I can agree that it is not prudent to take unaudited statements as the abolute truth. I believe that the current s/p reflects that among other things.
So we can assume that the published f/s for fiscal 2008, 2009 and Q1 2010 are either fairly accurate or grossly mistated. If the latter, then those who consider this a scam would be correct.
If we assume the former, then revenues Q by Q on an annual basis have historically climbed through the course of the fiscal year. It appears that seasonality impacts Q1 in those three years, in that Q1 is lowest of all 4 Q's. Year over year through all quarters are reflecting annual growth, this culminating in net income for Q4 2009 and Q1 2010.
If you look at Balance Sheet for the same three years, Cash fluctuates in line with inventory, which makes sense because you need to pay for inventory as you book it. What is interesting is that Current Liabilities-Accounts Payable has steadily decreased over the past three years. This to me reflects an improving cash position which is in line with growth in revenues and profits.
Yes, I believe you will point out the increase in Long Term Liabilities but suprisingly the increase there is less in Notes payable and more in Wages Payable. I believe this correlates to the deferral in wages by the Zankowsky family. They have opted in the past to take restricted shares in lieu of wages.
I believe this has two implications:
1) They are looking to improve the f/s and cash flow and willing to forego cash wages to help accomplish that.
2) They are willing to accept shares of the company in lieu of cash wages, which is typically a bullish indicator because who knows better of what to come than they. They can actually increase their salaries should the share price go above the strike price of conversion. Of course, this is how many made lots of dough back in high tech breakout in 80's-2000. The savior for shareholders is that these shares carry a minimum 6 month restriction, so if this line of thinking is correct then the Zankowsky's must see brighter days ahead at least 6 months out before the restrictive legend is removed. Could be sooner as they hold substantial shares now, due to be unrestricted later this year.
One final thought, I am sure that IMJX, carries forward some of their A/R but an increasing A/R is a natural progression for any company who extends terms to customers and is in a growth phase. This is why many small businesses fail, too fast growth overextends the ability of a company to manage and fulfill its' cash needs.
I like the trends, I like the pace of growth but again we end up at the same point. Are the Financial Statements, which are unaudited accurate or overstated? I don't know, do you?
This is the risk/reward factor inherent in investing in Pinkies. Can we agree on that?
D
