Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
It it still priced as the failing company that it is. $5 two years ago, now $1.60, probably one of the worst investments anybody could have made.
BTW have you seen all the stories about solar saturation in CA?
They do, Frank Hunt used to be a partner at their former auditor. Nothing like going straight from a family reunion to the to being a partner at their auditor to being head of the audit committee.
The brother of their former auditor, their former auditor being a Robert Jensen, confirmed that they know each other. That brother even used Jim Nelsons son (I do not know which one) as a backchannel to talk about accounting issues, and seemed to know it was wrong yet did it anyway. He also believed that former CFO Tracy Welch insinuated to him that the cell was dead years ago. In my opinion doing something like this could be dangerous to your professional future.
The other two members of the audit committee are random guys from Utah and alums of Nelsons alma matter, basicaly placeholders and Nelson loyalists. There really isnt any serious independent oversight at all and it has been this way since the start.
As for evidence of this stuff, I will happily provide it should the people involved in it request it.
Well their attorney did resign right along with the CFO right before the massive Q3 miss, and right after all their stock comp paid out.
I love how Nelson has his cousin as the head of the Audit Committee.
It's like he doesn't even care about pretending to take issues of oversight seriously.
They can access a portion of that capital much more easily than getting the stock back to $4.15 (which is probably never going to happen).
All they have to do is a small follow-on offering and BAM the warrants now convert at that new lower price. Of course this would be devastating for shareholders, which is why the new CEO would never do this because his bonus comes only from shar..... oh wait:
Earlier I had been convinced I was wrong about Nelson filing his form 5 late. Apparently the company believes he filed it late. Therefore my original contention, that he filed it late, was actually correct. Which means that Nelson's "bona fide" gift excuse probably didn't pass muster. The one time I admit to being wrong... I was actually right!
A 60 month payback period is not short term so your analogy doesn't work.
You are a bit confused - let me help.
Here is what I did.
The company has bills they must pay in the near future, these are called accounts payable.
The company also has people who must pay them in the near future, these are call accounts receivable.
What happened was that the company now has much more bills they must pay in the near future than before, relative to the amount of money that people must pay them.
Does that make sense?
So I made the assumption that the company will pay it's bills eventually. And I assumed that the people who owe the company money would pay them too. Not assuming these things would be a very bearish thing to do. Bulls should be making these same assumptions, so there shouldn't be any disagreement between us on that particular issue.
Once the company pays all of it's bills, and gets all the money that is owed to them, they will have $7,000,000 or so left over. This is a more accurate measure of the amount of money they will be able to deploy for business needs than viewing the cash balance in isolation.
This number has also dropped quite a bit since last year, which is to be expected because the company posted losses in Q1, Q3, and Q4.
By that measure the company has roughly half the resources this year to deploy as they did last year.
This isn't meant to scare anybody, it's just a basic figure. It's why the analysts on the conference call were concerned with costs. If it's scary then it's not me scaring you, it's the financials of the company.
Any bullish case for the company should take this into consideration instead of pretending it doesn't exist.
Public companies go bankrupt all the time for all kinds of reasons. I think an equity raise would be more likely - but then we enter the RGSE scenario of survival by dilutionary hell.
When you say they have enough cash to cover for the year - read that 10-K closely. It states that the cash they anticipate to generate from operations is a part of that. There is good reason for that, should they fail to generate significant cash from operations, they will run out of reserves pretty quick. So basically it comes down to whether or not you think they will turn a profit this year (do better than last year) or not. You clearly do, so a scenario in which they run out of money isn't that big of a concern for you.
However, to do this they have to do much better than last year to avoid the scenarios I laid out. You and I am sure many other believe that they will. I think, based on their track record of failing to meet prior guidance and the overall market conditions, that there is a good chance they don't. Their margins are a lot lower already than they were last year. Of course that could turn around, but it might not. We will see.
They lost $2.9M last Q - they are down to 7M when you subtract payable and add receivables. If 1Q is bad they lose around $3M and are down to $4M. This number was $14M at the end of last year.
If they can't stop losing money they will run out money eventually, it's pretty simple. They anticipate being able to make money to prevent this, but they anticipated it last year too and ended up losing a lot of money.
