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Actually, the Cash Flow Statement is part of the Q. It also shows a significant number in Accounts Receivable which the company says it will collect in Q2 which just ended on March 31. Maybe that puts out the fire.
Beigle: The Cash Flow Statment makes the adjustments for you and gives you the amount of cash that is actually spent. It clearly states that cash was $9,700,117 at the end of Q1. it also states that the net cash used in operating activities was $3,926,794. Theses are CTC's numbers not mine.
Kids: Your wife must balance the family checkbook. CTC has stated in its 12/31/2004 10Q that it is burning cash at the rate of $1.3M per month with a monthly net loss of $1.9M. According to Beigledog in post # 2279, Fidelity has pegged the burn at $ 1.9M. CTC had cash on hand of $9.7 M as of 12/31/2004 per the 12/31/2004 10Q. If Beigledog and Fidelity are right, that means the CTC runs out of money in May 2005, if they don’t cut the burn. If you accept the CTC $1.3M/month cash burn figure, CTC runs out of money in July 2005.
Point well taken.
I don't think anyone is looking for a blow by blow account of negotiations. I think we are all looking for actual sales and revenue.
Electro: Well said.
Willy: The numbers I posted: $1.3M cash outflow, $1.9M total monthly loss come directly from CTC's 12/31/04 10Q which was filed in February.
That's exactly what it means.
Beigle: You are right. The monthly loss is $1.9M and the stated cash depletion is about $1.3M. The $1.9M figure is comprised of accrued expenses as well as cash out the door and is probably more accurate.
Beigle: My post from RB
Based on the information provided by CTC in its 12/31/2004, CTC has an approximate cash burn rate of $1.3M per month with a monthly net loss of $ 1.9M. CTC had cash on hand of $9.7 M as of 12/31/2004. With the current burn rate, CTC had approximately $5.8M on hand as of 3/31/2005 which means that without revenue or other influx of working capital, CTC runs out of money in July 2005. That means we need to see results on the revenue side soon.
The above computation is based on information excerpted from the CTC 12/31/2004 10Q:
For the three months ended December 31, 2004, we had a net loss of $5.7 million. At December 31, 2004, we had $9.7 million of cash and cash equivalents, which represented an increase of $6.8 million from September 30, 2004. The increase was due to the transfer of $10.0 million of cash from restricted cash related tithe convertible subordinated debentures offset by $3.2 million of net change in cash. Cash used in operations during the three months ended December 31, 2004 of$3,926,794 was primarily the result of operating losses, offset by depreciation, amortization, and non-cash compensation expenses and working capital requirements. Cash used for investing activities of $137,701 was primarily related to the purchase of computer hardware and software, and equipment put in service in anticipation of manufacturing activities offset by the sale of equipment. Cash provided by financing of $823,936 was primarily due to the cash proceeds from option and warrant exercises net of principal payments made on capital lease obligations.
What difference does it make? Regardless of the reason, money is being spent. The point is that CTC has limited time to make sales or get additional capital.
This industry is very conservative and slow to respond to new and innovative products. Like another poster stated, they are eager to be first in line to be second. However, that being said, the time to generate revenue is not unlimited. CTC has a burn rate of $1.3 million/month and approximately $5.8 million in the bank. Without revenue or an infusion of working capital, the company runs out of money by August and that is just 5 months away. Even a small contract will eliminate or significantly reduce the burn. Unfortunately, if CTC does not have revenues by August, additional working capital will be hard to obtain. Even if you can get it, it will be expensive and will likely cause significant dilution. Hopefully, we will see a revenue deal soon.
Craps: I sincerely hope you are correct. I believe that getting the China deal done within a reasonable period of time and getting it structured correctly is extremely important for the long term growth of this company. Also, getting the China deal done right and within a reasonable period of time will speak volumes about the capabilities of management, or lack thereof.
I think that the characterization of Far East as merely a "local supplier" is not entirely accurate. I think it is a more accurate to characterize Far East as a "Preferred Supplier". If you look at the facts the Mr. Jiang, the chairman of Far East, is relatively young to control such a prominent company and to be a member of the Peoples Congress, it leads to the conclusion that he comes from a prominent family. As such, he likely has access to and relationships with those that make grid procurement and construction decisions. Accordingly, he would likely get greater preference that your average "local supplier” All that being said, does anyone have any information that CTC is in fact negotiating with other "local suppliers" and if so, who they are and how they compare to Far East in terms of asset base, sales and production capability? Also, just curious, does anyone know how CTC found Far East or these other suppliers?
