A couple of comments from 10Q. They secured a $16 million line of credit, $5 million equipment line and $4 million term loan. These loans along with current current cash is expected to last 12 months (ACCORDING TO 10Q SEE BELOW). This is OK as hopefully ADSL deployment will be strong enough to generate profits. However, it would have been better if the amortization schedule on the equipment and term loan was maxed out. Instead the $5 mil. equipment loan is amortized over 4 years and worse, the $4 mil term loan is amortized over 3 years requiring HUGE quarterly payments of $333,333 just for the term loan. THESE HUGE PAYMENTS WILL NOT HELP CASH FLOW. MANAGEMENT DEFINITELY SCEWRED UP HERE BY OBTAINING 3 & 4 YEAR AMORTIZATION SCHEDULES. Longer amortization schedules would have reduced the payments due giving WSTL more flexibility and an easier cash flow under these difficult times. I am sure the bank would have agreed to at least 5 year amortization schedules if not longer...
<At September 30, 1998, the Company's principle sources of liquidity were $25.4
million of cash and short term investments. In October 1998, the Company entered
into a credit facility that replaced the revolving promissory note and equipment
facilities that expired on May 15, 1998 and December 15, 1997, respectively.
Under this credit facility, the Company may borrow up to $16.0 million under a
secured revolving line of credit based upon receivables and inventory levels and
up to an additional $5.0 million under a secured equipment line of credit.
Additionally, a $4.0 million term loan was provided under the credit facility to
refinance existing long term indebtedness with the prior lending institution.
Cash and cash equivalents, anticipated funds from operations, along with
available credit lines and other resources, are expected to be sufficient to
meet cash requirements for the next twelve months.> |