So if you think the company is going to cut expenses and make a bunch of money in Q2 and Q3, you are right and you have nothing to worry about.
But if they perform the same as they did in 2016, they will go bankrupt or more likely raise money. If they are lucky someone will give them a loan.
When I say "bills paid later" I don't mean that they were delinquent, just that accounts payable are increasing much faster that accounts receivable, the ratio has changed a lot over time. This means they are collecting money owed to them faster than they are paying money they owe, which has the short term effect of boosting cash in the bank, but little long term financial impact. There isn't anything wrong with this ethically / legally, but it gives context to the cash increase. Had the increase come from simply operating the business, it would have an entirely different meaning.
The report was written to cover 2016, which means the cell was officially abandoned in 2016.
Nelson continued to promote the idea of the cell in 2017, which misled you to believe that it still existed and the company was still working on it.
Nobody forced Nelson to mislead you and others by doing this, he chose to do it on his own.
And don't blame yourself for being misled - it wasn't your fault.
I am not against Jim Nelson, Jim Nelson is against you.
He lied to you and robbed you for years. He even pumped the cell in February after the company had officially abandoned it.
I recall you were very excited by that announcement, but why would they put out that information if they had already made the official decision to abandon it?
Pretend that you don't hate me for just one minute and think about that.
When the company buries all kinds of horrible stuff deep within footnotes you have to have OCD just to survive!
It's nothing personal I have against Nelson or the company. I do think he is not ethical and ripped off his shareholders. I made money on this by a trading strategy that assumes that management self interest and the interest of p-note holders is held paramount and that common shareholders are to be used to further those primary goals.
I haven't gone long yet but I may because Nelson retired and got a ton of stock options at $1.30. Now that he is behind the scenes it will be easier for him, in my opinion, to use his connections to stock promoters to pump this up one last time.
When they said they are not going to capital markets in the near future, I believe it. They will go after the p-note holder is done selling everything and Nelson is done selling everything. Of course this is just my guess.
But speaking of the P-Note holders. Do you remember how at the start of March there was a big sell off and nobody knew why? Well those p-note holders got more shares and dumped them once again onto you. They have once again gotten very lucky (Insider Trading in my opinion) in timing their sales in a way that screws over the common shareholder to the maximum extent.
My 2017 general roadmap now looks like this:
1. Get Q1 out of the way.
2. PR / Stock promotion offensive
3. P-note and Nelson dump shares into this around Q2 and Q3 ER's.
4. Capital raise near the end of the year that obliterates once and for all all hope for longs.
I intend to focus my trading around those earning reports, should I decide to.
Really not much has changed since yesterday other than Nelson having more shares and an easier way to dump them. Not only him but Abe + Emil + Mike just got a bunch of shares yesterday (they have 800K each now) and that will add to management incentives to pump the stock.
I predict they will use pumping measures in the near term because the risk to the stock price in the long term is too high for them to risk not selling soon.
We are up to 22,440,664 shares now btw.
You are missing the point. The balance sheet got much much weaker this past year and the damage isn't over. Guesstimates of future revenue have nothing to do with the deteriorating balance sheet.
Next Q is Q1 by the way, not Q2, which will make this worse.
And if 30M revenues is your benchmark, then you better hope that they get costs down more, because they will be bankrupt EOY at $30M a quarter with current cost structure.
It is why analysts were so focused on costs.
Cash is only up because the company is taking longer to pay bills.
Despite all of that it's still a positive step that they have a new CEO who isn't linked as far as I can tell to the Santa Barbara shenanigans. But Nelson and his buddies controlling the BoD remains very problematic.
Hope it's more than just window dressing, based on the call it sounds more like a shuffling of titles in an attempt to appease investors than any fundamental change.
Their auditors failed inspection on basic stuff like verifying revenue
https://pcaobus.org/Inspections/Reports/Documents/104-2016-071-Liggett-Webb.pdf
Most of the Q&A was about 2017 and Nelson did a really poor job answering questions, I would have liked the person who is going to be CEO to answer the questions about the plans for the future.
You could tell the analysts were not happy with the level of preparation management put into the call.
This Q&A is a disaster haha.
Why can't the new guy answer anything??
Every time Nelson says "Frankly" is when he is BSing.
OUCH:
He changed his stock options to pay out when he retired 6 months ago, this was planned.
