Monday, November 10, 2014 11:51:08 AM
Almost NO GROWTH in real cash revenues. Notice how the press release no longer mentions “non monetary” revenues. They’ve now termed their monetary revs as “SaaS and development revenue” and non monetary ones as intellectual property ("IP") licensing revenue. Creative! Maybe everyone will look the other way…doubt it. May be legal but to me it’s reminiscent of the guy who hides the balls under the cups and makes you guess which one it’s under, always taking your money.
“SaaS and development revenue for the three months ended September 30, 2014 totaled $561,286, which represented a 47% increase when compared with similar revenue of $381,539 in the third quarter of 2013. On a sequential basis, intellectual property ("IP") licensing revenue totaled $4,275,000 in the third quarter of 2014, for an increase of 46% when compared with IP revenue of $2,925,000 in the second quarter of 2014."
Ignore the press release, it was just as expected. Takes a lot of chutzpah issuing that press release. Read the filing, the real devil is in the details.
Looks like they also burned about $4m in just last Q and their real cash revenues weren’t even the $600k they previously announced they would be. Gave away another 600k shares in the Q and Oct for “services”. That’s on top of the almost 1.1M last Q. The market isn’t stupid. Problem is with the huge growth they are reporting, sophisticated investors are now taking a harder look to see just how they’re doing it and can’t possibly like what they’re finding, that is the other side of the sword.
Reality is that they sold a single license back in Q1 to “someone” for $225,000 cash which they used as the determinant of fair value for the other subsequent 35 exchanges of them with customers. Each time they have traded a license, again for no real money, they are recognizing $225,000 in revenues. Legal per certain accounting standards, but that doesn’t make it good business practice and many would argue it paints a horribly inaccurate picture of the company’s actual business and financial strength and possibly grossly over inflating the stock price. The exchanges generate no real money and never will. Won’t pay salaries, pay the rent or produce a penny in actual cash profits.
Bottom line, in my opinion a business that has around 87% of their revenues involve NO CASH trading hands and who burns roughly $4M a quarter is solely dependent on issuing more shares to survive and is simply not sustainable in current form and most certainly not deserving of a fully diluted valuation of approximately $67M.
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