In looking at the report, I'm still unsure exactly why the auditor's removed the substantial doubt opinion. They lost money in the June 2012 fiscal year. They still have debt to refinance at the end of 2014. Still owe some dividends to the preferred holders. So what changed?
- Access to credit
Maybe the auditors felt that the increased access to credit (expansion of credit line multiple times and loan from Gamma) is very positive.
- Expansion of company
The company grew which is unusual for "substantial doubt" companies on the verge of death. They added new locations and expanded others. Also increased advertising and operating earnings. No doubt operating earnings will be up substantially for fiscal 2013.
- Increased liquidity from CPFH investment sale
Maybe the auditors were looking at the added cash they got from selling the CPFH stake with remaining payments due soon.
- Subsequent Events
One of the things that drives me nuts following this company is the lag to the financials. Latest we have is June 2012, but the auditors are probably looking at the current liquidity situation in determining to pull the substantial doubt opinion. We still don't know how they did for the Holiday season in Dec 2012.
Still no financials on the web site as promised in the shareholder letter. I think a news release would have been appropriate when they added more stores in November in a $1.5 mil deal. Even as a non-SEC filer major expansions, credit line increases and events should be reported on the web site or press release. That stuff is probably of interest to customers, vendors, and the community as well as shareholders. If CPFH hadn't reported the transactions with XPOI many months ago, shareholders and potential investors would be just finding out about them now.
I'm not going to make it out to Texas either. One interesting little tidbit in the report is that Gamma (run by Cummer) negotiated to get an option to have some of the interest paid on the loan in shares of common at $1 / share. These guys know the stock may be undervalued IMO, but are quite content to have zero publicity. They don't even do publicity that companies which are completely private would normally do for opening new stores, expanding stores, buying stores and getting increased credit lines.
If they sold the company at 1X revenues (EZPW is at 1.3X revenues, FCFS is at 2.8X revenues and CSH is at 1,1X revenues), the stock would be well in the money and there are still only a little more than 3mil shares and revenues are growing.