I will give the author his dues here. Coming out just before they announce the 4th quarter results and the fiscal year is a bit brash. No 20/20 hindsight for him. His lead argument is the cash rich balance sheet. Fair enough but unless Swishers burn rate of cash went away in quarter four that argument could look weak after the fact. But this guy is long and as you know I still own a boatload of the common courtesy of Coolbrands so if there is anything upbeat after 2 years plus of seeing the common beaten into a pulp I will take it without complaint.
The main news is that they are pretty much dumping all the rest of the bad news in the 4th quarter of 2013 figuring they will start 2014 with as clean a slate as possible. Are they really saying they could write down 100 million in goodwill? It would seem so. "Swisher is in the process of quantifying and finalizing the expected impairment, but it is anticipated to include all or a substantial amount of the goodwill on Swisher’s consolidated balance sheet, which totaled $101.5 million as of September 30, 2013. "
This is all a non cash event and might actually make sense although it illustrates just how much their 2011 buying spree went off the rails. The filing also includes the visuals for todays conference presentation.
Note it does not include the suit by Choice Environmental which is still pending. Swisher almost certainly has a corporate liability policy which covers these type of suits. As a matter of fact most likely they are required to as part of any loans they have outstanding. What will happen with Choice is an open question. Unlike shareholder suits where usually very little money ever gets to the common shareholders this one has much higher stakes.
In any event the suits are not Swishers biggest problem. Their earnings and cash burn is their biggest problem so lets see what the next report tells us. If there is any good news the common might actually move up towards a buck, And if there isn't any good news and just more burning of cash this could easily be a 25 cent common.
Law360, Los Angeles (February 05, 2014, 10:05 PM ET) -- Commercial cleaning services company Swisher Hygiene Inc. agreed to pay $5.5 million to end a putative securities class action over faulty accounting practices that led to restatements of three quarterly reports, according to a motion filed in North Carolina federal court Wednesday.
By the way they have now announced the transfer of their securities to the NASDAQ capital market. No rss for the moment. That actually may be good news for those of us who still own shares.
Now lets see if Mr Pierce can do with Swisher what hasnt been done up until now and that is show that Swisher can make a buck
Swisher has another SEC filing today. This one has attached their presentation today at the annual ICR XChange Conference in Orlando.
One way or another there really should be an announcement by no later than Wed-Thursday. I would prefer avoiding if at all possible a RSS even if it means we trade on a lesser exchange. If they can get their operations to a point where they are actually cash flow positive and maybe gasp even approaching break-even then the stock wont need a RSS to regain compliance. If of course is the issue.
They filled yesterday the forms with the SEC indicating that other than 1500 shares they are now divested of their original 23 million share position in Swisher. They must have lost north of 100 million here. Given that Fidelity was the first major fund to jump in back in the spring of 2011 and were always tight with management this has to be looked on as their thumbs down. Obviously they don't want to risk the after effects of a reverse stock split nor give Swisher any more time to show they can make a buck. So for the rest of us who still have positions here small and not so small the risk reward ratio just got a little more tilted the wrong way.
I believe that filing pertained to another issue of non-compliance. That would be the issue of audit committee membership.
The issue with respect to the listing is still there and the deadline is January 17th or close to that day. They can put in for another 180 day extension providing they agree to cure the deficiency by a reverse stock split if necessary and agree to the transfer of the securities to the NASDAQ capital market exchange.
Strong buy? What happened?
Next week is the end of the first extension they got on non compliance on listing requirements. So what will they announce? If it is a reverse stock split those usually are a negative.
Meanwhile they can continue to sell off assets( like my old friend Coolbrands) but for how long? Swisher had a drop in their cash from 61 million on January 1 2013 to 33 million on September 30th( not counting the restricted cash). If they can't close that burn rate just how much longer do they have until their cash reaches zero?
I have still my old Coolbrands now Swisher shares so I have skin here but honestly this one still looks like it is following in Coolbrands old footsteps.
The problem with going to Canada or the EU for that matter or anywhere else to obtain the meds can be summed up in 2 words. Who pays? Since even meds now a days let along physician visits operate within fee schedules and networks you go outside if you want to pay out of your own pocket. I doubt most of the MS patients can afford that. The FDA decision matters plenty. Those milestones could still be met and there is still 6 years window left but now it is much much more difficult and the potential upside here more limited.
There is a catch as it pertains to that 400 million in sales milestone. It has to be within 4 consecutive quarters of the first 6 following launch. So they have a time frame that also has to be met.
A Canadian law firm has now filled a class action suit against Swisher and some of their directors with the usual boiler plate language. Must be on behalf of the old Coolbrands Canadian shareholders whose Coolbrands common transitioned into Swisher common. Its kind of like a second attempt, The lawsuits against Coolbrands never amounted to a hill of beans so maybe they figure the second time will be a charm. As a former Coolbrands shareholder and still a shareholder here I wouldnt hold my breath that any of the common shareholders of Swisher will see a cent American or Canadian from any of these suits. History does repeat itself however. Coolbrands went from a buck to $27.00/share within 4 or 5 years and then collapsed in a heap bottoming out at around 30 cents before starting yet another run peaking at what $11 as Swisher and now back almost to those to those grim days when it was a sold out shell of its former self. Can there be yet a 3rd act?