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Ancient history, as VEND goes, and no longer valid. You should know better than to post this.
The most recent guidance, which is now a month old and also probably no longer valid, is as follows:
"... the Company decreased its fiscal year 2020 revenue projection to a range of $12 to $17 million on 260 to 380 global kiosk deliveries."
The reason this more recent guidance is probably no longer valid is that the company is approaching 120 days since it announced its 90-day restructuring project. No production, no sales, no financing.
The updated revenue guidance for fiscal year 2020 should be zero.
And the next news you hear from VEND should be an insolvency proceeding of some sort.
VEND has missed another deadline. The 10-Q was due November 14. VEND filed for an extension but it mistakenly stated that it would get another 15 days to file. That was wrong - the extension for a Q is only 5 days, which have passed. Again, it’s a pretty big deal for a public company to miss these filing deadlines, but I suppose they are doing what they can under the circumstances. It just goes to show how bad things are.
“Are you just another disgruntled franchisee???”
RoBo, that question (or the fact that you would ask it) says a lot in itself. Especially coming right after you claim that all the franchisees talk to each other. They may be talking, but they’re not all talking the same tune.
And there’s the rub - no restructuring is going to be successful while they are being pursued by the zombies who will arise from VEND’s trail of dead / disgruntled bodies. Like zombies, they may move slowly but they are eventually going to catch up with you and devour you. And more importantly, no new money is going to join you if it means that they have to worry about your zombies.
Much of what he said is indisputably true - litigation, etc. You can’t put a kiosk in Chicago- and that franchisee is suing. VEND owes a lot of people a lot of money. VEND’s reputation is shot. The zombies are coming.
Not all of the franchisees had their deposits placed in escrow. Under the laws of some states, VEND was required to escrow the franchisee deposits until delivery, but that was not true in every state. Also, some but not all franchisees may have demanded an escrow as a wise protection. There were other franchisees who were neither protected by state law or by their own negotiations.
Unfortunately for them, quite a few franchisees just trusted Nick and paid the deposit without adequate protection. VEND publicly disclosed that it was reliant on those deposits to fund its cash flow requirements.
Now, was it right and fair for VEND to take those deposits and spend the money? Some, including me, would argue that it wasn't, at least not under the circumstances. Nevertheless, it may have been legal for VEND to do so.
I doubt that VEND raided any escrow funds to pay for anything other than the delivery of kiosks to the franchisees who had placed those funds in escrow. Not because VEND is so honorable, but because there probably wasn't an effective and advantageous way to do so.
"VEND did use escrow deposits intended for the manufacture of a specific franchisee’s robot for other franchisees."
I had not heard that before. How do you know that?
I believe you.
What day of the month does VEND make payment? I think that I read that it's early in the month, so the next payment would be made in early December?
Is it possible to set your kiosk to either only take cash payments or to offer a discount for cash?
You go first. Please tell us who you are and what your motivations might be. I think I know, but I'd still like you to disclose it.
Nope, I am not an insider or otherwise involved with VEND, and I have no inside information. Your comment makes me wonder what information I posted that you believe to be “inside “, but I suppose you can’t reveal that.
I speculate a fair amount on here, but I usually try to make it clear what’s speculation and what stuff I know to be factual. I suppose that I didn’t do that with Ryan Polk comments although sometimes I assume that the context or the nature of what I am saying suggest that it is either opinion or speculation.
I have posted a few things that I am absolutely certain of only to be told that I have it wrong, but that’s OK. I know what I know.
It would be so easy and so cheap to push the price around that I have to resist the urge. You could just go in and buy at the ask to drive it up, then sell at the bid whenever you want to drive it down. The percentage change would be impressive even though the out-of-pocket cost of the folly would be negligible.
I do have to say that the bid/ask spread has been somewhat reasonable from time to time, like maybe 13 bid, 13.5 ask. Some market-maker out there is doing his job! Usually, it's much wider than that. Also frustrating is that I can't input a bid or an offer at something other than whole cents, so those prices are really only relevant to the wholesale traders and market-makers.
I do wonder whether someone out there is playing with the price, and my guess is that some of that does happen at these levels. The long-term down trend, however, is inevitable.
Nah, just general impression.
For that matter, Nick Yates always seemed to have a very positive attitude, but I imagine that his BS wore off after a while and his upbeatness didn't help after that. Typical sales guy who doesn't know when to quit.
I just picture Ryan as more of a straight arrow guy who is honest (well, as honest as he can be in light of the bag of BS he's been handed to deal with) and reliable. A CPA, you know? And I think the only way that he's been able to become the guy who attempts to lead VEND through the valley of death is to stay positive and keep plugging, as he apparently has done. Besides, he has a life after VEND, since he can presumably return to the what he had been doing pre-VEND. Easier to stay positive when you know that your future is somewhat secure regardless of the outcome for VEND.
