1 post • joined Wednesday 28th March 2012 17:07 GMT
Not necessarily a bad thing...
Businesses need working capital for one of two reasons, 1) they are losing money and don't want to go bankrupt, 2) they are growing and need money to fund growth. If they aren't raising money for the second reason they have been seriously misleading investors because they just went on two investor conferences, have been talking about gaining sales traction on the new product which was just released and the next version which they said was coming in April. Anyone who runs a small business understands that it takes cash to make cash. Needing working capital isn't necessarily a bad thing. You can have the best product in the world but if you don't have the cash to carry from the time it takes to buy products to the time it takes to sell them and collect the cash then forget about growing. Management said to expect the sales to ramp incrementally over the year, so if they are telling the truth then it could actually be a sign things are taking off. Remember that they were authorized to raise 5m shares and they only used about 3.6m. If things were that bad they would have used up the whole thing in my opinion. Can't speak to the legal issues its all just speculation. It is eye catching that their lawyer went on the public record in the latest press release about the legal saying that he was confident. Most lawyers are super uptight about that kind of stuff. Overall our focus should be are their new products any good or not?
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