Reading the 3rd Qtr SEC filing you learn: dated 11/23/2009 things become pretty clear when you work the numbers doing the math. The majority of the following statements are copy/pasted from the SEC filing.
1. Bottom page 1; number of outstanding shares as of 11/23/09 2,868,177,256. Sold as of same date listed by agreement(s) on later pages.
St George 1,018,666,667
Barclay 144,444,445
War Chest 356,111,112
Management 88,353,674
Subtotal 1,607,575,898
Oustanding 2,868,177,256
Delta 1,260,601,358 (SHARES BEING SOLD IN 4TH QTR)
(these were being sold day by day 4th quarter. See statement on Page 43 of filing below (copy pasted next)
Liquidity and Capital Resources
As of September 30, 2009, we had a working capital deficit of $12,427,533. This compares to a working capital deficit of $10,546,454 as of December 31, 2008. Accrued interest on notes payable was $2,856,735 compared to accrued interest of $2,438,682 as December 31, 2008. Accounts payable as of September 30, 2009 were $1,790,107 and compares to $1,239,145 as compared to December 31, 2008. As a result of our operating losses for the nine months ended September 30, 2009, we generated a cash flow deficit of $405,559 from operating activities. Cash flows provided by investing activities was $0 for the nine months ended September 30, 2009. Cash flows from financing activities provided $406,324 primarily from the sale of stock for the nine months ended September 30, 2009.
While we have raised capital to meet our working capital and financing needs in the past, additional financing is required in order to meet our current and projected cash flow deficits from operations and development.
My OPINION is: Now when I read this I see (1) capital deficit of -$12.4M (2) Accounts Payable of $1.7M (3) Cash flow deficit of $.4M (4) Cash flow from sale of stock thru 3rd qtr is $.4M. In the next paragraph I see a statement saying while we raised capital (this is equity capital in selling of stocks). It's the "additional financing is required to meet our current and projected cash flow deficits from operations and development." THAT'S THE PLAN SELL MORE STOCK THEY HAD PREVIOUSLY AUTHORIZED AND OR ISSUED. This will provide another $.5M in the 4thQtr in offseting working capital deficits. The key to me is cash flow deficit statements; they are always by quarter not annualized and only paid by quarter. That's pretty much what has been going on and will continue to go on as long as folks will buy no matter how low it goes as it was authorized with a value of $.0001. The above pretty much tells me that's the business plan. Sell stock to generate working capital!
Going to the section titled, "ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS on page
41 the following: In the existing Department of Defense (DoD) and Homeland Security/First Responder channels, Management has significantly changed our model from competing as the prime contractor for DoD contracts. In January, we transformed our Go-to-Market strategy from competing as a prime contractor to being the supplier who supports existing prime contractors and existing contracts. In addition, Management has also significantly changed our retail product strategy to become the product innovator and supplier to large existing retail marketing companies that have the scale and capability to bring a product to market world-wide.
MY OPINION: This is an open statement saying we can't sell what we developed and need someone to sell it for us whether it's DOD channel or the retail channel! In summary my opinion they are selling stock for equity to float this until either (1) an existing channel supplier agrees to sell their products for them. Problem here is they have no inventory already built to sell and can't build product without inventory and the supplier base won't front them any more credit; it's C.O.D. now with judgments already issued so they probably won't find a channel partner willing to build the product and sell it for them too! or (2) someone or company buys them out if they can find a buyer that sees the potential* or (3) when they can or will no longer authorize stock for sale when and if value goes under $.0001 on market or (4) management gives up and seeks bankruptcy (this can happen when managements personal funds deplete and they can no longer afford to work without compensation or are just unwilling to accept the risk any longer personally themselve; note GM's CEO just resign as he was only making $500K and it wasn't worth it any longer). * - #2 above is the preferred (white knight) result but anyone or company that could buy them based upon the perceived value of the patents (that's where the "value" is is it not?) also knows it may just be a waiting game for #4 and then pick it all up in bankruptcy court for less. Being a public company and having SEC filings hurts in this case. As a private company under performance is not so public. Case in point in 2000 I worked with a company in same situation, patents with perceived value but no way to get to market or create market share. This CEO even the IRS on him for non-payments/non-filings three quarters in a row along with all suppliers being past due. Solution proposed and executed was figure out who has the channel already developed and available cash flow to make a buy into a new market if they saw the potential themselves. Did not approach them looking for selling but rather rented booth space across from them at next trade show (McCormick center Chicago $86,000 for 4 days rent plus another $17,000 shipping products, lathes, and equipment for the show) and let their Sales and Product Engineers look at his patents and products across the aisle for 4 days. They (Sales and Product Engineering) could see the value and they knew they already had the channel developed. They called next week after the show and bought him out (patents and all CNC machines within 60 days. Now, had he stuck it out he could have made more money in the long run if he had developed and controlled his own channel to market; ditto Cyberlux. Ditto being public and the statement about not being able to move product through any channel whether DOD or retail. That's a real problem.