Tonner One World Holdings Inc (TONR)

[Voices of Reason]

"...personally, I DO NOT believe OWOO has orders for 25000 dolls……….they can say they "PLAN" for 75000 dolls ALL DAY LONG……they won't & haven't fooled the market..."

The backlog inventory really shows the demand. Looking at the 10k, the inventory at Dec 31 ended at $146,488. After the 1st quarter, the inventory dropped to $144,690. The inventory is based on the cost of goods on a FIFO basis. Using my earlier analysis that the cost of goods is about $14.69 per doll, this would mean that their current (March 31, 2014) remaining inventory is around 9,850 dolls. My best guess using the financial data available is that they have sold about 1,250 dolls to date (this would coincide with an initial run of about 10,000 dolls). Using the gross sales to date of $22,842, this would give you an average weighted sales price of $18.27 per doll - this seems in line with the range of pricing we have witnessed.

Using this gross margin ($18.27 - $14.69 = $3.58), one can arrive at OWOO's most optimistic view of selling out the remaining inventory, plus another 75,000 dolls for the upcoming holiday season: about $303k in gross margin by the end of the year. So even with this best case scenario, the figures, only cover 50% of the ongoing $619k interest expense alone, and does not include additional financing needed to make this 75,000 doll inventory run.

To give you a feel for the cost of that new additional run, the last run was put on the books for about $147k for an estimated 10,000 dolls. Using a simple ratio for 75,000 dolls, they need to come up with about $1.1 million.