Over the coming months, every business is going to feel the impact of this next Black Swan Event. The duration and depth of the impact is one of the major uncertainties, and while some businesses may be able to capitalise, most will suffer. Two maxims are worth bearing in mind during this tumultuous period:
“To survive in the long-term – one must survive in the short-term”.
To be followed by the maxim which is perennially true: “Cash is King”.
Your Default Alive Cash Plan – Maintain Cash in – Slow Cash Out.
The economic impact of Covid-19 and its imminent effect on you:
2. Debt facilities will be reassessed
3. Consumer markets will polarise
Over the coming weeks, we will analyse other effects such as supply chain risks, labour supply shortages & currency volatility.
The cash-review process should be:
1: Priority analysis regarding the survivability of your company:
Review a worst-case cash scenario for the next 6 months:
Feed the above into a weekly cash model and run some sensitivities – this model does not need to be sophisticated in the first instance – a simple cash in/out weekly model will suffice.
2. Tips on cash conservation for your company:
1. Harvest and maintain cash receipts:
(a) Debtor book review – defaults here could be a contagion for any factoring arrangements in place. A debt default can have a ripple effect which can put your survival in jeopardy quickly. Get on top of it early and talk to those debtors you feel are default risks (certain industry sectors will be at more risk than others - smaller clients will be at more risk) – you cannot afford lack of payment – there are other things that can be done here to encourage payment which we can review again i.e. you may need to present better deals to collect.
(b) Maintain current customers – if you provide a service perceived as non-essential you will come under pressure. It is always cheaper to keep a client than win a new one and so now is the time to offer discounted renewals and other deals
(c) Winning new business – now is not the time to offer deals. Close any product lines which are loss-leading or burning cash and won’t turn positive in two months.
(d) Turn old inventory or any inventory into cash – even at a loss. Cash is more important than profits right now.
2. Conserve cash by delaying tax payments if needed –Government announcements relay a commitment to supporting businesses who are struggling with new plans in place for VAT and Income Tax. Contact HMRC and ask for “Time to Pay” We recommend taking advantage of this at the earliest opportunity.
3. Press for payment plans with larger suppliers who are likely to be able to better weather cash flow difficulties than you. As a trade, offer a longer-term contract or a price increase in six months for example.
4. Analyse all the services you buy in and decide which are Business Critical. You are now looking at your Variable Costs however you also have to look at what Fixed Costs can go variable such as moving permanent staff to cheaper contracts. Check what your contract terms and cancellation rights are - we also recommend exploring deferred or lower price options which you might be also offering as discussed in Point 1.
5. Staff – review contract/temporary staff and decide which are absolutely critical and whether a lower base can be used for a period; the duration of the contract can be increased as compensation. Decide which permanent staff are needed for minimum service delivery– companies have previously found innovative ways to reduce salary cost by requiring all employees (from CEO to Junior) to take unpaid leave at pre-agreed periods during the year or reducing workdays from 5 to 3. We are at the beginning of a period of uncharted territory and so we recommend close consultation with your employees to encourage collective buy-in.
6. Development projects with no positive impact on revenue in the next three months should be postponed or cancelled immediately. Investment priorities must be aligned with retaining or generating new revenues quickly - which will be difficult thus - cut.
7. Recruitment should be focused on roles that are essential to maintaining or building new business for the next three months i.e. not many.
8. Marketing spend must show a considerable return or be stopped immediately in the current environment with consumers spending less. Travel and other services, for example, will have little to no chance of return. If you run an eCommerce business, it may be a good time to press through and not cut back. Analysis of marketing return ratios should be carried out on a daily basis with a view to cutting.
9. Debt holidays for principal and interest should be taken wherever available and at the earliest opportunity. Whether you are using senior, mezzanine, venture debt, factoring or inventory financing, start all conversations early in order to have the best chance of restructuring. Expect all providers to pressure you towards your equity partners and use this as an opportunity to bring all parties to the table where the best deal is likely to be agreed. We strongly recommend not to leave this to the last minute.
10. Ask your bank for an extension if you have a current overdraft. They are unlikely to be in agreement however do not take this off the table.
11. MOST importantly we recommend you check with your current equity investors on their options for a bridge ASAP. We recommend using a system of convertibles structured to convert in an absolute time period between a predetermined floor and ceiling valuation, otherwise, you may be just delaying the pain. It is also worth highlighting that any investors will require your tightest ever weekly cash plan immediately.
