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Tuesday, July 26, 2011 1:23:18 PM
Do you realise how fanciful what you say sounds. I've read the PR's and I realise that GERS has the makings of a spectacular business. HOWEVER, they still have short term cash flow issues to manage due to the high level of debt run up while they were trying to keep the lights on. Let's look at your statement that debt will be paid off by the end of the 3rd Qtr:
If I recall correctly, debt remains at around $29 million. I am assuming that this is still the figure for debt and that the reference in Fridays PR refers to the $7 million that was paid down in Q1 - I don't think any additional has been paid down. Let's assume Revenue is around $10 million (whixh I think is generous) when all 2010 contracts are on-line (let's ignore 2011 for now as, chances are, they won't add much to top line this year as they come on line over time). Assume a Cost of Sales of 35% (based on Q1) is $3.5 million. SG&A plus interest is another $2 million. So simplistically, Net profit could be $4.5 million in Q2 and Q3. How is this going to clear the remaining debt by the end of Q3? ?How on earth can you square this analysis with your assertion that "The PRs explain enough for anyone to understand that there's a really good chance that their debt will be paid off by the end of the 3rd quarter"
IMO there's far too much "blue sky" thinking here without any realistic analysis.
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