The company had $20k in GROSS PROFIT last quarter and $160k in interest payments alone.
They have negative working capital and could not obtain any financing, other than toxic loans (either that or they aren't knowledgeable enough to know how stock crushing toxic debt is).
There are other worrying trends
"Gross profit decreased by $12,602 to $20,998 for the three months ended March 31, 2016 from $33,600 for the three months ended March 31, 2015. This decrease in gross profit was primarily attributable to lower profit margins. A significant portion of this lower profit margin was due to a pricing adjustment on material kits and transportation costs. As a percentage of net sales, gross profit was 12.9% for the three months ended March 31, 2016 and 27.8% for the three months ended March 31, 2015."
"General and administrative expenses increased by $33,497 to $46,067 for the three months ended March 31, 2016 from $12,570 for the three months ended March 31, 2015. As a percentage of net sales, general and administrative operating expense is 28.3% for the fiscal quarter as compared to 10.5 % for the three months ended March 31, 2015. The increase in general and administrative expenses is due to several factors, i.e.: (i) payment to an outside firm to provide advertising and promotional services, (ii) payment of professional accounting services, (ii) consulting fees for a joint R & D venture with UCLA, and (iv) a loan discount charge."
"Interest expense was $159,374 and $5,000 for the three months ended March 31, 2016 and 2015, respectively, and primarily consisted of interest expense on indebtedness under our convertible note payable to MDI and others as well as the amortization of the discount on the convertible notes payable that totaled $107,433 and $0 for the three months ended March 31, 2016 and 2015, respectively."
"As of March 31, 2016, we had a bank overdraft of $1,849. Net cash used in operating activities was $123,964 and $370 for the six months ended March 31, 2016 and 2015, respectively.
Our cash reserves will not be sufficient to meet our operational needs and we need to raise additional capital to pay for our operational expenses and provide for capital expenditures above the basic operational expenses, which are estimated at $20,000 per month. If we are not able to raise additional working capital, we may have to cease operations altogether.
Our future depends upon our relationship with MDI as well as MDI's future relies upon us. MDI Corporation is a minority owned government contractor, which previously assembled all of the products that were being sold by MDI. The owner of MDI no longer wished to be engaged in the assembly and manufacture of the products, but to become only a sales organization. Renewable purchased the equipment, inventory and business knowledge to begin business as a separate entity. Not only is MDI the sole customer of Renewable, but Renewable is the sole assembly and manufacture provider for MDI. As part of the agreement, MDI has agreed to support the operations of the Company through November 1, 2016."
“No one in this world, so far as I know — and I have searched the records for years, and employed agents to help me — has ever lost money by underestimating the intelligence of the great masses of the plain people"
H.L. Mencken