3. Crucially businesses need to act now, however doing so with a cool head with a view that this will pass and not throw the baby out with the bathwater. This is going to be a tough time and tough decisions will be needed but this will pay dividends in the long run.
This is the first of several articles that the Whitelake Team will disseminate over the coming weeks, the next of which will summarise cur Governmental assistance schemes in place. If you would like to stay informed, please reach out directly or make a note in the comment section. We offer a free call for guidance to anyone who wishes where we can.
John Rowland, CEO/Managing Director White Lake (email@example.com)
Jamie Bowler, Associate Director (firstname.lastname@example.org)
If you need help on any of the above please contract us. We have executed on all these areas successfully. We are a team of ex-VCs who specialise in assisting PE/VC funds as Consultant CFOs with portfolio companies on cash management, restructuring, corporate finance & financial function management, controls and reporting.
A fear of the coronavirus has lead to massive cancellations of events all around the world. Schools and universities have been shut down and people are working remotely at home. "Social distancing" has become part of our daily lives in which people avoid human contact with others. This current pandemic state is primarily due to the fact that we widely accept the Germ Theory of Diseases. The Germ Theory of Diseases is basically a theory that says microorganisms, such as bacteria and viruses are responsible for causing disease.
Louis Pasteur, a microbiologist in the 1800s postulated the Germ Theory of Diseases that we still accept widely in contemporary society nearly 200 years later. In the Germ Theory of diseases, microorganisms, such as bacteria and viruses are responsible for disease states.
However, with recent advancements in medical research, we are learning that bacteria and viruses can actually prevent disease, and that a colony of bacteria is necessary for a well functioning immune system. Scientists and doctors are recognising that “good bacteria” are necessary for optimal health. When we have a microbiome of good bacteria, we are healthy.
Another widespread assumption is that there is “antibiotic resistance” in the population and that bacteria are becoming resistant to antibiotics. If we consider how antibiotics work, when they destroy the microbiome of “good bacteria” this puts people more at risk for disease. These are considerations we must take into account to understand the complexity of how antibiotics disrupt our immune system.
However, in regards to the Germ Theory of Diseases, let’s put some of our assumptions on hold and investigate what viruses are and where they come from? Viruses are essentially protein coated strands of RNA or DNA; they have protein receptors to help them attach to cells. A viroid has no protein coat and transmits RNA into other cells. In repeated studies, plant viroids can only replicate in that specific type of plant and animal viruses can only replicate in the same species of animals. Cross-infection across species has not been observed, although hypothesized by some scientists. But generally, human viruses can only replicate in human cells.
So then we have to ask the following question:
Where do these viruses get this RNA and DNA from, and how is it that it is an exact match for human DNA so that it is able to insert itself into human cells and DNA and become part of our genome?
Internal anatomy of a virus. Inside each protein shell, has in its center DNA or RNA stands.
In the human body, when “foreign DNA” (such as from cows or birds or pigs) are entered into human DNA, it causes an inflammatory response. Foreign DNA cannot insert itself into our genome without gene editing (e.g. CRISPR). However, with certain types of viruses, they are able to seamlessly enter human cells, replicate and insert itself into our DNA, becoming part of our genome. It is extrapolated by geneticists that approximately 8% or more of our human genome are virally derived. In fact, we can trace back our human ancestors from similar viruses that they had attained throughout the centuries and track the movement of people across different geographies over time.
In the last decade, as epigenetics has become a significant sector of study, we are learning that we are only beginning to understand the role of viruses in human and animal evolution.
Right now, our understanding of viruses is at its infancy. Scientists are recognising that viruses might not be all that “bad”. In fact, some are suggesting that viruses have a role in the development of human immunity. “Endemic” viruses are viruses that are part of the human body and have a function in which scientists aren’t sure of. Annelloviruses are a type of virus which have been recently discovered in which scientists have theorised have some function in the development of immunity.
Research has also shown that the human immune system is activated by the presence of viruses, which leads to viral activation of the immune system.
"Virus and/or virus-infected cells can stimulate B lymphocytes to produce antibody (specific for viral antigens) Antibody neutralization is most effective when virus is present in large fluid spaces (e.g., serum) or on moist surfaces (e.g., the gastrointestinal and respiratory tracts). IgG, IgM, and IgA have all been shown to exert antiviral activity. Antibody can neutralize virus by: 1) blocking virus-host cell interactions or 2) recognizing viral antigens on virus-infected cells which can lead to antibody-dependent cytotoxic cells (ADCC) or complement-mediated lysis. IgG antibodies are responsible for most antiviral activity in serum, while IgA is the most important antibody when viruses infect mucosal surfaces."
