They have a $3 million credit line which is drawn $2.75MM. How will they finance working capital with no money. This is the new credit agreement and they are paying 11.7% interest on the term loan. If they do a Jones Soda and have down sales, they are in deep do-do. Why is this going up?
This is flat-out untrue. The $3 million LOC was refinanced at 7%, down from an ugly 18%. In addition there was a new $750k term loan taken out. So they have plenty of cash and the reduced cost of the debt will have a strong impact on their income statements going forward.
Did you miss Chris Reed stating several times that they turned cash flow positive in Q3?
The real problem is they have 31.6% gross margins and Monster (hansen's)has 53% gross margins. They just can't make the stuff cheap enough so it can be priced to compete on the shelf. Four bottles for $5 vs $4 for 6 cans of hansen's. Virgel's same problem. REED's answer--expand the product offerings--is not the right answer. We may never get to a profit.