I read over the 10-Q/A very carefully, comparing it to the original, and I couldn't find any big differences. The amortization was different, but this made a difference of $300K or so. I wonder if they made a mistake in calculating the amortization in the original, or perhaps the amortization period has changed since then, and this caused a "material" change in amortization charges? I did look though and couldn't find anything about a change in amortization period.
They also filed an S-2 today, to register 1.75 million shares to the guy who won a legal settlement. He may sell no more than 25,000 shares per day, until he gets the $750K that he is due, or all the shares are sold (in which case Panda will immediately pay him the balance remaining). Poor guy needs to sell 25K shares per day at $0.50 for 60 days - I'm not sure he'll get his money out before Panda is finished.
I did notice that James Wooder resigned from the board of directors on 18 Nov 98. He was owed a $2m note as of 30-Sep-98, as well as being a major shareholder and convertible holder. Perhaps he resigned in order to avoid a conflict of interest situation should it be necessary for him to protect his personal financial interests?
I'm really baffled that Panda has made it this far. By any calculation I can make, they have got to be desperately short of cash. Commencing 1 Jan 99 they had to pay $200K on the first of each month in penalties to the convertible and private placement holders. They cut their payroll to 40 employees ($190K/month) in October-98.
According to the 30-Sep-98 balance sheet, they had $3.007m of tangible current assets, plus $2.5m of PP&E. If I assume that the current assets are worth 100 cents on the dollar and they can somehow scrounge up 75 cents on the dollar by selling their PP&E as required, they had only $4.375m of assets. Offsetting this against a $2m note payable to Wooder/Helix on 15 Feb 99 and $0.9m of A/R, and there's only $1.475m left. If they've managed to reduce the cash burn from $1m/month down to $250k, then in the four months since 30-Sep-98 they've gone through $1m. That leaves only $475K.
I cannot imagine how they will be able to stay out of bankruptcy for the next 45 days. Bankruptcy always takes much longer to occur than any short could possibly imagine, though.
Perhaps we could get our doctor friend from Boca Raton to drive by their plant and count cars in the parking lot?
- Daniel |
