From the 1996 Annual Report dated June 30, 1996:
"Inventories increased $270,000 since FYE June 30, 1995. The majority of this increase was the build up in restaurant equipment needed to fulfill contracts in place (Wal-Mart 1200 machines). Deployment began in late June, 1996..The Company is also pursuing additional loan funds to finance the long term equipment needs of the Fry Guy program."
If we assume 270k for all 1200 machines or we could cut that in half (600 machines), and arrive at a range of $225 per machine to $450/machine. Either way, someone has to finance these things, which will cost money. Figure on 10,000 machines at $225 to $450 and arrive at $2.25 million to $4.5 million in new borrowings to meet Salubre and Walmart expansion.
It takes money to make money, but with these guys losing $4 million per year and selling stock all the time to raise money, who will lend them the money and at what rate?
Don't get me wrong, I still like the story and think ALAN could be earning at a rate of $0.50/share by Dec'97 and north of $1/sh by Dec'98, but I thought I'd see what ALAN was doing with its cash flows now...
Take a peak at Accounts Receivable, it increased by 168k in FYE June, 1996. Inventory increased by $554k. Prepaid expenses fell by 88k and other assets fell by $163k. It seems they will need to raise more money. Remember, these guys are leaking cash to the tune of $300k per month.
Any thoughts?
Tim West
11:30 pm, Wed Feb 19th |
