fundamentals

I can see from the EWC chart why you guys are so keen on this stock, but to me the fundamentals are very concerning.

Please - if anyone reads this and can see something I'm missing (i.e. that the fundamentals are sound rather than troubled), please do let me know as I would love to be able to jump on board for the ride.

Firstly - tangible asset backing is only 7.26 cents per share.

Secondly -the company is in debt up to its eyeballs. It now has a bridging loan of US$ 100 million, all of which has been spent in paying out the previous CBA loan and in buying the other 50 percent interest in the Indonesian facilities. This loan is due in full within 12 months and they are being charged interest 4 percent above the bank cost of funds. If you look at the financial statement for 2006, the gross profit for the year was $2.2 million. The financing costs were 4 times this amount - $8.6 million....and that was BEFORE they took out the US$100 million loan. Yes, the company will have increased revenue now they own 100 percent of the Indonesian operations - but even if the revenue feasibly doubles, I still don't see how it's enough to pay interest costs.

Thirdly - funds obtained through the 8 cent share placement in August are to be used for working capital (page 7 of prelim report). The company expects this cash should enable it to meets its obligations for the next 12 months.

Next - why would a company sell 25 cent strike price options on shares currently trading at 63 cents unless a) it was desperate for cash
b) it recognised the purchaser wouldn't pay any more for something with so much risk.

Finally - the "contingent liabilities" section of the prelim report (page 14). They can include these items here if "the amount is not capable of reliable measurement".
See items (ii) and (iii) specifically. More debt coming right up?

The ewcl.com.au website has been down for the past month I have been tracking this stock's progress. Perhaps a bill just hasn't been paid..... (no idea...just another alarm bell....)

As I said...love it if anyone has any factual feedback which contradicts...

BW