Look Guys:
In a dream world a young company like NGW could generate countless millions of dollars in revenue...……….AND profit in their very first year. This isn't a dream world however. It takes millions and millions of dollars to build a company. Where do those dollars come from?
Obviously the initial IPO generated most of those dollars. And those dollars were put to use, building the facility, acquiring land, attaining permits, hiring and paying staff. But it still requires money to operate that facility. P.G.& E. is not cheap in California and the utility bills must be enormous in a grow facility like this one. I don't know about their staff, but MY staff expects a pay check every single week, and they expect ME to pay their payroll taxes and various benefits every week as well. There are fixed costs which simply cannot be avoided.
So...…..the real question becomes: How to they fund ongoing operations? Cash-flow is an interesting subject. I know that in my company (Concrete Contractor) we frequently have millions in receivables but are relatively cash-poor. You simply cannot pay bills with receivables. So on the balance sheet, a company may look outstanding given their receivables : payables ratio. But it still requires cash to fund ongoing operations.
EVERYONE was expecting some dilution. We've talked about it on this board many times. There are very few options when it comes to achieving operating capital. One either pays for ongoing operations from the cash flow of the company's operations, issues new shares, or borrows the money. It appears that the company has done a little of all of those things, which is undoubtedly the wisest choice they could make.
Yes it would be wonderful if they were to be profitable and only had a million shares outstanding. Yes it would be wonderful if they never had to borrow any money. But the reality of business, virtually EVERY single business on the planet, is that they need to borrow money occasionally to fund operations.
