Before the Sun Sets. . .
between the famous twin peaks overlooking Hooterville on Monday night, we should have word on the Annual Report. We should either see a copy or an extension filed with the SEC. One thing we should remember when we look at the annual. It is for 2007. It will have only one COE in production and the Montana Oilseed Plant.
I would like to see a positive cash flow into ebitda from both of these and also from Bio-diesel construction. We should have real money in the net income section - and for now that can be best used to chain the debt hound, paying off principle and building real shareholder wealth.
The forward looking section will hopefully provide detail on the COE construction and how we are meeting the terms with YAGI. The Skunk would like to be ahead of schedule but would be happy with a smooth working plan. We have some previously announced 31 total COEs awaiting construction. I would like to see more names than the seven and a total number bigger than 31 would show momentum.
The Skunk want some news on the financing front. We were working with another company to try and get a 150M financing deal with decent rates closer to the 10% level. This would change the company instantly into a legitimate player and we could shake off the YAGI debt. With the YAGI deal we are paying 20% plus/10c/gal and with some free shares its around 30%. On the positive side - if we can show we can pay the 30% - others should feel safe giving us a loan at decent rates.
The Skunk also wants to see a minor problem that is being dealt with. We shareholders constantly cry for information. WE WANT THE TRUTH. But in real life Shitshu Happens. And then we panic over anything. So they don't want to tell us and the cycle continues. I want to be told something needs fixing - and we are fixing it. That's real life. And we should expect it. But I'm not sure if they told the shareholders something that's wrong and being fixed - and we did handle it - with whom I would be more surprised.
The Skunk has this COE section of the business spreadsheeted out over the next two years. I change a variable like Ave COE production in June '08 and the PPS estimate changes for the month. It has factored in all the YAGI payments and the product being sold as corn oil. My weakest assumption is the cost of the CEO systems. I cannot find one on E-Bay. So I would appreciate some critical comments based on knowledge or experience (the other kinds are OK too) for these cost estimates of the COEs, which are based roughly on my idea of how they are installed.
COST ESTIMATE: My best guess (worse case/highest cost) is they draw 200K a month for 5 months on each COE. That is from 120 days before installation to 30 days after. The skunk also throws in an extra 200K the month of installation. So I got it roughed in at $1.2M. With seven units and a 20% pad that puts us in the ball park for the total 10M revolving credit. Yet they also talk of using positive cash flow and this same credit line to install more COEs in the same time period. The skunk may be off by as much as 100% - and hopefully on the high side. (Skunk does not expect GERS to release these offical figures - it hard to negotiate a good deal with someone who knows your margins)
INSTALLATION ESTIMATE: It starts with design crew and project manager on site visit five- six months out? Enclosures and concrete pours begin with the project manager on site supervising these subcontracted jobs. Back at the ranch . . . The Skunk figures a specialized team constructs and bench tests the 4-5 major modular components in Alpharetta GA facility under the watchful eye of Dave Winsness. Then the COE parts get craned on a couple 18 wheelers and shipped to the ethanol plant. There the COE unit meets up with our installation team in our enclosure and a bunch of pipes and valves ordered by our design group in Ohio to fit into the back-end of that particular install. Our team of 3-4 does the first couple weeks of this rough install under the project manager (Maybe Chris Kennedy or Dan Page). When everything is bolted together, Winsness and company fly in for the last few weeks and tweaks the thing up to plate capacity. During the burn in the installation team gets a week at home and its off to the next installation where another project manager has another COE enclosure ready for the team. For the last week Mr. Kreisler flies in to sign the turnover to the plant and generate the PR.
So if anyone out there knows or can run these ideas past someone who would know - have them read my musings and comments - seriously, all critiques are appreciated, but I want to firm up all my cost assumptions. skunkhunter13@gmail.com
PS My definition of Constructive Critique: Polite laughter is tolerated - uncontrolled rolling on the floor gut-gripping belly laughs, however appropriate, is not. And of course since this blog is all about sharing DD -when this spread sheet gets a dress I will share it with any reader who asks for it.
PSS Can anyone give me the model number of the main centrifuge above? I assume it is an Alfa Laval considering the history of our main players. It looks like a High Speed Disc Stack Centriguge - is it a nozzelbowl or a desludge? Do I see a small pre-stage stand up clarifier in this one picture to the left(nearly all the way to the right)? I think this would be major expenses in the construction. If we can nail them down - they might be 10-20% of the total install price.Skunks Grade For Last Week (last weeks prediction in blue - ACTUAL + comments in red)
1. Trading range .9 -19 with no closes below a dime. [Actual 10-14 cents] with no close below a dime - Not one! BOTTOM! Off the top by a nickel – but I nailed the bottom. B+
2. Best Buys .11-.12 Only a few sellers left at a dime or below. Only a few 100 sold below .11 the best buys were actual [.11&.12] Skunk takes home an A.
3. Closes above .20 none - Will have to wait for another week. Got it right! A.
4. Friday's close .17 - That is one big percentage jump. Off by 4 cents – but I got that the Friday close was slightly down from the weekly high & it was a +27% rise for the week – I’ll take that every week. B-
Grade for the week A-
That should bring the average up!
WARNING BELOW : This is Skunks small trading Position found to in the right column – Not to be confused with his long hold position. The tides gonna rise – and I’m play’en in the surf.
1. Trading range .9 -19 with no closes below a dime. [Actual 10-14 cents] with no close below a dime - Not one! BOTTOM! Off the top by a nickel – but I nailed the bottom. B+
2. Best Buys .11-.12 Only a few sellers left at a dime or below. Only a few 100 sold below .11 the best buys were actual [.11&.12] Skunk takes home an A.
