Friday, August 26, 2005 3:49:41 PM
A&O for a 3 month period was $233,704 and working capital of $827,453. Do the math. $827,453 divided by $233,704 equals 3.45 months of cash, then it's back to borrowing and or massive dilution.
Another way to look at it is to read a different section that very same 10Q "..During the nine months ended June 30, 2005, the Company incurred a net loss of $8,166,055 compared to a net loss of $2,581,939 for the nine months ended June
30, 2004. A significant portion of the $5,584,116 increase in net loss for the nine months ended June 30, 2005 relates to the $5,749,575 loss on extinguishment of debt the Company incurred as a result of the debt restructuring. So if you back the $5,749,575 from the $8,166,055, that leaves $2,416,480 for a nine month period, or $268,498 per month. Again, lets do the math....$827,453 divided by $268,498 equals 3.08 months of cash, then it's back to borrowing and or massive dilution.
And this was as of June 30th 2005, or 1.87 months (57 days ago.) So best case of 3.45 months of cash minus 1.87 months leaves 1.58 months of cash, or a little over 48 days or October 13th. Worst case (using 9 months worth of data) looks even worse with cash running out before the end of the fiscal year.
Another interesting tidbit is the debt extinguishment and financing.You have a debt of $5,749,575 that was eliminated and it cost the shareholders and company....
Conversion of related party debt to equity
$12,634,084
Exchange of convertible and non-convertible debt, related party $10,134,084
Inducement to restructure convertible debt and provide line of credit $5,749,575
Accrued interest, related party $2,620,295
$12,634,084 + $10,134,084 + $5,749,575 + $2,620,295 equals a whopping $31,138,038. Can you say fiduciary duty to shareholders?
Geez if this is a good 10Q, I'd sure hate to see a bad one.
Mongrel
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