If you look at the three companies that were on the fax (ACOR, IGHS, and I think UNSC replaced ETPI as the lead story), all three are down since they started releasing the fax. Obviously, the quality of the distribution vs. the quantity is what is important, and unfortunately I don't think Rapid Release Research has much of a reputation yet.
The thing that concerns me about ACOR comes from their 10Q, which shows that the company has liquidity problems (no cash, more current liabilities than current assets), and that they frequently state that they will need to quickly increase their cash position through private placements, selling additional stock, and the sort.
Here's a summary of the items which may be concerning potential investors (from the 10Q):
The Company continues to experience a liquidity problem. Historically the Company's working capital needs have been satisfied through financing activities primarily consisting of the sale of shares of the Company's Common Stock. As of March 31, 1998 the Company's current position was $(654,271). This negative current position has limited the growth the Company has desired.
The Company anticipates meeting its working capital needs during the current quarter primarily with proceeds resulting from the private placement of Company securities and a small profit which the Company expects to generate. The Company will seek to borrow and/or raise such funds through the private or public sale of its Common Stock. No assurances can be given that such financing will be available or that it can be obtained on terms satisfactory to the Company. If the Company is unable to secure financing from the sale of its securities or from private
lenders, management believes that the Company will be unable to continue with its current business plan.
During the next twelve months the Company will stress the acquisition of existing automotive related businesses. The Company is currently contemplating undertaking a new offering of its debt and/or equity securities in order to achieve its business objectives over the next twelve months. Unless the Company is able to raise additional capital from borrowing or the sale of corporate debt
and/or equity securities, the Company will encounter a shortage of capital to accomplish its business objectives.
Also, the current debt conversion that they are in the process of converting is replacing promissary notes with restricted common shares. While the interest payments will be wiped out, the outstanding shares will increase.
In summary, it looks like the company is going to have to take some steps which will be dilutive to current shareholders. The company is only projecting a small profit in the final quarter (which won't be announced till probably mid-August), so I think there's a lot of people thinking that maybe this isn't such a good time to be buying or holding this stock.
Just speculating. Keep an eye on ETPI. Next week earnings will be announced. Expecting two more centers to be opened by end of May.
Gator |
