Hague Corporation (OTCBB: HGUE): Distress Signal Indicated?
by Jovita BaltrusaityteJune 9, 2009
Is debt of $3,500,000 going to sink the boat of Hague Corporation? I am not stating that the company has threatened to capsize, but that seems possible if looking at the overall situation. Let me explain what I mean.
Hague Corporation (HGUE.ob or OTCBB: HGUE) does not have a significant business plan at the moment. The company aims to design and manufacture solar cells using a proprietary thin film semiconductor technology which is supposed to reduce the cost of production. However, dreams remain only dreams most of the time.
In addition, one of the directors resigned from his position at the beginning of March. As top hands start leaving the ship, I start getting anxious. However, there are still four employees left. On the other hand, my opinion is that four or even seven people aren't enough to achieve anything in solar technology nor in any other business, though HGUE is planning to hire a new COO, CFO and others this year. We will see how the expectations evolve.
As if the foregoing issues are not be enough, the company seems to have even more problems.They had an arrangement with William Marsh Rice University where they had to pay $5 million for a patent license on a new technology where Quantum Dots were used. However, Hague never had the money (as of March 31, assets were $411,000). And now that the deal has been suspended, they received notice that a debt of $3,500,000 to Rice. What is the company going to do? If it issues more shares to cover the debt, the present shareholders would be greatly diluted. Is there a way to get additional financing?
Besides, the financial side of HGUE does not give me much comfort. In a single quarter (I am talking about the one ending in March), current assets decreased from $506,000 to $111,000. If you counted the money in the bank, you would see that this was a loss of $381,000. Does that sound sane for you? In addition, the company hasn't made any sales, and the loss extended up to $420,000. Although it looks like Hague is able to cover its current liabilities, long-term debt of almost half a million is still floating like a shadow.
Despite that, the corporation seems to be on the way to making some changes. Last week HGUE paid $11,000 to Stock Guru for stock promotional services. The stock price hasn't still been affected. Any ideas why?