You have become the Andy Kaufman of investing!
And I didn't think that you could possibly be more amusing. I was wrong!
Hats off to you and your attitude. Particularly if you are an insider, as you have seemed to suggest.
For that matter, Ryan Polk sure seems to keep an upbeat attitude. If only he had been in charge a long time ago.
Oh, and I forgot to add:
- VEND isn't installing any new kiosks.
- VEND has not struck a deal with Walmart.
So, I suppose VEND's business activities are limited to (a) raising capital, (b) operational support of existing franchisees and (c) dealing with unhappy creditors.
Of those efforts, the operational support of existing franchisees will be the next function to succumb to lack of resources, and I'm confident that's already beginning to happen. Then even the happy franchisees will begin to turn on the company.
In this case, the silence is deafening and tells you that:
- VEND is not selling any new franchises, probably hasn't done so in three months and won't be doing so in the foreseeable future.
- VEND is not manufacturing any new kiosks, hasn't done so in three months and won't be doing so in the foreseeable future.
- VEND hasn't struck a deal with any new investors.
- VEND hasn't struck a deal with its franchisees.
In other words, there's nothing to report, no news is very bad news and the clock is ticking. VEND has virtually no sources of cash flow (unless you want to count R&I royalties and Print Mates!). I'm sure they are only paying those expenses that are critical to survival, but at some point in the very near future, that juggling act will come to an end. Professional fees alone must be gobbling up nearly all available resources, and they need funds for a retainer for Chapter 11.
Well, not all franchisees are happy with the proposal.
Two more lawsuits were filed within the last week, suggesting that at least a couple of franchisees are not lining up to participate in (or waiting to see) whatever VEND has proposed.
Not much of a surprise, but the reason the out-of-court solutions don't usually make it is that there don't need to be that many hold-outs for the plan to fail. If you pay the hold-outs off, then everyone else may want that deal. If you ignore the hold-outs, then they pursue their rights and put the restructuring at risk.
Aside from franchisees, ordinary vendors are highly unlikely to have interest in VEND equity, particularly if it's of equal rank with the current equity.
I concur with RoBo, Ryan is ingenuous.
And, here's the good news! Many of the abuses of the past have been addressed!
Of course, the solution is basically to cease doing business, but look at the bright side!
- There are no new franchisees being deceived with misleading disclosure materials!
- Vendors are being treated in a straightforward manner (as in, cash up front or no goods or services)!
- Kiosks aren't being shipped with serious defects!
- Investors aren't being sold worthless securities!
In a little while, the remaining abuses of the past that have not been addressed will be solved by an insolvency proceeding!
Polk was appointed CFO and COO on April 1, so he's had over 7 months already to address problems within that very broad purview and to familiarize himself with everything else.
You may know better than me, but what makes me think that NY is still around and still has influence is the effort that is underway to recapitalize the company while preserving the common stock that is currently outstanding.
If Yates didn't have any influence over the process, I would think the Board would come to the conclusion that the common needs to be wiped out and a deal needs to be reached with the creditors and new investors. There's no room (or value) for the common.
Thanks for setting me straight.
The current VEND web site shows him as VP - Business Development, and has this to say:
"With our founder Nick Yates at the helm, Generation Next is led by a team of experienced innovators and entrepreneurs."
VEND, your 90 days are up.
From the PR of August 8, 90 days ago:
"Raising capital, adding strategic insights, and increasing governance are critical objectives for us during the next 90 days."
- Raising capital? No results there.
- Adding strategic insights? I have no idea, unless it means coming to the realization that you can't raise new capital without giving a big haircut to the current creditors and investors.
- Increasing governance? Well, of the 2 new independent directors who were to be appointed by the end of September, one was appointed. No word on the other. So, a majority of the Board is still comprised of non-independent directors (with or without Nick on the Board).
1. If you read all the announcements and the 10-K, it says that Yates resigned as Chairman of the Board. They don't say that he resigned from the Board, and I doubt that he did. Another example of unnecessary lack of clarity on VEND's part, of course. If VEND bothered to make appropriate disclosures, there would be no need to read between the lines and debate the status.
2. They don't need Yates and haven't for a while, but I bet he's still on the payroll. There has been no announcement to the contrary, and it would be appropriate to disclose it if he had resigned or had been terminated.
3. According to the 10-K, he owns over 16 million shares exclusive of the option shares.
4. Who knows, but I think he's probably still around wielding whatever influence he can (and I think he's still on the Board).
If Yates were really totally and completely gone, we'd all know it. Until then, he will continue to do what he can to feather his own nest.
