to clarify what I mean by "cashflow" is where the cash came from....
While you are correct in your definitions, I am really refering to how cash was sourced. "Cashflow" from operations (which again you are correct in your definition) was not sufficient to fund operations.
That in itself doent make it a ponzi (nor does ATO giving it a tick defend this position - which was really not my point)
The company had a flawed business model which was - pre-2004 raising money at $9,000 spending some on capex and some on ongoing management of investor trees which made sense, particularly if they could do that for long enough to get into second rotation land and have cap-ex free sales.
If anything that was a long term land play funded by MIS investors which is quite clever - particularly if the investors made money on their trees (which they didnt). Though, if early MIS investors got a reasonable return (and their expectations werent set so high from the outset - seriously 1995 this was an experiment right up there with lama's but they had 3 fold expectations) took their tax deduction and cashflow at the back end it would have been genious.
But, land prices rose, the busienss diversified heavily (into cashflow negative operations which posted an accounting profit in year 1 i.e. accounting was crap)
Borrowed heavily to do so and got caught.
If they stuck to trees they'd probably have probably had a chance.
Lastly, I am over the ponzi debate. it's morbid and fruitless to debate the worst word we can all this (and even for some slag people who dont think ponzi is corect - not you Zwu).
Disaster is accurate and will do me.
GTP Price at posting:
12.0¢ Sentiment: Sell Disclosure: Held
