The 10-Q illustrates just how tight their financing was at the end of December.
On December 21, the received a new payment of $7.5 million of convertible preferred shares from Castle Creek. On December 27, they had a grand total of $7.8 million of cash. So, they were down to about $300,000 of cash before Castle Creek bailed them out with the new $7.5 million. Working capital at the end of the quarter (even after Castle Creek's $7.5 million was added) was negative $2.5 million. Without Castle Creek's $7.5 million, they would have had $10 million of short-term obligations and $300,000 of cash. Also, I see no money from Mr. Berg was received during the quarter.
So, that is the backward-looking comments. Now for forward-looking comments.
They began the current quarter with negative $2.5 million in working capital. They had $7.8 million of cash, but their current liabilities exceeded current assets by $2.5 million. They clearly need more money. The filing says so in black and white, and also says their current funds should last them through March. So they've got another 6 weeks to raise more money.
My suggestion. Watch for the terms of the new financing. If it is more floorless convertible junk, things are not as rosy as you might want to believe. If the financing is something more conventional, then maybe a big contract is near and you can breath easier. |