Isn't Yates still on the board?
Isn't Yates still employed?
Doesn't Yates still hold many millions of shares of VEND stock?
Didn't Yates choose most, if not all, of the "independent" directors?
As far as I can tell, Ryan Polk is probably a decent guy, probably a straight shooter, but I don't think Yates has "ridden away into the sunset", and his influence still seems to be strong. For all we know, Yates is still calling the shots.
Also, I don't think anyone in Polk's position could be unaware of the misstatements and mischaracterizations in the company's filings. I sympathize with his position, trying to walk the tightrope of keeping the company alive long enough to recapitalize it, but it reminds me of Ken Lay and Enron - Sometimes it's better to just come clean, because otherwise you may, with only the best of intentions, make yourself part of someone else's scam.
The only chance here is if Yates were to walk away completely, with no job, no equity and no other rights. He is the one responsible for ripping the franchisees and investors off, so he's the one who should make it right. I know that won't happen, but the next best thing would be a bankruptcy where the franchisees and other creditors get a shot at taking over.
VEND - Digging its way out of a hole.
That is not a fact, Franky.
How about some facts?
Franky, how about some facts like you have so often offered but never delivered?
Here’s an easy one for you- When does VEND pay wages? Is it on a semi-monthly schedule, bi-weekly, or what? And when is the next payroll due to be paid?
VEND wins the chutzpah award of the year.
Here's our plan:
1. We convert your legitimate debt to common stock.
2. We leave the currently outstanding common stock outstanding.
3. After we have suckered you into converting your debt to common, we will go out and raise new capital that has superior rights and is priced more cheaply than the stock we just got you to (unhappily) take.
Sounds like a plan!
I think it's Nick's dad.
Let's ask him about selling pre-paid phone cards in Australia.
Looking for a silver lining - At least the 16-cent options that Nick showered upon himself and his buddies are under water and likely to remain so.
Just the facts, Franky.
Who are you in relation to Nick?
The restructuring plan has zero chance.
A Chapter 11 filing is inevitable.
The existing common must be wiped out.
Yates must leave.
If the franchisees want to own and run the company, that will be their opportunity.
They are finally going to roll out Flavor Burst!
Six (or is it 7?) flavors with a twist!
You're probably right, and it's probably a case of incorrectly dealing with the sunk costs, but if I were a franchisee who owned 3 or 6 functioning kiosks, even if they only generate a modest amount of revenue, I might be disposed to trying to salvage the corporate unit that makes it possible for me to continue to generate those modest revenues.
I guess it's a question of whether the failure rate for kiosks is more of a one-time thing or if it is symptomatic of a maintenance issue that you can expect to continue for the life of the machine. If it's just a question of some of the machines being lemons, and I didn't get a lemon, then I don't care as long as the company gets out of the manufacturing side of things. On the other hand, if all the machines are potential lemons, then it's time to throw in the towel.
The franchisees have the choice. Some of them may choose rationally, and some may fall victim to the sunk cost fallacy. They'll have to decide based on their personal experience. Robotinvasion will want to find a way to continue to sell hundreds of cups a day!
The franchisees effectively own the company.
VEND is hopelessly insolvent. When a corporation becomes insolvent, the directors' fiduciary duty no longer runs to the shareholders - It runs to the creditors.
Collectively, the franchisees are owed more money than anyone. They are the majority of the creditors, both in terms of numbers and in terms of amounts collectively owed.
So, before a bankruptcy filing, the directors owe their fiduciary duty to the franchisees. After a bankruptcy filing, the power will reside in the unsecured creditors - mostly, the franchisees.
It's all a question of whether and when to assert that right. I think that in VEND's case, it would clearly be in a bankruptcy context. There's no way to work a deal outside of bankruptcy with the creditor claims facing the company. As doesitreallymatter points out, if the franchisees decided then to band together to take the company, there would still be the issue of the intellectual property - a deal might need to be cut with Robofusion, but they are in a position where almost any deal improves their situation.
The franchisees could eliminate virtually all the debt by sprinkling new equity in satisfaction of claims, most of which would end up in the hands of franchisees.
The question remains how this still-failing company would be run, but you could, for the time being at least, eliminate all corporate functions that don't involve servicing the installed base. If someone took the lead and kept things simple, there might be a shot at something.
If the franchisees do nothing, each of them is facing the likelihood of owning about 120 cubic feet of useless machinery that a landlord wants them to remove.
Ha! I don't think they have another 90 days that they can give themselves.
They did raise a couple million in the fourth quarter on convertible notes, but I wouldn't expect them to repeat that feat. But then, I wouldn't have thought that they could raise $2 million in the fourth quarter, either. The problem with raising money right now is that unless it is enough in and of itself, it just complicates the effort to recapitalize.
