Recent 10Q - Not sure what to make of it.
Huge sales quarter almost hitting $1m. This is what I thought could take place this year as evidenced in earlier posts. Very impressive!
However, I do recall someone on their conference call stating breakeven would occur at $4-500k in quarterly sales. Yet, losses have increased! Now, there's lots that can be said as to legit reasons why but it wasnt me telling the public where breakeven sales come, it was KRED. Concerning?
KRED made 2 payments to professional athletes for endorsements, totaling a paltry $2,700 in aggregate? WHo was this athlete, the last guy on the roster for the Jupiter pro basketball league? Worse yet, KRED doesnt even name this pro athlete paid to ENDORSE. Talk about irony!!
Although top line sales are exploding higher, gross margins are decreasing. Higher volume yet lower gross margins? I think top line sales are the #1 priority for KRED and they are accomplishing that. However, gross margins shouldnt be getting squeezed lower typically. Does this suggest reorders are losing ground percentage-wise to new sales? That wouldnt be a good sign
Im also concerned the VDF warrant, which grants anti-dilution protection into 10% ownership of KRED, is something to overlook. As shares outstanding increase, this warrant theoretically decreases shareholders ownership. It may not kick in until KRED uplists somewhere or business really explodes exponentially, but they should clean this mess up before it really becomes a problem later. Good management is lacking here
Lastly, its very clear KRED has cash flow problems, not unexpected for fast growing companies. Problem is theyve demonstrated an inability to raise sufficient capital to support their growth. That means they likely continue to issue toxic (near toxic) instruments to the LPCs et al or pick up a couple 100k here and there, spending their time chasing money each month. It also reflects that professional money and industry strategics have not jumped in as funding partners. Why? It could be KRED needs some real professional management with the connections, know-how and credibility to pull this all together.
I should be excited over this 10q but im not.
