My comments after 1Q 2023 FS :
A) BALANCE SHEET
1. Cash, credit line, payable, receivable
They managed their cash flow through the bank credit line : receivable are up 150K, they have payroll liabilities up 41.3K and payable are down 17.3K.
So they used the 175K credit line to “pay” the net loss of the quarter -73K and manged the cash.
The amount receivable keep being very high ! It is now 670K. If it’s a rolling of past receivable paid, new payable booked, it is ok.. If it’s an old receivable > one year, there is an issue with the debtor.
2. Debts (long term)
They got rid of the notes. A small one 12K being repaid quarterly. Another for quarter to repay it completely (3128.97 paid quarterly)
3. The accountant
They need to higher someone with some accountant skills.
They haven’t fixed a basic mistake : total amortization of the machinery & equipment is higher than their book value lol. If they continue this way, they will have negative total fixed assets in a few years lol.
B) OPERATIONS
4. Direct Labor and Union Benefit
85 % of the Income versus an average of 69% Im2022.
Obviously, either they do not charge enough clients, or they pay too much employees.
Or as touted for 2022 FS, they do not book correctly charges and income for a specific period. Maybe booking all charges for a project not being completely invoiced at that time. But I doubt this is the explanation.
Other explanation: they hired too many employees and haven’t enough clients yet… could be for a willingness to grow the business in 2023
5. Amortization is booked in 4th quarter.
1st quarter result would be a little worse if amortization was booked by quarter.
C) COMMENTS
Leased property is up 4 times.. already all 2022 value booked. Interesting.
Rent is up big time as well. 70% higher on a annually basis.
So, in terms of cash flow, they need to receive the receivable. In terms of operations, they need to stop working for free.
In terms of communication : they could be more shareholder friendly. Between the Pump weekly, monthly PR we can usually get in pinkyland and the silent JNSH… There should be a right level of disclosure and transparency !!!
Conclusion : I am stuck for sure.. FS won’t bring madness here and quiet PR department (lol) won’t help neither.
But the last big jump in price came from nowhere. So.. let’s wait.
(NB : I recall the crazy periods where all OTC was on fire… that was the time to be all in !!! and to sell all of them !
- Some of the less friendly observers have determined that we will abandon our principles and reveal ourselves as shallow cynical exploiters. We must disappoint them... quite simply put, we walk our talk -
