Replies to post #266306 on Amfil Technologies Inc (FUNN)

[MightyX]

Thanks...I had asked about cash flows but never got a response, guess I shoulda asked a shareholder...LmAo...cash flows absolutely are critical and we are strongly cash flow positive with significant cash on hand to do whateverTF we want.

[Excalibur13]

Nice breakdown , thank you !

[Macod]

Excellent post, very informative ..but where do you see $1.6M cash on hand for 2019?

[NJ_TOAD]

AWESOME POST!!!!

Even the least knowledgeable at reading financials can understand this post!!!

These are hard to decipher to most as we can see in many posts on the subject that are flat wrong so THANK YOU 10000000 times for this post!)

Once again great breakdown in a way EVERYONE should be able to understand.

Saying this company is in bad financial shape or anything close is just insane.

In the OTC you just don’t find this type of company growing like we are PERIOD. All CLEAN too NOTHING toxic or dirty about it)

[Goodbuddy4863]

WOW what a post.....I cannot thank You enough for this information.

Just a matter of time for Investors to start flocking back into FUNN.

I dare to say....but I believe 85% of all FUNN Investors are holding thru this incompetent 2018 Audit.

Communications was indeed the Big Problem!

[NJ_TOAD]

EVERYONE SHOULD READ AND DIGEST THIS POST.

[NJ_TOAD]

Can a mod pin this post?

Needs to be up there, maybe one of the most important posts yet

[Egold]

Great Post GGR makes complete sense to even me lol

[DFLY]

GREAT informative post TGGR much thanks!

Great to know too! Thanks again!)))

[Uncle Gordy]

Awesome post GreatGreenRush - if/when documents accepted from supplier, can ‘18 be adjusted?
Really enjoyed your insights on eve of audit release.... you know stuff! Seriously, thank you!

[rushmann]

This is precisely why we need to get off the vile pinks asap. More sophisticated eyes would see this and understand it better. Good post!!

FUNN

[Russ777]

This is a VERY IMPORTANT explanation of how to understand the audit. Please take the time to read it. Read it a couple of times to fully comprehend the importance of it. Outstanding!

Here is factual DD each shareholder should be paying attention to. Yes we saw a decrease in revenue from 2017 to 2018; just like with anything there is an explanation for it:

In January 2018 the International Accounting Standard for Revenue recognition was changed. IFRS15 which was first adopted in 2014, was implemented completely in Jan 2018.

This made the revenue recognition process completely different. It put the onus on the business to justify they were the contract holder of any transaction with a customer where a good or service was provided.

IF there was not enough information, or IF there was not given information in a timely manner which satisfied all 5 steps in this new process, FUNN would be unable to claim said revenue. Because the auditor was having issues receiving this information, and because the auditor could not determine who was able to claim the contract FUNN could not recognize this revenue.

This is in part because their classification was changed from an Agent to a seller. An Agent can negotiate contracts, a seller cannot. Because of this designation, FUNN was unable to claim any contract in regards to board game sales because they were no longer an Agent. Had the auditors received the necessary information from the supplier, to either A) render the designation wrong, or B)suggest FUNN is able to contract directly with the consumer for a good or service they would have been able to recognize said revenue.

The revenue for 2018 was understated because of the new revenue recognition rule. FUNN could have waited to get all of the information from the supplier, but that would have held up the process even further, another dammed if you do dammed if you don’t scenario.

And we’re talking about two years in the past as FUNN is already in Q2 of 2020. What’s great is these numbers will be restated as 2017 was once FUNN receives the information necessary to better determine who recognizes the revenue.

Now here are some numbers to pay attention to, which should be a guiding factor in investment decisions:

Revenue 2017: $8,087,837
Revenue 2018: $7,764,903
Revenue 2019: $11,373,432

2017 Profit Margin: 35.67%
2018 Profit Margin: 48.83%
2019 Profit Margin: 49.84%

2017 Cash Burn Rate: $150k
2018 Cash Burn Rate: $491k(Tempe built)
2019 Cash Burn Rate: $151k

2017 Cash On Hand: $289k
2018 Cash on Hand: $135k
2019 Cash on Hand: $1.6M

2018 Capital Expenditures: $2.988M
2019 Capital Expenditures: $348K

There were two main drivers to widening loss in 2018, Capital Expenditures (takes money to make money) and Loss on Extinguishment of Debt $1.8M totaling $4.7M of $6.1M in losses.

This is why the statement of cash flows is important.

FUNN used less than $500k in operating activities in 2018,

In 2019 they only used $150k in operating activities.

The balance sheet will never tell the full story, and neither will the income statement.

The Statement of Cash Flows IS the MOST important financial document to analyze. That gives the real health of the company. Any company can make a balance sheet look pretty, but a company can’t sugar coat where they’re spending money and how they’re spending it.

Hope this helps, Good Luck to All…

[shajandr]

Butt the SAME change was made to the RESTATED 2017 annual in the 2018 annual, so a YoY comparison of revenue IS on the same basis!!! So revenue for 2017 and 2018 are presented on the SAME BASIS in the 2018 annual.

"9 Restatement of previously issued financial statements Amfil Technologies, Inc. (the “Company”) is restating its consolidated prior year financial statements arising primarily from errors made in inventory, cost of goods sold, accounts payable and revenue. The Company erroneously accounted for third party inventory that was on consignment in their warehouse, in addition to recording gross revenue on such inventory sold. As a result of the overstated inventory, the Company also had overstated cost of goods sold and accounts payable."

