Some notes from the 10Q
Note that the net cash reduction over the first six months of this year was less than $1.7M and that the company says they had enough cash (on 9/27/98) to last through calendar 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company used $9,005,000 net cash for operating activities during fiscal year 1999's first six months compared to using $11,437,000 during the first six months of fiscal year 1998, a decrease between comparable periods of $2,432,000. This decrease resulted primarily from collection of accounts receivable and proceeds from insurance advance.
During the six months ended September 27, 1998, the Company used $4,769,000 net cash from investing activities compared to providing $1,296,000 during the first six months of fiscal year 1998, an increased usage of $6,065,000 between comparable periods. The increase primarily was a result of the benefit of maturities of long term investments during the six months ended September 28, 1997 which offset the use of funds for equipment purchases.
The Company provided $12,512,000 net cash from financing activities during fiscal year 1999's first six months compared to $3,933,000 during the first six months of fiscal year 1998. This increase resulted from proceeds of issuance of preferred stock and initial borrowing on line of credit from principal shareholder.
As a result of the above, the Company had a net decrease in cash and cash equivalents of $1,676,000 during the six months ended September 27, 1998,whereas it had a net decrease of $5,736,000 during the same period of fiscal year 1998.
During fiscal year 1994, the Company, through its Dutch subsidiary, signed an agreement with the Northern Ireland Industrial Development Board (IDB) to open an automated manufacturing plant in Northern Ireland in exchange for capital and revenue grants from the IDB. The Company has also received offers from the IDB to receive additional grants. The grants available under the agreement and offers, for an aggregate of up to L27,555,000, generally become available over a
five year period through October 31, 2001. As of September 27, 1998, the Company had received grants aggregating L4,035,000 reducing remaining grants available to L23,520,000 ($40,038,000 as of September 27, 1998).
As a condition to receiving funding from the IDB, the subsidiary must maintain a minimum of L12,000,000 in debt or equity financing from the Company. Aggregate funding under the grants is limited to L4,035,000 until the Company has recognized $4,000,000 in aggregate revenue from the sale of its batteries produced in Northern Ireland. Given that the Company has no agreements to supply batteries using its current technology, there are no assurances that the Company will be able to meet the agreement's revenue test.
The amount of the grants available under the agreement and offers is primarily dependent on the level of capital expenditures made by the Company. Substantially all of the funding received under the grants is repayable to the IDB if the subsidiary is in default under the agreement and offers, which includes the permanent cessation of business in Northern Ireland. Funding received under the grants to offset capital expenditures is repayable if related equipment is sold, transferred or otherwise
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disposed of during a four year period after the date of grant. In addition, a portion of funding received under the grants may also be repayable if the subsidiary fails to maintain specified employment levels for the two year period immediately after the end of the five year grant period. The Company has guaranteed the subsidiary's obligations to the IDB under the agreement.
There can be no assurance that the Company will be able to meet the requirements necessary for it to receive and retain grants under the IDB agreement and offers.
The Company expects that its existing funds as of September 27, 1998, together with the interest earned thereon, will be sufficient to fund the Company's operations through December, 1998. |
