They have more than $50,000,000 in debt, almost all of it short term. Their sales have dropped from about $15 million per quarter early in 2012 to $3 million in Q4 of 2012. Q1 of 2013 will not be any better.
BDO, their previous auditor, wanted to put a warning that CHGI might not be able to continue as a going concern. Their orders are non-existent, they keep putting back the target date for nuclear, they have almost no sales at all in their target high purity products.
By way of comparison, they did $3 million in sales in Q4 last year and their competitor in China, Fang Da, did $185 million in sales in Q4 of 2013, a large percentage of that in high purity.
They lost money in Q4 and had a negative cash flow. Look for the Chinese government, which lent them the money, to refuse to roll over the notes and to take them over--then China might sell or give the remains to Fang Da, which knows how to run a graphite operation.
It is true that China produces lots of graphite. It is also true that China is shuttering inefficient and poorly run graphite operations in a move towards consolidation and bigness. China will not protect or tolerate the downward spiral of companies like CHGI.
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