His buddies dumped tons of shares right before they pre-announced the bad results too.
P-note holders dumped 700K shares just before the bad results were pre-announced.
Just though you guys should know.
Their CEO doesn't even list it on his resume. It's just a big blank space from 2008-2013.
The whole history of the company shows how absurd they are, you can go through their press releases to see but the gist of it is this:
First plan: Air -> Gasoline
Second plan: Nat Gas -> Gasoline, which would have been done by driving around mobile processors in the back of trucks to access almost tapped out gas lines and convert the leftover gas into gasoline. If this sounds absurdly economically inefficient, it's because it is.
Third plan: Produce Graphene
They started coming up with the idea to sell graphene after going radio silent for a year when they were getting ready to deploy plan 2. In this time the company was taken over by Bill Beifuss. You may know him better as the person who runs "Cumorah Capital" the largest seed investor of SLTD. He is also, according to Jim Nelson himself in an interview with Belnome, a friend of Nelson.
Since Graphene has nothing to do with natural gas, but something to do with carbon, it seems they decided on Graphene to avoid having to change the name of the company.
Anyways they claimed to have discovered a novel way to produce tons of cheap graphene, but as soon as they did this they decided not to actually produce it. Instead....
Forth Plan: They are now planning on uses Graphene to make the internet faster.
Of course during the whole time the CEO is getting paid much more in salary than is being spent on R&D and toxic financing is eating shareholder value at a rate of about 50-60% / year. The google finance chart doesnt include a 10:1 reverse split last April.
All of the tech companies run by these guys in Santa Barbara like SLTD / SUNW worked in a similar way, they extract max value from shareholders at all times while always promising greatness in the future. A future that never comes.
The first part of this post makes a great case for why the entire business model is fatally flawed. Well done.
The second part pins the entire hope on the cell, which is a phony pipe dream and probably just a scam from the start perpetrated by Nelson and his buds in Santa Barbara who do these kinds of things all the time. Carbon Sciences anyone?
In that one this guy (their CEO at the time) was supposed to make gasoline for cars from the air. Somehow... that didn't pan out.
Gas from the air... I got this!
Putting the hopes on the cell is less convincing.
Really great job on the first part though, I actually hadn't looked at it from exactly that angle. But a lot of the residential solar industry is built upon pushy salesmen who probably aren't offering the best deal for customers. I think Nelson even said once that SUNW doesn't even offer the best price... for what is basically a commodity service, some non-sense about superior customer service or whatever.
Growth isn't even good for them anymore, it's more of a liability. Increasing company size while not growing working capital leaves them vulnerable to running out of juice after a few bad quarters. This is what is happening now.
Remember when they bought SUNW it was small but profitable, now it's medium sized and losing a ton of money, and they don't have that much money left to lose. This stock is over 50% down from the day they merged with SUNW, growth is useless if it kills you.
The chance of them having to raise capital is quite high, and if they do raise capital, I don't believe you will like the results.
They will have to raise for significantly under market price because of the warrants (go ahead and read them it actually says that on them).
The only reason it was above $2.77 at all is that people trusted Nelson not to BS them with his guidance.
Turns out that trust was misplaced, and here we are 50% below that number, which people didn't even like then.
They did 670M vs 690M expected. Waaaaaaay smaller of a miss than SUNW. Nelson blew it by missing twice in a row by so much.
Not a credible CEO to almost everybody now.
He and the CFO resigned within 24 hours shortly before end of Q3.
citations: http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=11581812-1170-7186&type=sect&TabIndex=2&companyid=109162&ppu=%252fdefault.aspx%253fcik%253d1172631
http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=11581168-1170-8448&type=sect&TabIndex=2&companyid=109162&ppu=%252fdefault.aspx%253fcik%253d1172631
They can't even verify revenue, that is the core function of an auditor.
http://www.otcmarkets.com/research/service-provider/Liggett-Vogt-&-Webb-P.A.?page=1&pageSize=25&id=4834&filterOn=5
Another funny thing. All those SB companies that SUNW totally has nothing to do with?
Hypersolar, Biosolar, Carbon Sciences, CloudCommerce (formerly Warp9, Roaming Messenger). They all switched from HJ to LVW at the same time.