Originally Posted by cleshock
With this note, we are terminating our coverage of Syntax-Brillian
Corporation (BRLC) effective immediately. Investors should no longer rely
on previously published recommendations or estimates.
Syntax-Brillian's recent Form 8-K filing (dated February 14, 2008) indicated
that the company has failed to fulfill its obligations with a number of its
lender's requirements, including default of payment, inadequate reporting and
failure to meet the requirements of minimum adjusted working capital. As
such, the company has entered into a second amendment with lenders and
Silver Point Finance, LLC, which tightly restricts the company's access to
additional capital financing while requiring Syntax-Brillian to provide weekly
reports, reconciliations and assessments to the lenders. Consequently, though
it appears that Syntax-Brillian's Olevia-branded televisions continue to sell
well in the U.S. and expand into additional retailers, the company's
substantially weakened financial position will likely inhibit its ability to meet
its operational objectives, in our view.
In hindsight, Syntax-Brillian is a company that we misunderstood. On the
one hand, our checks with retailers previously indicated that the company
was gaining brand recognition and rapidly expanding sales in North America.
Additionally, our checks with suppliers in Asia had led us to believe the
company had a solid manufacturing ecosystem. On the other hand, however,
Syntax-Brillian had poorly managed its accounts receivables, which led to a
series of working capital constraints, which forced the company to
continually find additional financings, which contributed to a substantial
reduction of shareholder's equity. As such, Syntax-Brillian is a case in which
the company's business prospects (demand, shipment and manufacturing)
appeared fundamentally strong, but its financial position (accounts
receivables, cash flows and shareholder's equity) met a downward spiral.
Therefore, given the many uncertainties and hardships surrounding Syntax-
Brillian, we believe it is no longer practicable for us to publish financial
estimates on the company's business.