JNS Holding Corp (JNSH)

[Gatsby]

My comments after 3Q 2023 FS:

A) BALANCE SHEET
1. Cash, credit line, payable, receivable
More cash at the bank although the quarter loss. How? (to answer Orca remarks).
The YTD details are in their cash flow statement but I summarize the quarter cash flow here, rounding the numbers.
Cash went from 38.5K end June to 119.4K end September = +80.9K. How?

What decrease the cash at the bank:
a) Quarter loss: -326K
b) Decrease of the Bank credit line: -82.75K (-82.75K in cash)
c) Decrease of the amount due to Capital One; -1.1K (-1.1K)
d) Decrease of the amount due to US Bank: -0.25K (-0.25)
e) Quarterly payment of the Chrysler note: -3.1K (-3.1K)
f) Decrease of the payroll liabilities: -12.8K (-12.8K)
TOTAL of items decreasing the cash: -426K

What increase the cash balance
g) New item called “Due to Others”: 60K (+60K in cash)
h) Increase of the account payable: from 0 to 22.8K (so 22.8 3Q expenses not paid as per end Sept.) (+22.8K)
i) Huge decrease of the accounts receivable: -424.1K (from 1.314M to 0.89M i.e invoiced amounts received by jnsh). (+424.1K in cash)
TOTAL of items increasing the cash : +507K
NET cash increase: +81K

I hope they continue to cash the receivable. Nothing worse than having debtors not paying the due amount. It would be detrimental not to get paid by the debtors.

In fact, I am not happy with this huge amount receivable. They should ask for a deposit and then issue interim invoices to be paid within 30 days imo. How does it work in the USA for services? Typically, clients are asked to pay an initial amount (down payment) and the balance after completion of the work.



B) OPERATIONS
Income = 600K for Q3
COGS = 839K for Q3
Direct Labor (382K)+Union Benefit (258K) = 640K
Union Benefit = 67% of direct Labor expense

I note that Leased Property I sup 132K in Q3. an amount equivalent to that of the entire first half-year. Same change for equipment rental.

Regarding the admin expenses:
Insurance: double the amount of previous quarter (11.1 in Q1 and Q2 versus 23.1K in Q3

Interest expenses: increase (6700 in Q3 vs 4100 in Q2) (higher interests?)
Rent : 29.4K in Q3 vs 8.8K in Q2 and 11.7Q in Q1
Payroll : 34.5K in Q3 vs 24.7in Q2 and in Q1
They had some marketing expenses (5.8K) : not for a new website or for PR lol)


C) COMMENTS
As I am owning jnsh shares, I am certainly wearing pink glasses but based on the expenses, I have the feeling they are increasing the business: more rent, more wages. And I would think that Q4 income (sales) is going to reflect this (as we had in Q2/Q1? big charges in Q1 compare to sales and huge revenue jump in Q2).
Total liabilities are down 7 % but I suspect this could go down fast in they manage to receive the “accounts receivable”.
The marketing expenses can be seen as a good sign that they want to develop further.

Here the answers I would like to get from them:
- What is booked under "account receivable". Is this clients having not paid the invoices yet, or paying with delay.
- What is the CS 8306 investment and are they going to reassess the value in q4 (50.5K currently)
- What are the 60K due to others? A loan? Are they bearing interest?
- What is the current interest percentage for the bank credit line as the interest expenses increased.
- How are they booking charges and incomes related to a specific project? In the same quarter or when the amounts are paid/received?
- Is the increase in labour a good indicator of the Company activity (more projects, more contracts with income(sales) to be receive later)?