order, it says it will need a lot of cash ($1 million or so?) to pay down vendors payables before they will supply it again, and it hasn't got that cash.
--20% of its sales are to an affiliate
--50 employees vs. a market cap of $159 million...lets see, that's a bit over $3 million per employee. Not bad for a company with almost no assets, big losses, and negative revenue growth. Not to mention that most of its sales are project revenue, so it's really a consulting firm. Only thing is, it's hard to find a consulting firm valued at more than about 2 times sales, which would be about $4 million. That's what, about 30-40 cents a share?
Good luck, longs, you're gonna need it tomorrow!
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