I read the quarterly. My condolences to the longs. I am not one of those who wishes bad on stocks or people when I am not a long there. I like this company. But that quarterly was terrible. Hopefully people will look towards the future and not the current and not sell the stock today. I’m hoping you have a flat day, not a big down one. But either way, that quarterly sucked.
My observations:
On the balance sheet, assets remained about the same as 12/31/16, at about $350K. Current liabilities, including defaulted notes, rose from $5.5 Million to $7.50 million. That’s a large amount to rise in one quarter for a company like this. Stockholder deficit also rose from about $5.5 million to $7 million, but that doesn’t bother me as much for a pinkie.
On the income statement, it looked worse. Revenues versus March 2016 went from $666K to $77K. Ouch! But at least while they were bringing in a lot less revenue, SOMETHING rose. Salaries rose. From $61K for the quarter to $175K for the quarter. Later we see that some of that is unpaid salary accrued for two of the people involved, but still, it seems like a LOT for three months for a company bringing in such little income. Maybe it was for a longer period of time and not marked until now, but that is left unclear.
Income from operations in first quarter 2016 was a positive $91K. Of course, from there you still have corporate expenses, but at least it was a positive. IN 2017 it was a loss of $399K. Also not good for the short term.
Interest expense went from $757K to $2.83 million. We’ve chewing up a LOT of our money on interest expense for loans we keep adding to. Especially for $77K in revenue. Think on that. $2.83 million in interest expense. Up from $757K. tells you how we are surviving. Lots of new convertible debt. I’ve said before that the sector is great, but when we see all these contracts coming out, it is always with names of other companies on them. Not us. We have a great industry, but we are not getting the contracts. I’m talking the blockchain contracts. IN fact, our revenue was from GES for elections, not truly our blockchain potential. We need to get the contracts, or we shall be the best positioned company in the business to go OUT of business. We are spending way too much, and getting higher, to pay to survive, and not getting the contracts. That was very bad news in my opinion.
Net loss went from $496K to over $2 million for the quarter. We are struggling.
This chart speaks for itself.
March 31,
2017 2016
Options 3,000,000 3,000,000
Warrants 281,608,620 65,670,263
Convertible notes 604,166,894 134,318,946
Total 888,775,514 202,989,209
From 203 million to 889 million in future dilution. And whereas the warrants are usually above the current price, the convertible notes are usually below. Well below, since they were done while we were at a penny or less. <Convertible promissory notes with interest at 12% per annum, convertible into common shares at a price ranging from $0.08 to $0.14 or a 50% discount from the lowest trade price in the 20 trading days prior to conversion (as of March 31, 2017 the conversion price would be $0.0023 per share)> There we have it. And they can be converted NOW. Still at 10 cents on the dollar, so worth converting and SELLING, since the company is not doing well. NOT a good thing for the near term future. And now, we are current, so they can sell easier via Reg 144 than when we were not. The next two weeks will tell if someone gets their shares out and unrestricted and then starts selling. Look for a trade to cross after the close, as that will be the reprint of the shares entering the public from any of these sellers. I think at least two are coming. Another reason to not be happy at this time.
Enough. To hammer a report too harshly does no good. Suffice it to say, I was not happy with the quarterly. I wish all the longs here the best, but think it is going to be a tough few weeks coming up.
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