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HaloSource – Woodford dog barks “very pleased with the progress”… but then admits it’s set to be cash crunch ahoy AGAIN!

By Steve Moore | Monday 11 September 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

HaloSource (HALO) is “very pleased with the progress we have made with our newly executed all Drinking Water business strategy”. Good, good – this results statement for the first half of 2017 should be encouraging then…

The results show a continuing operations loss of $3.30 million on revenue of $0.91 million. The former at least reduced from a corresponding 2016 period $5.44 million, though the revenue also lower – the comparative $1.37 million, though the company seeking to emphasise “32% higher than revenues in H2 2016”. Hmmm.

CEO James Thompson emphasises “significant announcements in the area of lead-removal (our manufacturing scale-up deal with Chematek, SpA), restructured our supply-chain (exiting manufacturing in India) and signed a brand new e-commerce distribution partner in China (JiuBan)” and the announcement also contains “we expect revenues to accelerate in H2 2017, with continued sales to established customers as well as through our e-commerce partnership with JiuBan” and “with the difficult exercise of reducing headcount and cutting expenses now largely complete, we believe that the company is poised for increased revenues, improved margins and profitability.

Sounds encouraging indeed… but one slight problemo! Despite a bailout by the few friends it had left, the company still ended with cash (net) of just $2.1 million. Doesn’t look too strong given the noted P&L performance… and indeed it is explicitly stated;

“Management believes current funding will be sufficient to finance the company's operations through the remainder of 2017; however, sufficient funds are not currently available to fund operations for 12 months from the issuance of these financial statements and the company anticipates raising additional funds in the next 12 months. There can be no assurance, however, that such financing would be available when needed, if at all, or on favorable terms and conditions.”

Er, I’ve seen enough! This stock remains firmly on the bargepole list.

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