Sunday, December 02, 2007
Disaster Preparedness Systems (DPSY)
DPSY: This is actually a disaster itself. Looking at the most recent quarterly report for the period ending Aug 31, 2007...
Let's look at the balance sheet where we see forty-four dollars in cash and $1,090 due from a related party.
During the nine month period ended August 31, 2007, the Company advanced $1,077 (2006 - $Nil) to a relative of a director. The amount is unsecured, non-interest bearing and due on demand. [Note 7 c]Dude, pay the damn loan back!
That's all the assets of the company: less than fifty bucks and a measley IOU from a relative!
Now how about those liabilities?
$161K accounts payable
$30K accrued liabilities
$146K due to related parties (Ok, I take back that jab I mentioned above)
$68K promissory notes to related parties
$95K license fee payable
$106K convertible debentures
Total CURRENT liabilities: $604K
How about the income statement?
Total cumulative revenues since inception three years ago: $38K
Total cumulative expenses since inception: $1.7 million
Hey, I think I found where QBID went to? :-)
Now let's look at total cumulative cash flow to see what happened?
Operations burned up $521K (non-cash expenses were various fees, liabilities due, and $59K of donated services).
Financing essentially raised all this cash: $352K from stock, $138K from convertible debentures (that's when you know you're in trouble), $58K net in promissory notes. They actually paid back $44K on the convertibles.
There is no guarantee that the Company will be able to raise sufficient equity financing or generate profitable operations.I never would've figured that one out.
Inventory consists of a hydraulic unit used for fire fighting and is valued at the lower of cost and net realizable value. Cost is determined on a first-in, first-out basis.It's gone now; they must have sold it at a pawn shop or something. I like that "first-in, first-out" statement. Think about it: there was only one thing in inventory!
Effective July 7, 2006, the Company and Duck entered into a Technology Transfer Agreement (the “Transfer Agreement”) relating to the above licensed proprietary technologies and products.Duck? They entered into an agreement with "Duck"? Let's back up here. "Duck" here means Duck Marine Systems, Inc. Aren't ducks non-marine waterfowl? Do they really hang out around the ocean? I thought the gulls really dominated that niche. [let me check this out....] Ok, so there is a "sea duck" that exists. How about Goldfish Marine Systems.
So anyway, this Disaster Preparedness company paid 8 million shares and $600K total to develop, manufacture, and market, (and presumably sell) certain proprietary products developed by Duck in the homeland security area for military, fire fighting, shipping, mining, transportation, and environmental stuff. There motto was going to be, "ALL THINGS TO ALL PEOPLE". Just kidding.
Here's an interesting note:
Effective December 30, 2004, the Company entered into Employment Agreements (the “Agreements”) with two executive officers of the Company for annual salaries of $120,000 for each of the executive officers. Each of the Agreements is for a term of 5 years from the effective date...Let's go back to that cumulative income statement and look at some interesting lines:
Auto and travel: $33K
Consulting and mgmt fees: $776K (looks like $519K was paid, based on cash flow)
Professional fees: $193K
Maybe I'm missing something here, but it seems like consulting and management was paid $519K in cash while operations overall only burned up $521K.
So what's the plan?
We currently believe we will require approximately a minimum of $3 million over the next twelve months in carrying out our plan of operations, subject to the availability of additional financing. To date we have had limited revenue to provide incoming cash flows to sustain future operations. The ability of our company to emerge from the development stage with respect to any planned principal business activity is dependent upon our efforts to enter into the market place, sign distribution and joint venture agreements, raise additional equity financing and generate revenue, cash flow and attain profitable operationsDid they do anything these last three years?
This is your basic garden-variety corporate startup disaster for which they were ironically unprepared. Underfunded and ended up with nothing, not even the fire hydrant. I've seen these things, I've lived through them. The only ones who win are those who can draw lots of salary and walk away unscathed with a useful business education.
I often think of those idealistic intellectuals all over the world, denouncing us dirty wealthy capitalists, but never seeing the dirty poor capitalists who generously paid salaries while hoping those exploited workers getting paid would bring in a return on the huge risky investment.
Disasters happen. Be prepared.