I own stock in both CTC and RS. I question management when there is management action or inaction that is questionable. I could just as easily characterize you as a company shill because you refuse to acknowledge even the possibility that management could do better, but I haven't. If you have view that is contrary to mine, I am not afraid to hear it and even welcome if it is well reasoned. If you can demonstrate that I am wrong, I will be happy to change my opinion. What's wrong with a little civil debate? I want this company to succeed. If it doesn't do well, I don't make money.
Ratt: I have already done my DD on this company. I have been a shareholder for more than 2 years. The questions I currently have cannot be answered by IR. IR is very limited in what it can say. What JC can say will and should have a positive spin. My only point to you is that rather than personally attack another poster can't you just simply state your opinion objectively and provide your basis for that opinion?
It is nice you have such an emphatic opinion but how are we to know what JC did or didn't say if you don't share that information with us. Did you ask him if the machines were running and producing core this week?
Good point. Good post.
ACL: Caution is always prudent whether you are doing business in China or elsewhere. As someone who has done business in China for many years, I find that many posters on this board and the RB board that discuss China are frequently not fully informed and often have strong opinions not based on personal experience. A company can do very well in a country like China provided caution and prudence are employed in ample portions. However, caution should not be confused with paranoia.
Lent: I must admit it is a bit scary that I find myself in complete agreement with you. There should have been a follow-up PR to let us know what happened with that MOU. We can only hope that management is quietly working behind the scenes to make the China deal work.
Ratt: Beigle is right. Just because you don't like the message doesn't mean the poster is a basher. If you have an opinion contrary to the "basher" please provide corroborating facts to support your opinion. Without corroborating facts, your positive opinion is nothing more than the unsubstianted speculation of a pumper and not taken seriously. We should all welcome information, whether it is pro or con, if it gives us a more detailed and accurate picture of the health of the company.
Beigle: Well said. Management needs to focus on cable. If limited resources are stretched too thin by trying to do too many things at once, nothing will get accomplished. Cable is the key.
Beigle: In my case I had faith in management early on and up until just recently as promises about China, Mexico and other deals failed to materialize. I have been involved with technology companies at every stage of development and I judge management objectively based upon performance not on promises. I have viewed BA’s involvement as a counterbalance to BW. They each have different skill sets as well as different personalities. With them together, each having an equal voice, management functioned fine. With BA’s diminished role there is no longer a counterbalance and that is the primary cause of my concern.
Troutlout: You seem to have strong feelings about how business with China should be conducted, how much experience do you have with China? Just curious.
Farmer
Well said ddoc.
Farmer
Your concert metaphor assumes that the fans don’t riot and then leave. Business opportunities don’t last forever. Sometimes your customer will wait until you are ready and sometimes they won’t. Because China’s needs are so urgent, they can’t afford the luxury of waiting indefinitely. They need a solution to their transmission problems yesterday. If CTC doesn’t get in the game, China will be forced to look to other alternatives that may be less attractive but available to solve their problems. In business, I have always lived by the old adage “you snooze, you lose”. I truly believe that if CTC does not find a way to get in the game soon, a golden opportunity will slip away. Benton has been saying for the past year that the China deal is just around the corner but I see no evidence that we are anywhere close to that corner.
Farmer
Thanks ddoc. It looks like I may not be alone in the views I express.
Farmer
Newzip: That's correct. I think this company will succeed in spite of current management. However, I believe that success will take longer and I think Mr. Wilcoxon will finesse his way out of some significant opportunities along the way.
Farmer
Although I question management's performance and ability to close sales, I am also in this for the long haul.
Farmer
Imaginative:
That is definitely the timeline Benton provided at the shareholder meeting. However, prior timelines have proven to be illusory. Do you have any information that gives you confidence CTC will meet the stated milestones?
Farmer
X, If there are significant delays, the natural question is - will that cause them to look for alternatives on the poles? It would be interesting to see what the written agreement says.