They also liquidated millions of dollars of current assets. There's a limit to how far that can take them, and I think that it must have been reached by now.
I wondered if the investors in the convertible notes offering were franchisees. In for a penny....
Franky! Where are your facts?
What's the big announcement going to be? Only 7 business days left in the self-proclaimed 90-day capitalization effort!
I have noticed the continuing growth of the VEND Investors group on Facebook while participation has declined on this page. The FB group only has about one post a day, but it seems to have drawn interest among watchers. I suppose this page has some of the same watchers - it would be interesting to know.
The FB group is a closed group that I assume is for like-minded individuals, so I don’t think I would be welcome there, and I know my posts here are not welcome by some, so maybe we have been responsible for reducing participation. Nevertheless, I think you hit the nail on the head when you pointed out that there just isn’t all that much good news to share and there continues to be plenty of bad news to discuss.
Here's one way the 10-K puts VEND's liquidity crisis in focus.
Even if you completely ignore the liability for "Contract revenues - customer advances and deferred liabilities" (which you shouldn't), VEND's 10-K indicates that as of June 30, 2019, VEND must come up with over $20 million this year just to pay the liabilities that are on the books.
The book value of ALL of VEND's assets is less than $16 million. In other words, if they sold everything they have at book value, it would fall far short of what they have to pay over the course of the year. If anything, those book values appear to substantially exceed the actual liquidation value of those assets.
It's a pretty sure thing that VEND operated at a cash flow deficit in July, August, September and October, but let's give them the benefit of the doubt and assume that was cash neutral. The only way that's possible would be through the continued liquidation of inventory and accounts receivable. They raised only $75,000 or so from stock sales between June 30 and October 16.
Aside from liquidating its balance sheet, VEND's only cash generation unless/until franchise sales and manufacturing operations are resumed will be from the royalties on froyo sales and whatever pittance they can milk from Print Mates. And it's doubtful that manufacturing can be resumed without a hefty cash deposit, so I don't see that happening anytime soon.
Even if you generously assume that the $20 million in current liabilities is somewhat back-weighted such that none of it was due within the first four months of the fiscal year, that still leaves VEND with a need to generate $2,500,000 per month in cash to avoid default. Of course, the lawsuits and rumors of lawsuits establish that VEND is already in default on some of those obligations, so that "helps".
So, the end will come when any of the following conditions prevail:
1. Frustrated creditors file an involuntary bankruptcy case.
2. The volume of litigation reaches the point at which VEND cannot effectively defend all of it.
3. VEND runs out of the cash necessary to fund critical operations - payroll, franchisee support, rent, etc.
I think that it will still take a while for either number 1 or number 2 to happen, so it's probably a question of when there's no cash in the till to make payroll. That may take a little while longer - How many people does it take to support critical operations? - but I don't think it will take long.
And their information seems to me to be credible. I don't doubt that there are some happy franchisees out there. The group in Philadelphia seems to have concentrated on good locations, mostly hospitals and medical facilities, but also other promising venues. They originally signed an agreement committing to at least 84 locations over a 5-year term. It appears that they must have installed about a dozen or so by now, or about a $600,000 investment. Almost in Robotinvasion's league! Anyway, by all appearances, things are working for them and they are reasonably happy.
It's a shame that what seems to have been a good concept that was capable of succeeding was ruined by poor management, inadequate capital and dishonesty.
Here's some franchise information for ya!
As of today, VEND's franchise registration in California and Wisconsin (and, I suspect, many other jurisdictions) has expired.
They still have 5 days to play in Minnesota, then that state goes away as well.
Those are the only 3 states that provide online access to franchise filings, so it's hard to say where things stand in other states, but it's a safe bet that the updated franchise disclosure documents that are required are all filed at about the same time. Consequently, I don't think VEND will be permitted to sell franchises in any jurisdiction by the end of this month.
It takes money, effort and time in order to renew those registrations, none of which VEND seems to have in healthy supply. And then, of course, there's the nasty necessity of having to update the list of former franchisees, actual results of sales for the remaining franchisees (9 or 10 cups of froyo a day going to excite anybody?) and litigation, not to mention other bad news.
I predicted that VEND would not file its 10-K on a timely basis. They did file it, but it was a day past the already extended deadline. I'm disappointed to say, because I was looking forward to reading all those updated disclosures, but I predict that VEND will not be renewing its franchise registrations. What's the point if you have no manufacturer, no working machines to deliver and no money?
There are 10 business days remaining in the 90-day period that VEND gave itself to come up with a solution. That's probably all the gas that's left in the tank.
Are you affiliated with the Philadelphia franchisee? It looks like things have generally gone well with them.