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Here is factual DD each shareholder should be

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TheGreatGreenRush Member Level  Tuesday, 11/19/19 02:47:49 PM
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Post # of 271149 
Here is factual DD each shareholder should be paying attention to. Yes we saw a decrease in revenue from 2017 to 2018; just like with anything there is an explanation for it:

In January 2018 the International Accounting Standard for Revenue recognition was changed. IFRS15 which was first adopted in 2014, was implemented completely in Jan 2018.

This made the revenue recognition process completely different. It put the onus on the business to justify they were the contract holder of any transaction with a customer where a good or service was provided.

IF there was not enough information, or IF there was not given information in a timely manner which satisfied all 5 steps in this new process, FUNN would be unable to claim said revenue. Because the auditor was having issues receiving this information, and because the auditor could not determine who was able to claim the contract FUNN could not recognize this revenue.

This is in part because their classification was changed from an Agent to a seller. An Agent can negotiate contracts, a seller cannot. Because of this designation, FUNN was unable to claim any contract in regards to board game sales because they were no longer an Agent. Had the auditors received the necessary information from the supplier, to either A) render the designation wrong, or B)suggest FUNN is able to contract directly with the consumer for a good or service they would have been able to recognize said revenue.

The revenue for 2018 was understated because of the new revenue recognition rule. FUNN could have waited to get all of the information from the supplier, but that would have held up the process even further, another dammed if you do dammed if you don’t scenario.

And we’re talking about two years in the past as FUNN is already in Q2 of 2020. What’s great is these numbers will be restated as 2017 was once FUNN receives the information necessary to better determine who recognizes the revenue.

Now here are some numbers to pay attention to, which should be a guiding factor in investment decisions:

Revenue 2017: $8,087,837
Revenue 2018: $7,764,903
Revenue 2019: $11,373,432

2017 Profit Margin: 35.67%
2018 Profit Margin: 48.83%
2019 Profit Margin: 49.84%

2017 Cash Burn Rate: $150k
2018 Cash Burn Rate: $491k(Tempe built)
2019 Cash Burn Rate: $151k

2017 Cash On Hand: $289k
2018 Cash on Hand: $135k
2019 Cash on Hand: $1.6M

2018 Capital Expenditures: $2.988M
2019 Capital Expenditures: $348K

There were two main drivers to widening loss in 2018, Capital Expenditures (takes money to make money) and Loss on Extinguishment of Debt $1.8M totaling $4.7M of $6.1M in losses.

This is why the statement of cash flows is important.

FUNN used less than $500k in operating activities in 2018,

In 2019 they only used $150k in operating activities.

The balance sheet will never tell the full story, and neither will the income statement.

The Statement of Cash Flows IS the MOST important financial document to analyze. That gives the real health of the company. Any company can make a balance sheet look pretty, but a company can’t sugar coat where they’re spending money and how they’re spending it.

Hope this helps, Good Luck to All…

If your plan requires that you do nothing but wait, then do nothing but wait. 90% of trading is waiting
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