Recent 10-K does not mention the software platform that they indicated was going to be rolled out in the second quarter. With the reduction in staff and operating expenses, it makes you wonder if the project is being delayed or is over. I noticed no significant change in capitalized assets, which is were software costs are generally capitalized, and no mention of how much the development of the software platform is impacting the operating expenses.
Also, I noted that the accounts receivable balance as of 3/31/2017 exceeded the net sales for the quarter. In theory, none of the sales that they had in the first quarter has been collected.
Operating margin was significantly lower than the 4th quarter. It makes me wonder if they are manipulating numbers or timing of sales. If you note in the loan agreement, IFON had a debt financial covenant that they would have an EBITDA of greater than $0 in the fourth quarter of 2016 in order to be in compliance with the debt agreement. They met that target. However, by meeting this covenant, did they knowingly sacrifice the results for the first quarter? The previous 10-K foreshadowed the poor first quarter by noting the potential impact of the Chinese New Year.
The sales of this company are very unstable. Even management will not provide any estimates for future months.
Also, I too have noted that the working capital has decreased significantly from prior year.
Can anyone find any positives from the latest quarterly results?
