Doc you have miised a couple of important points here.
They already have 103 installs as at last December which have been in place for more than a year and are producing recurring revenues every month. The last shareholder update in March said these revenues were now consistenly above 500K US dollars every month.
These existing revenues are only enough to keep the business at breakeven. What has prevented them going forward has been lack of capital. For the full calender year of 2002 I think they installed a total of 2.
In December 2002 RDF raised 10M equity and obtained a 6M line of credit from the NAB giving a total available of 16M at the start of January 2003. This should last until late this year at a install rate of around 10 a month.
Further capital will be required to enable the company to maintain and increase the existing install rate which they need to do, due to the growing rate of there contract wins
My understanding is that there are no issues with the company obtaining more bank finance its just the rate of interest they have to pay. With a profit margin of around 65% on each new install there is still plenty of profit left over after you pay yor interest.
But if you can get Finance at say 6% by waiting untill your balance sheet looks better and you currenttly dont need the money why would you rush out now and pay 10 to 12% just so that they can announce it to the market so that any nervous investors can feel better that finance is secure.
The company has a business to run and they need to take the long term decisions and not be influenced by sharemarket wims. At the end of the day the true fundamentals will get reflected in the share price and long term investors will be rewarded for their patience
There is not a clearer example of this than Poltech and Redflex. Go and read Poltech announcements of the last 2 years (there seems to be a large number of them but their is no real substance). The Poltech ones read like Poltech was far superior to Redflex and this was reflected in their shareprice but poltech seemed more intent on managing their share price than their business and in the last 6 months reality has finally been reflected in the Poltech share price.
My personal opinion is that it is very hard to see Poltech surviving. Their financial situation is so dire that I dont know where they will find enough financial investors who would be prepared to put enough money into the company to make it viable. It is very clear that they no longer have any more bank support. The last time I looked they had bank loans of close to 4M and it would seem it's only a matter of time before the bank want the money. They have offsetting assets on the balance sheet but you have to question if the value on the balance sheet can really be realised
Even if they do survive they can only survive in a much reduced form and while they were once a genuine compeditor to RDF this is no longer the case
RDF Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
