For what it's worth, here are the numbers as of December 31, 2018:
Inventory - $11.9 million
Deposit for inventory - $2.7 million
Restricted cash - $4.6 million
That's about enough for 600 machines or so, I suppose (probably more like 500 to 550 kiosks), so they have plenty of resources to solve for that problem for a while. The bad news here is that their gross profit on the 200 or so machines they have or will install in 2019 through June 30 will only come to $1.0 million (and that's assuming that Nick gets his production cost down from $39,000 to $35,000, so it's probably less) since these current sales are at the low low price of $40,000 (and before RoBoZo argues with me about that $40,000, it's taken straight from yesterday's press release). The press release also indicates that the sales for the balance of calendar year 2019 will carry an average price of $41,000, so it's moving up, but very slowly.
The problem they face is that the profits from sales of kiosks are very low and will not provide net cash flow sufficient to cover operating expenses. The operating expense beast that must be fed consumes about $1.7 million a month. As I've said before, they need to (a) reduce operating costs, (b) increase profitability on sales of kiosks, and (c) raise capital.
They could also increase liquidity by driving those inventory numbers and deposits for inventory down, but with a prospective increase in production, those figures should be expected to increase, not decrease. If the production problems can fairly be placed at the feet of Flex, maybe VEND has some negotiating power to get some relief on that front. Given VEND's weak credit, though, I would not expect Flex to loosen credit requirements. They could also find new franchisees whose investments are not required to be held in escrow.
If they had any private placements since December 31, they should have disclosed them in filings. The only filing of that sort that they have made since December 31 has been related to the 19 Degrees offering, and they haven't raised much in that offering since they last discussed it. As of April 1, they had raised a total of $1.2 million through that offering.
Let's see what they report in the next 10-Q. There may be some surprises on one or more of those fronts. Who knows, maybe they will convince Flex to let them work through the current inventory without having to replace it for a while. That would potentially free up a lot of cash. Nothing that has been announced to date, however, gives any reason to expect any progress on those lines.
AI
