GEO Investing

Windstream Tech (WSTI) CEO made the following statement it its rebuttal statement to our short thesis article published on Seeking Alpha on 7/1/2014.

The CEO stated:

An article contends that contracts, distribution agreements and past pilot successes with ACC Limited, Meytek Group, Key City Trading, Suka Wind & Solar, Senan Liberia, Inc., Africa Energy Limited and Viza Networks, Limited are not real and states “as is often the case with P&D’s, most of these customers are located in emerging markets.”

We never said that these agreements were not real. But we are questioning the company’s ability to execute its contracts, unless it raises a substantial amount of capital.

WSTI’s Q1 2014 filing

The following two passages, not included in our original article, from WSTI’s Q1 2014 filing bring this point home, one even showing that the company has been in default on one of its loans since 2012:

“We estimate that within the next 12 months we will need substantial cash and liquidity for operations, and we do not have sufficient cash on hand to meet this requirement.” 2013 10K

“WindStream has a history of recurring losses from operations and has an accumulated deficit of $10,480,672 as of December 31, 2013. Management is unable to predict if and when we will be to generate positive cash flow. As a result, there is substantial doubt about our ability to continue as a going concern. Our plan regarding these matters is to raise additional debt and/or equity financing to allow us the ability to cover our current cash flow requirements and meet our obligations as they become due.” 2013 10K

“Our ability to pay key suppliers on time will allow us to effectively manage our business. Currently we have a large outstanding liability with our product manufacturer that is inhibiting us from receiving additional units at this time. In addition, we have other large outstanding accounts payable with key suppliers that may inhibit the Company from receiving system product in the future.” 2013 10K

“In July 2011, the Company entered into a $1,400,000 note agreement with the City of North Vernon, Indiana. Interest accrues at 5.5% and the note matures on August 1, 2016. As of March 31, 2014 and December 31, 2013, the note had an outstanding balance of $1,400,000. The Company was unable to pay the interest and principal payments due on August 1, 2012 and was in default of such payment. The Company was able to negotiate payment terms with the City of North Vernon, Indiana, which allowed the Company to delay scheduled repayments of the loan. During the three months ended March 31, 2014 and March 31, 2013, the Company made $0 and $0, respectively, in payments to the City of North Vernon for accrued interest.” Q1 2014

 WindStream needs funding

Also, here is a quote from an article where it clearly mentions it needs funding to fulfill its Jamaican contract:

“If we are successful in executing this contract and are able to secure the needed capital to fulfill this large order, at current rates, this could potentially result in greater than US$120 million of revenue to WindStream,” stated the company in a notice to shareholders obtained by the BusinessObserver.”

“This contract calls for US$14.5 million of products to begin delivery in first quarter of 2014,” stated Windstream about its Jamaica contract.”

To our knowledge, the company had not filled meaningful parts of  this order during its Q1 2014.