Word out that this company (FAO,Inc. - OTC Symbol:FAOOQ) is not only on shaky ground to survive bankruptcy, but is going through the little operating capital (cash) left as a result of clinging to the $20 million of "cash collateral" the banks advanced as inventory financing. Not only that, but it remains doubtful the court will approve their retaining this cash beyond January 29. Finally, there is speculation that the regulators may probe their accounting practices and procedures. All this sounds like the proverbial "kiss of death." Anyone out there know if there is any truth to these rumored rumblings?
Really it is not the accounting practices of the company. If it was the accounting practices there would be a positive then a negative. This company has always been negative. Trust me on this one. The problem is management and poor management at that. You are right about the cash collateral and they are having a hard time getting DIP financing.