Until VLNC received the $30.4 million infusion in late December 1999, its working capital last year varied from NEGATIVE $7 million to NEGATIVE $9+ million. (Remember that over $1.6 million of the $32 million went to pay off CIBC for their investment banking service). Their cash position never was above $3.2 million for the March, June, and September quarters, but the entire year they were sitting on at least $10.5 million of current liabilities. Additionally, they had negative working capital through much of 1998. Prior to receiving the second $7.5 million tranche of floorless financing in December 1998, they were down to about $300,000 cash, against $11 million in current liabilities at that time.
So, this is a company that had a large negative working capital position for well over a year. Given that current liablities far exceeded cash for so long, it is a certainty that VLNC was forced to use the little bit of cash they had to pay off immediate liabilities, while defering those (current) liabilities that were not due immediately. The string of monthly $3 million cash infusions was certainly used to pay off the most immediate liabilities. They had no other choice but to do this, because until December 26, 1999, current liabilities far exceeded cash.
Therefore, it is certainly reasonable to believe that a significant portion of the $13.4 million in current liabilities as of December 26 1999 is payable long before December 26, 2000.
Maybe you should stick to your ad-hominem arguments, lipo. You are much better at them than when you actually try to argue the facts. |
