In general I do not disagree. But I have worked through a review of 4-5 such companies, names which were mentioned on this board. Whether a dead cat bounce or not I do not call a 700% increase from the low chump change, one was up even more. NONE of those businesses had the sales of WSTI nor the potential. Some had more stock outstanding. The one I mentioned in a prior post even has financials posted where the Balance sheet does not even balance.
I completed my initial Due diligence and bought a modest position of 4 million today at .0001. The most I can lose is $400 which is chump change.
I decided to buy based on prior points I made and the following few things.
1- The US is set to pass an infrastructure bill. Within that bill is a re-funding of the import/export bank (same bank which insures the WSTI credit line). I believe this funding has held up other line renewals for companies and new funding. So that is a minor positive.
2- I believe the company for the first time in history has substantial inventory ready for sale, cash which was used in the prior few quarters and sales in India are set to increase dramatically
3- I believe The Argentina project (Stage 1) did not complete until October (after the September quarter) and that should be a big cash collection and sales reporting for 4th quarter
4- The company has a real business in a favored sector and was the subject of a previous promotional effort and has great awareness. These stocks are most likely to bounce.
5- There is always a long-shot potential for a deal with a company like solar city or other large investor where 20-40 million is like chump change to them.
Overall, this company had been hyped by outsiders for profit and short sold into oblivion prior to the company's efforts to survive by issuing toxic debt, which can be cleaned up in any number of ways. New financing, expanded IE line, sale or offering of India operation, new partner, new strategic investor etc etc. I believe while investors that paid much higher prices hate management, I have to give them credit for staying in business by doing whatever they had to. If they did not take their only financing they would not still be around.
Sales for the 9 months were I believe the highest in company history and had a gross profit for the first time in company history. Project cash flow will be improved by 50% up front payments. US sales starting to pick up.
The factors outweighed lots of negatives and some new negatives like the prospects for a fed int rate hike which could hurt sales in US dollars (foreign sales) and hurt developing countries which the company does business in.
Despite my personal decision to be clear this stock is an ultra high risk situation not suitable for large amounts of money and anyone looking at it should do their own due diligence and proceed with the utmost of caution.
