re: MTSL
This comment from the press release may be contributing to the sell off.
In order to fund our current operations and to execute our business plan, we are currently seeking additional financing and are investigating available alternatives," concluded Mr. Salansky.
Based on some quick and rough estimates it appears the non-Vexigo operations of MTSL were pretty weak. By my calculation the non-Vexigo operations lost roughly .08/s. Excluding the merger and acq expenses it appears Vexigo contributed roughly .1 in eps.
There are however some peculiar items that need further explanation.
Selling expenses for the first quarter without Vexigo were 561k. In the current quarter, with consolidated results and 2.6x higher revenues, selling expenses were 503k. What is the true run rate going forward?
Prior to the acq. MTSL's operating expenses have been running at roughly 1.5m/q. If you net out the M&A expenses from the 2nd Q then consolidated operating expenses were roughly 1.85m for Q2. A .35m increase in SGA for Vexigo seems light to me.
Based on the first quarter press release Vexigo had operating income of $1.1m on revenues of 4.2m. Assuming the 40.7% gross margin which Vexigo reported in the current quarter. That would have left them with operating expenses of roughly 600k in their first quarter. So what is the true run rate for operating expenses going forward?
Furthermore, a 1.1m dollar seq. decline in revenues for Vexigo leads to other questions. Is that normal lumpiness? Did the change of ownership lead to a loss of business? Competition?
AI
