GFY - Capital Raise, page-5

Appreciate your thoughts and respect your opinion.
The business model is a little complicated but suffice is to say it is reflected in the reduction in gross margin. Godfreys was built on converting $10 customers into $2,500 vacuum purchasers. The Dyson offer and instant mobile internet pricing has disembowled this power base for Godfreys.
The balance sheet is inflated with 90 million plus of goodwill - which probably needs impairment given 10% plus same store sale and margin contraction.
The fact that the business now solely relying on reducing stock levels to fund cash flow is alarming in its naivety. Sounds a bit like Dick Smith??
This strategy may work if the offer is compelling new and innovative and allows margin maintenance.
Godfreys doesn't have this luxury and stick will be moved at low or no margin, with significant P&L impact.
$1.4 million cash balance and bank debt at ceiling levels, margin compression and same store comps reducing by 10% is no recipe for a sustainable business model.
This company needs major surgery.
Cheers.