In other words, the presence of viruses activates the human immune system. T-cells or white blood cells proliferate and produce antibodies only when viruses are present. This is essentially how vaccines also “work”. Weakened viruses or modified viruses are used in a vector to be injected into animals, children or people in order to hopefully become inserted into the genome and to activate T-cells.
In addition, the discovery of a new type of virus called anellovirus has been found to be present in all humans, present among mucus membranes but apparently is not connected to any disease state, but has a preventative feature of respiratory disease in developing humans:
"Anelloviruses are major components of the virome, present in most, if not all, human beings, where they are acquired early in life and replicate persistently without causing apparent disease. We will discuss how modulation of innate and adaptive immune systems by Anelloviruses can influence the development of respiratory diseases in childhood and provide evidence for the use of Anelloviruses as useful and practical molecular markers to monitor inflammatory processes and immune system competence.
Although viruses have long been considered “bad news in a protein coat” (Medawar and Medawar, 1983), many novel viruses are found to replicate in healthy individuals...Many viruses that infect humans may even have a beneficial role (Phan et al., 2016)
Resident viruses influence the immune system helping it to develop properly, similarly to bacterial microbiome."
What if we put our current Germ Theory of Disease assumptions on hold and then ask the following question:
What if viruses are actually part of the process of the human immune system, and not the cause of disease?
Let’s say in our Modified Germ Theory, that the actual causes of disease are other microorganisms such as amoeba and parasites, toxins or chemicals, and certain types of fungi. Then, let’s say when the presence of these microorganisms or toxins are detected, our DNA activates viruses to locate the damaged or infected cells. The viruses that are then produced by our human body, inserts itself into the damaged cells and replicate, which activates T-cells/white blood cells by the presence of viral antibodies. The white blood cells then are able to recognise which are the damaged cells, leading to either destruction or autophagy (i.e., white blood cells “eat” or recycle damaged cells).
So in that analogy, if we were to utilise military warfare definitions: toxins, chemicals, types of amoeba, parasites are the “terrorists”, the viruses are the “secret agents” or messengers to locate the terrorist cells, and the white blood cells are the “Seal Team Six” that comes to destroy the cells or re-train them for our own recruitment purposes. If viruses are part of our immune system, then the viruses we produce are based on our own DNA and RNA processes, hence why viruses tend to mutate quickly because each of us, although we possess 99.9% of the same DNA, have that micro percentage of difference in which the viruses we produce are entirely specific to us. It could also explain why some vaccines fail to work in children, because the viruses might not be a close enough match to their DNA.
In the case of the coronavirus, specially COVID-19, in some Wuhan medical studies, it was reported in some documented cases that the infected individuals also had fungal pneumonia. In addition, researchers write: "No antiviral treatment for coronavirus infection has been proven to be effective."
In previous studies of aspiration pneumonia in respiratory intensive care at the Zhongnan Hospital of Wuhan University, researchers wrote in 2015: "Aspiration pneumonia is more common in the old than in the young in RICU, with more complications, and prone to mix with the infection, the mortality is high. Treatment should lay stress on fungal infection. "
Exposure to black toxic mold releases mycotoxins into the air that may cause severe respiratory illnesses including fungal pneumonia and cause immunosuppression. Black toxic mold proliferates in places with low ventilation, lack of UV light exposure and humid conditions. Mycotoxins are labelled as neurotoxins by the US govt and labeled for use in bioterrorism and may cause healthy people to become ill within a short amount of time after exposure.
Let’s take our Modified Germ Theory and make the assumption that it is actually species of opportunistic fungal infections in the lungs that are responsible for the coronavirus disease state and COVID-19 is the virus that the body produces to locate infected cells. Fungal pneumonia is primarily spread through exposure to mycotoxins in contaminated food and water sources, and also fungal spores in agriculture in which people can breathe in. However fungus and mold are everywhere and it is repeated exposure that actually can cause fungal pneumonia - typically in areas of low air ventilation and wet conditions from buildings that can cause mold or fungi to grow within the walls.
Trichothecene mycotoxins produced by black toxic mold are neurotoxic. In repeated exposure, the mycotoxins produce pneumonia, organ damage and brain damage after repeated exposure, even in the healthiest patients. Mycotoxins in drinking water may cause healthy people to become sick and cause immunosuppression.
