You have stated that "I can not understand how the SP is holding up when it is so obvious that the new financing facility compared to the probable sales growth is a disaster. Even the POSSIBLE sales growth just balances out with the available funding which means that any failure to meet targets will result in a certain SP crash."
I would like to make a few personal observations with regard to your statement, which IMVHO is way too premature.
1. New financing facility: This is there to provide working capital when needed and under strict conditions that protect EDE and all of its shareholders, both large and small. Around June 30th next year, we will have the first opportunity to really analyse how much of this A$7.2 million financing facility has had to be drawn down. Which directly relates to:
2. Sales growth: GS has made a conservative "targetted revenue" forecast (presented at the AGM) for the period from 1.07.2020 until 31.12.2021, of A$8.5 million in EdenCrete sales, and A$1.8 million of Optiblend sales i.e. A$10.3 million together. There are 6 quarters in this period of time. Therefore, the amount of sales revenue required to meet this target will be ca. A$1.72 million per quarter.
3. EDE currently has a cash-burn of A$3 million per quarter.
4. On the basis of GS's conservative "targetted revenue" forecast, this means that EDE will have a quarterly deficit of A$1.28 million per quarter.
5. EDE currently have A$1.2 million in cash, plus their shiny new A$7.2 financing facility i.e. together A$8.4 million.
6. Based on my above calculations, EDE will thus have enough financial liquidity in order to survive 6.5 quarters i.e. until just after 31.12.2021.
Having said all of the above, and on the basis of GS's past forecasting efforts, I would suggest that GS really doesn't have a clue about the total amount of sales revenue that EDE will achieve up until 31.12.2021. Indeed, I strongly doubt that anyone can really make an accurate forecast at the moment. The reason being that there are currently far too many unknown variables, not to mention the huge elephant in the room i.e. COVID-19. Due to all these unknown variables, it is my strong belief that GS has simply made a very conservative "targetted revenue" forecast as a so-called "worst-case scenario" i.e. the actual real outcome should be significantly better.
I will be bitterly disappointed if EDE only reaches GS's conservative "targetted revenue" forecast. Indeed, under such a scenario, I would call this a flop of major proportions, which would almost certainly mean the end of EDE in its present form.
My personal "targetted revenue" forecast for the period from 1.07.2020 until 31.12.2021 is for A$25 million in EdenCrete sales, and for A$7.5 million in Optiblend sales. Having said this, I make this forecast on the basis that one or more COVID-19 vaccines will be available to the general "global" public at the latest in the second quarter of 2021.
Moving onto the reasons why the EDE SP has rallied 18% over the last 4 trading days. Clearly, investors have had increasingly grave fears about the survival of EDE. Last weeks announcement about the signing of the new financing facility with Long State has allayed most of these fears, or at least until 31.12.2020. In addition, on the very same day, EDE made an extremely important announcement about the successful completion of a 3 year EdenCrete trial in Denver. Both these events were IMVHO pivotal moments in EDE's young history.
As both of these announcements were mostly unexpected by the investment community (as well as by most forum members here), investors were immediately forced to seriously reconsider their attitude towards EDE and thus to rerate EDE accordingly, in order to more accurately reflect EDE's suddenly very different fundamental position, which within the space of a few minutes last Thursday, had improved quite substantially. It was this "investment community" rerating that has led to the recent significant rise in the EDE SP over the last 4 trading days.
Where the SP goes from here is entirely dependent on the amount of sales from EdenCrete and Optiblend. If this news is good, investors will be forced to rerate the EDE SP upward once again. If, on the other hand, this news is not good, the SP will head south again.
As you rightfully pointed out: "only time will tell".
Cheers.
EDE Price at posting:
3.2¢ Sentiment: Buy Disclosure: Held
(20min delay)