First of all, many of you that have read this blog for a while, have heard this tone before. The SkunK has said many times over the months that we need financing "now". However, it is hard to read this last report and not come to the conclusion that "now" actually means "NOW!" Like within weeks. . .
As seen below we are in vendor collections for just over $2M. It appears we have already written off as "discontinued operations" both the Biodiesel plant and the Oil seed crushing plant and are actively seeking buyers or their "divestiture" in some manner.
My guess is at this point GERS management sees our best chance at financing involves cutting away both NextDiesel and Sustainable. Both had excellent potential at their acquisition, but both required expansion through financing and stable markets to become profitable. Neither of which was possible since the collapse of the oil and capital credit markets last fall. When the COES become more of a pure play our financing should become more possible. I expect to see news of the divestiture of either or both of these assets to be positive news - depending of course on reasonable terms that can be measured by the amount of legacy debt added.
The corn oil production for the first quarter was disappointing, however without a breakdown of how many COES were running and how many were involved in the vendor parts or services collections, per unit production would be speculative at best. The "red" reference below highly suggests part of our COES capacity is not producing due to lack of operating funds. Needless to say, the numbers should have been higher with 4-5 COES running at full production.
Here, below is some of the 1Q that I based my opinions on. You are encouraged to read the whole 1Q - multiple times. I give you the link. You, of course are always encouraged to come to your own conclusions. I certainly am not batting a thousand this hardball season - here or anywhere! Never have. For those who are - please - start a blog - I'll be your most avid and loyal reader! lol
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As of March 31, 2009, the Company was in default of its debt agreement with Acutus Capital, LLC, and NextGen Acquisition, Inc, was in default of its agreements with Stillwater Asset Backed Fund, LP.
As of March 31, 2009, the Company is in default of payments owed under the purchase agreement with Bollheimer Associates in the amount of $240,000, and is in discussions with the selling shareholder to restructure the terms of the relevant agreement.
The Company and its subsidiaries are party to numerous collections matters pertaining to outstanding accounts payable due to vendors.
The Company is also involved in various collection matters for which vendors are seeking payment for services rendered and goods provided. These collection matters total $2,096,000.
These facilities collectively are designed to extract in excess of 7.3 million gallons per year, of which more than of 6.0 million gallons per year is currently installed.. We are currently focused on securing the capital resources we need to operate our existing facilities and to build our contracted backlog of corn oil extraction facilities.
During the three months ended March 31, 2009, we also owned a 10 million gallon per year biodiesel facility in Adrian, Michigan ("BIG") and an oilseed crush facility in Culbertson, Montana ("Sustainable"). These two facilities were idled during the first quarter 2009 due to a lack of working capital. The Company expects to divest both BIG and Sustainable during the quarter ending June 30, 2009. The financial results of these subsidiaries have been presented as discontinued operations as and for the quarter ended March 31, 2009 (see Note 6,Discontinued Operations).
On April 27, 2009, Sustainable Systems, LLC entered into a settlement agreement with the states of Montana and North Dakota pertaining to outstanding payments due for purchase of oil seeds during 2008 that were contracted at rates far greater than current oilseed values. Sustainable had previously negotiated with two separate banks to receive working capital financing sufficient to service these obligations. Neither bank was able to close due to strain in the prevailing commodity and financial markets. Sustainable has accordingly idled its operations and voluntarily surrendered its commodity license to the state of Montana Department of Agriculture pending liquidation of Sustainable's inventories to satisfy the oilseed payables. Sustainable is permitted to reacquire its commodity license upon the completion of sufficient working capital and equity financing to operate. The liquidation of Sustainable's inventory is ongoing and is expected to be complete during the second quarter2009. While the Company is actively pursuing strategic investment to replenish the working capital resources of Sustainable, the Company intends to divest of the majority, and probably all, of its equity holdings in Sustainable during the second quarter 2009. The divestiture of Sustainable has not been completed as of the filing date of this report, however, the financial results of this subsidiary have been presented as discontinued operations as and for the quarter ended March 31, 2009 (see Note 6, Discontinued Operations).
REST of 1Q Here:
http://www.sec.gov/Archives/edgar/data/1269127/000126912709000048/gersq109.txt
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Good Luck to Investors,
SkunK
*"limp along" was borrowed from a readers email to describe GERS' present situation and is credited here.
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