Farmer
Do we know if CTC has made any of its "New Material" poles or, if not when the first prototype will be made? My assumption is that even after the pole is made they will need to test it and that will take additional time. Someone please correct me if I am wrong but if the new CTC pole is the critical path item, it could be some time before CTC sees any revenue from Kansas.
Farmer
Kids,
Are we merely cheerleaders or investors seeking to track the progress of our hard earned investment dollars? I have been around long enough to understand that it is important to scrutinize management and closely monitor a company’s performance. It wasn’t that long ago that investors approached the market with “irrational exuberance” and got badly burned. I do not intend to be negative. My intention is to objectively monitor the performance of management. If you perceive that as negativity rather than objective opinion, you are certainly entitled to your opinion. BTW, is your exuberantly positive opinion of management based on inside information? If not, what the basis for your glowingly positive view of managements performance? Please don’t get me wrong. I don’t believe they have done badly. I just believe that they could do better.
Farmer
Actually, I think it would be more accurate to say that I am questioning results and not individual decisions as I am not privy to the internal decision making process. I do however make observations and draw conclusions from what I see. I have rather extensive experience with companies at the start-up stage attempting to commercialize novel technologies. My experience extends to living the process from start-up to profitable operating company to IPO. From that perspective, I see CTC management seemingly drifting with no real focus. I see many international and domestic deals discussed by CTC yet none seem to have been fully consummated. China just seems to be a good metaphor for the way CTC management operates. As an observer with experience with growing companies, 3 years seems to be a very long time. In any event, I hope you are right and my analysis is wrong and that CTC becomes the Microsoft of the new millennium. I hold a great deal of shares and therefore wish nothing but the very best for CTC.
Farmer
I don't know the answer to your questions. I do know that Benton said in the past two shareholder meetings that the Chinese were pursuing CTC and that CTC was the cause for delay. We all just assumed that it was because CTC was cutting a better deal. I also know that the discussions with the Chinese have been ongoing for more than three years. It just seems to me that, even in China, it doesn't take 3 years to make a deal. Furthermore, there is a significant lead time between the decision to use CTC cable and actual line design and construction. Even if a deal were struck today, I think there would be a significant lapse of time before you would see anything other than small purchases for test lines.
Farmer
Great comeback with impeccable analysis. I almost feel compelled to sell. (Not Really) - LOL. I really don't think this is a bad company. Quite the contrary, I think they have a great concept with tremendous market potential. However, that does not mean that I believe that every decision by management and every strategy they develop is gold plated and above question. I have never bashed this company but rather have attempted to engage in a thoughtful dialogue about the company and its management. I simply cannot understand how anyone can worship at the feet of management without ever questioning their decisions and the results they achieve or fail to achieve. I am a shareholder and I have that right.
Farmer
Taizu,
I agree. My point in bringing this up is that CTC may not be the 800 pound gorilla it appears to think that it is. It is management’s job in dealing with China and other venues to be prudent but not arrogant.
Farmer
It's not a question of whether the line is AC or DC. The issue is whether there are reasonable high ampacity alternatives to CTC if CTC becomes too difficult in negotiating a deal.
Farmer
It appears the Chinese are studying alternatives to CTC.
Pertinent information begins on Page 31.
www. ewh. ieee.org/cmte/ips/2005GM/asia. pdf
IEEE POWER ENGINEERING SOCIETY ENERGY DEVELOPMENT AND POWER GENERATION COMMITTEE
International Practices Subcommittee
PANEL SESSION: ELECTRICITY INFRASTRUCTURE IN ASIAN REGION AND ENERGY SECURITY PROBLEMS
Nikolai Voropai and Tom Hammons
IEEE 2005 General Meeting, San Francisco, 12-16 June 2005 Monday June 12, 2:00--5:00 p.m.
Also, see Page 34
5. Future development of China power grid
Currently, the study of ultra high voltage AC transmission system (1000kV or 1150kV) and DC transmission line (±750kV or ±800kV) are initiated for future power grid development. The higher voltage class power grid based on the 500kV national-wide power grid will be tentatively built near year 2020 as a long-term plan.
Clearly the Chinese are examining all of their alternatives. One man’s opinion – I believe that CTC should negotiate a reasonable and prudent deal with China but should not be so arrogant as to believe that the Chinese will not walk away at some point and go with less desirable but acceptable alternatives.
Farmer
Does it specify what size the cable is?
Farmer