If we examine the prevalent architecture and buildings in China, South Korea, Italy, Iran and Florida, the areas where COVID-19 are most prevalent, this has typically been a rainy season in which wet conditions can affect old building structures, especially in areas such as northern Italy where much of the buildings are in disrepair and also in South Korea, where toxic black mold exposure is rampant as the prevalent architecture in South Korea is built upon concrete buildings with little air ventilation. The current climate of rain would create ideal conditions for fungi and mold to proliferate, therefore, COVID-19 would appear sporadically in geographies in which people are exposed to these moldy conditions, and not necessarily through exposure by human contact.
The CDC reported that in 2017 alone, approximately 500K people globally died from the common flu. Coronaviruses have been documented since the 1960s and symptomatic of common flu conditions. So far, COVID-19 mortalities have not yet reached the annual numbers of deaths by the common flu alone.
Could COVID-19 be a particular viral strain that could potentially be an immune system response to conditions of fungal pneumonia?
Mycotoxins from fungal spores could typically proliferate in old buildings, buildings without ventilation and also airplanes, where air is continually recycled. However some fungi are able to colonise drinking water distribution systems. Pathogenic fungi in drinking water can pose a health risk to consumers with daily contact with water that has been compromised. In history, we have learned that the fastest way to spread an epidemic is through the water supply.
In my opinion, it is highly unlikely that bats were responsible for transmission of the coronavirus as some have been hypothesizing since the coronavirus matches human DNA and specific to human DNA. If in the Modified Germ Theory, if indeed viruses are part of the human immune system and not the actual cause of disease, then every virus that is present in our bodies has been developed specifically to target a particular toxin or microorganism - such as opportunistic fungal and parasitic infections, in order to activate our immune system. We should think critically about these implications and not be prone to panic and shut down entire businesses and schools or force people into quarantine to perpetuate a fearmongering campaign based on old assumptions.
In history, during the Black Plague, Cholera and Typhoid Mary epidemics, these diseases became widespread and prevalent by lack of access to clean water.
Contaminated water and poor sanitation are linked to transmission of diseases such as cholera, diarrhoea, dysentery, hepatitis A, typhoid, and polio. Absent, inadequate, or inappropriately managed water and sanitation services expose individuals to preventable health risks.
Nurses in British hospitals at the turn of the century discovered that if a patient was continually given clean water, they would recover from the disease. Because typhoid caused diarrhea, it was dehydration that actually ended up leading to high rates of mortality. The human body is 60% water. Water regulates our body temperature, moves nutrients through our cells, keeps our mucous membranes moist and flushes waste from our bodies. Our lungs are 90 percent water, our brains are 70 percent water and our blood is more than 80 percent water. Simply put, we can't function without it. The human body needs clean water in order to maintain optimal health and immunity.
Typhoid Mary: Mary Mallon (1869-1938) was forcefully quarantined for life, for a total of 26 years due to doctors at the time thinking typhoid was a contagious disease with casual transmission features (i.e., able to be spread by close contact). It was later discovered by researchers some 50 years later that typhoid is a waterborne disease caused by the intracellular parasite: salmonella typhi.
Scientists are just beginning to understand the role of viruses in the human immune system and in human development and evolution. It could be that viruses are not the enemy that we once thought they were.
Our govts are telling us to wash our hands, which is generally good advice. We should also take care to think about our water sources, and if we are drinking clean water and not water that has been exposed to opportunistic fungi and other toxins. We should also consider our living environment and if we are breathing in air with lots of circulating ventilation and not closed up in moldy areas.
We should also make certain that we don’t isolate the elderly members of our population and give them the best care possible. Breathing in fresh air, access to clean water, regular exercise, eating clean foods, getting adequate sleep, nutrition and social interaction is what we all need to be healthy and well.
Most of all, during these uncertain times where pandemics often perpetuate fearmongering, we should be careful not to let our fears override our rationale.
By Sierra Choi
Disclaimer: This article is for educational purposes only and not intended as medical advice. If you feel sick, contact your local health professional. It is a part of lifelong learning to discuss ideas, examine research and engage in dialogue that can produce new theories in fast-moving sectors such as epigenetics, genomics, medicine, microbiology and virology. The intention of this article is to open a dialogue in order to re-examine old assumptions via discussion of ideas in a respectful way.