I am not si impressed with Ted's financial acumen but acknowledge his industry expertise.
However, the management loans (some secured) were not repaid by 30th June as per Board resolution in August 2018.
I feel another extension coming and I hope there is a quorum of Directors with no conflict of interest able to pass a resolution.
They should be extended anyway or start charging interest.
Financially there is a bit of pea and thimble going on.
Financing has been via CN where the interest is paid in equity so no cash cost or below the EBITDA line charge.
Moving to Debt financing creates a below the EBITDA line INTEREST cash cost which will be hidden on the current EBITDA statements but included in the 4c under financing cash flows. A new cash cost crystallised. A $15 million facility will have ainterest cash cost of say $2.25 m pa (15%) or $187.5 K per month or $562.5 K per quarter. This will need revenue growth of $1.41 million to have a cash neutral impact on the 4C.
All seems very doable given past performance.
However, the move to Net() will bring forward accounts payable and Ted will have to deal with a quarter where these accounts payments hit straightaway. I am still pondering that CASH impact but Ted feels the Net() offer will let him dominate this side and hence win more business from a probably a near monopoly on inventory or at least the cream. I hope the AI and Antifraud is well bedded down as the attractive terms will draw the fraudsters and I hope we are not paying fraudsters with Net()
Overall I hope Ted is getting sound CFO advice on a consultant basis.
The next few months will tell if we get the growth/expansion in business before the big gorillas cotton on