3. Closes above .20 none - Will have to wait for another week. Got it right! A.
4. Friday's close .17 - That is one big percentage jump. Off by 4 cents – but I got that the Friday close was slightly down from the weekly high & it was a +27% rise for the week – I’ll take that every week. B-
Grade for the week A-
That should bring the average up!
WARNING BELOW : This is Skunks small trading Position found to in the right column – Not to be confused with his long hold position. The tides gonna rise – and I’m play’en in the surf.
Trading Post
For the first six days of my life as a small time, laid back day trader of GERS, I am satisfied with my trading performance. Have done a little scalping years ago and did alright mostly with the low cost, high volume Lucent. I thought about getting in and out with this position, and I can make $28.10 (after commission both sides) on 3,000 shares and a two cent move. Trouble is I read what I write – and I was waiting last week for the stock to move to at least .15 before I pulled the first trigger. I then planned to buy back what I sold with a limit at .13 or two cents below the sell. Also with these low volume stocks – you may not get a sell/buy even if you meet the sell/ask price – since you might be in a long queue. So I feel good about ending the week fully vested in GERS – with the DIME bottom holding and the general move north through the week. I think the current is headed north, and this time it’s not a back eddy.
For the first six days of my life as a small time, laid back day trader of GERS, I am satisfied with my trading performance. Have done a little scalping years ago and did alright mostly with the low cost, high volume Lucent. I thought about getting in and out with this position, and I can make $28.10 (after commission both sides) on 3,000 shares and a two cent move. Trouble is I read what I write – and I was waiting last week for the stock to move to at least .15 before I pulled the first trigger. I then planned to buy back what I sold with a limit at .13 or two cents below the sell. Also with these low volume stocks – you may not get a sell/buy even if you meet the sell/ask price – since you might be in a long queue. So I feel good about ending the week fully vested in GERS – with the DIME bottom holding and the general move north through the week. I think the current is headed north, and this time it’s not a back eddy.
POLLS
I do not normally comment on the results of the POLLS - they are what they are- but not a single person admitted to selling at a dime? Somebody, somewhere did.
BOARD TALK
BOARD TALK
Lightbeam is back aboard the i-hub as of Monday Morning 31 March. He just had some great pictures of the Milton, Wi Ethanol plant. Thanks Lightbeam. Now lets see if you can get some pictures of GERS installing their COEs systems :~)
Forecast
Of all the weeks that I have forecasted – this is the most difficult so far. In order to get it right I must hit the trifecta. First – will the report be issued next week? Second – If released what will the annual say? Third – and most important for a weekly forecast - how will investors immediately react to what the report says – what will they focus on? Getting only two out of three right may still put me on the wrong side of the move. Well, I did not buy into GERS ‘cause I was afraid to take some risk. – So here goes. . .
Even though we got an extension 4 of the last 5 years - I am going against the odds and with my gut – The 2007 annual report will be issued after the close on Monday. The Annual will show a small positive flow through EBITDA all the way to net income in the 4th quarter – for the first time? two quarters in a row. I think this is the main thing investors are looking for – so they will act positively to the news – and we will get a significant bump into mid week.
If we see the things addressed in the forward section of the annual like I wrote about in the first part of the blog – things like status of the Yagi Debt, future financing deals, additional COEs signed up, a few more specific plant locations – then the move north will continue through the week as investors have a chance to read the annual cover to cover. I am guessing too many of these things will be left for future PRs and the 1st quarter report – thereby seeing a small retreat late in the week from the highs on Wednesday.
Detailed Forecast for the week 31 March - 4 April
Trading range 13-34
Closes above .20= Four
Best Buys – Monday before the report is released - .13-15
Fridays Close .26 (that's a double, babe)
Of all the weeks that I have forecasted – this is the most difficult so far. In order to get it right I must hit the trifecta. First – will the report be issued next week? Second – If released what will the annual say? Third – and most important for a weekly forecast - how will investors immediately react to what the report says – what will they focus on? Getting only two out of three right may still put me on the wrong side of the move. Well, I did not buy into GERS ‘cause I was afraid to take some risk. – So here goes. . .
Even though we got an extension 4 of the last 5 years - I am going against the odds and with my gut – The 2007 annual report will be issued after the close on Monday. The Annual will show a small positive flow through EBITDA all the way to net income in the 4th quarter – for the first time? two quarters in a row. I think this is the main thing investors are looking for – so they will act positively to the news – and we will get a significant bump into mid week.
If we see the things addressed in the forward section of the annual like I wrote about in the first part of the blog – things like status of the Yagi Debt, future financing deals, additional COEs signed up, a few more specific plant locations – then the move north will continue through the week as investors have a chance to read the annual cover to cover. I am guessing too many of these things will be left for future PRs and the 1st quarter report – thereby seeing a small retreat late in the week from the highs on Wednesday.
Detailed Forecast for the week 31 March - 4 April
Trading range 13-34
Closes above .20= Four
Best Buys – Monday before the report is released - .13-15
Fridays Close .26 (that's a double, babe)
Long Range Forecast:
$12.50 Share Price in FEB 2010**
That's right - that is over 90 times today's price.
Skunk has no stinking reason to change his long range prediction. Expect the number to be further refined as information is gleamed from the before mentioned, upcoming annual and 1st quarter reports.
**Note: I am a shareholder - I do not work for, nor do I receive any direct or indirect payment from GERS or anyone associated with them. (But it would be Kapitalist Kool if I did) I will not intentionally mislead - but I can be wrong (ask Mrs. Skunk for specific frequencies) - so do your own due diligence - and take responsibility for your own financial decisions - good or bad. And some good garage logic luck to ya.
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