Found the his on other board read below
11/15 Update
**Time for another update!**
Let's start with assets, including cash on hand.
- December 31 2021:
\- Cash - $6.067m
\- Accounts Receivable - $482k
\- Total Assets - $9.535m
- June 30 2022:
\- Cash - $5.779m
\- Accounts Receivable - $474k
\- Total Assets - $8.572m
- Sept 30 2022:
\- Cash - $2.441m
\- Accounts Receivable - $2.751m
\- Total Assets - $25.878m
From December of 2021 until June of 2022 change was minimal as evidenced by cash on hand, total assets, and AR numbers. From June to September there has been significant change. I will put it in perspective for the full year rather than just 3 months.
For the 9 months ended Sept 30th, cash on hand was reduced by 3.626m, of which 2.893m went to operations, and 1.930m went to acquisitions. Those numbers don't add up because they were offset by the 748.5k proceeds from selling the other subsidiary. $4.3745m in cash spent, cash on hand reduced by $3.626m. So the effective cash burn rate for operations over the last 9 months has been: $321.4k/mo.
As I had mentioned in my last update, with the new acquisitions it is expected that the cash burn rate will fall to approximately half of that, but we wont know for certain until we see the Q4 report due 60 days after the year closes. It may already be significantly lower with the efficiency initiatives being put in place by leadership.
So we spent a lot of cash, but what did we get for it you ask? Great question.
For every dollar spent over the past 9 months we added:
\- $3.74 in new assets
\- $2.51 in new revenue\*
\*this is an approximation based on going from $5m to 16m run rate
While the past few months have seen a ramp up in expenses with adding new leadership, the dollars that have been spent have been used very efficiently. This has been done by leveraging a reasonable amount of debt as well as cashflow from the companies acquired to pay for themselves.
**What to expect from here**
$2.441m cash on hand plus expected cashflows more than covers operations for the foreseeable future (12+ months), so at this time there is no concern of insolvency or running out of money. The company is stable, they've made great strides in the last 9 months and I am optimistic for the future.
There is a lot of excitement and hype around the great things that this company can achieve but I also want everyone to have realistic expectations and understand that while the team is doing great things, they are also operating in a tough economic environment and growth may be slower by virtue of cashflow or capital cost over the next year, or few.
The $100m revenue run rate is not going to happen in 2022, and may not even happen in 2023. The most important thing to accomplish for leadership right now is becoming cashflow positive at the corporate level, and that may involve acquiring smaller companies with a better margin and free cashflow, over larger companies with a smaller margin, and that's ok. Once the company is cashflow positive, the timeline for growth is infinite, there is no longer a countdown to insolvency, and they can leverage cashflow for acquisitions in place of debt or dilution.
I have seen a lot of questions around the CEO saying "profitability at the operating subsidiary level, which excludes corporate overhead and public costs, in Q4 2022" so I wanted to address it as well. I know the gut reaction is "He's moving the goal posts" but he's not, they are uniquely different goals. Getting to absolute cashflow positive was always a 2023 timeline, but getting each of the subsidiaries generating free cashflow even if collectively their margin doesn't cover corporate expenses is a big deal for two reasons. First, it stems operational cash burn, this means that no subsidiary would ever have to shunt cash to another subsidiary to keep it operational, and secondly, and perhaps more importantly, it's another "proof is in the pudding" way for leadership to show what they are capable of, and instill confidence in potential investors both for stock and corporate capital, as well as acquisition targets where they offer stock as part of the purchase agreement. To be able to go to a capital finance company and say "I have 3 subsidiaries that are all cashflow positive" is a great thing.