[strykerdude]

Great informative post! This should be stickied.

[C to the E]

Brilliant analysis on our FUNN situation. Thank you!

[Ringrock]

Nice to see... thanks to the mod that got it done!

FUNN FUNN FUNN
STRONG STRONG STRONG

[RMEG]

OK.That makes perfect sense. As a retired Director Internal Audit I have not kept up with IFRS and was struggling to figure out what happened and why the auditors did not perform alternative procedures. Now I understand and as you say, " ... these numbers will be restated as 2017 was once FUNN receives the information necessary to better determine who recognizes the revenue". Thanks for the explanation TGGR.

[Plowmaster]

100% NOT bullshit :) A true SUPPORTED NARRATIVE behind the numbers.

Thank you for an AMAZING analysis and post. Incredibly helpful for folks who don’t grasp the full narrative behind the numbers.

Easy to understand and breakdown, given complicated changes.

Than you do much. It’s awesome FUNN continues to grow and looks solid even in the face of unrecognized revenues. They will get them back in the future! Money can’t go *poof*!

$FUNN

[jrf30]

This post is SO GOOD that I came off the sidelines to say.

BRAVO. ??????

Great post. Thank you

Now back to the sidelines ....

[Martin1]

award this post plus one, it needs to be up there and remove the obnoxious misspelled one, a great explanation of why the rev's are the way they are.

[grtnative]

You presented a calculation for Profit Margin that is both inaccurate and not precise.

2017 Profit Margin: 35.67%
2018 Profit Margin: 48.83%
2019 Profit Margin: 49.84%

Not accurate:

The Profit Margin you are presenting is the Gross Profit / Gross Sales aka the Gross Profit Margin.

In 2017 the Gross Profit was $2,885,668 on Total Revenues of $8,087,837. Gross Profits / Total Revenues = 0.356791 or as you correctly state 35.68%

In 2018 the Gross Profit was $3,792,289 on Total Revenues of $6,498,593. Gross Profits / Total Revenues = 0.583555 which is 58.35%. Significant difference.

In 2019 the Gross Profits are $1,132,641 on Total Revenues of $2,853,000. This works out to $39.70%. Significant difference.

...
2017 Gross Profit Margin: 35.68%
2018 Gross Profit Margin: 58.84%
2019 Gross Profit Margin: 39.70%

(As a comparison, Restaurants operate with a Gross Profit Margin of about 40%.)

Not Precise:

If you are presenting "Profit Margin" you need to be specific or else there is a large risk of being MISLEADING.

Gross Profit Margin as presented is an indicator used to determine the strength of the business case. Often a preliminary calculation in evaluating a new business venture.

Net Profit Margin is one of the most important indicators in evaluating a business. It allows businesses to be compared regardless or size or type. It also is a good measure of how management is performing and managing operating expenses. THIS IS STANDARD PROFIT MARGIN USED TO EVALUATE BUSINESSES.

Net profit margin = (revenue - cost of goods - operating expenses - other expenses - interest - taxes) / revenue

In 2017, the Gross Profit (revenue - cost of revenue) was $2,885,668 - operating expenses ($3,368,445) - other expenses and interest and taxes ($713,020) / Total Revenues of ($8,087,837).
Net profit margin = -$1,195,797/$8,087,837 = -14.79%

In 2018, ($3,792,289 - $6,498,593 - $3,401,116) / $6,498,593.
Net profit margin = -$6,107,420 / $6,498,593 = -93.98%

In 2019, ($1,132,641 - $1,856,936 - $42,903) / $2,853,000.
Net profit margin = -$767,198/$2,853,00 = -26.89%

---
If I was to make conclusions based on the financials provided...

*This business has the Gross Profit Margin similar to restaurants where profitability is 0-5%.

*The Net Profit Margins show a mismanaged company that is suffering with debt servicing and other expenses.

*If we removed the price of debt servicing completely from the Net Profit Margin entirely we are still firmly in negative territory due to excessive operating expenses (2017 -5.97%, 2018 -41.64%, 2019 -25.39%).

*Mentioning cash measurement line items in isolation without also measuring sources of funding (outside of revenues) such as issuance of warrants, loans, and convertibles is rather meaningless.

[GoingBig35]

Wow very interesting!

[greenwillow]

Great analysis!

[Excalibur13]

Glad this was sticky noted ! Good post. Future of FUNN looking brighter every quarter, 2020 going to be a great year.

[Goodbuddy4863]

WOW ** MOM ** WOW

What an informative Post T/G/G/Rush.

KUDOS.

Sorry that I had not commented to You on this before today!

I just now took My time digesting it and like I said at the top of this message.

Explains where the Q4 of 2018 missing money is at.

We should be at $.10 PPS.

[pinch one]

Great post ggr thanks !

[Goodbuddy4863]

So this is the missing $400,000 in 2018 FUNN Revenues that could not be reported?

Trying to connect the Dots.

Very good post T/G/G/R

[Sheepdog]

There is so much wrong here it is hard to know where to start.

Saying capital expenditures cause a loss?

Saying they only used $150K Cash for operating expenses for 2019 while ignoring the millions obtained through borrowing and selling shares?

Saying Revenue is understated because there is a rule that won't allow a third party's revenue to be posted on brokered deals?

Saying a seller cannot negotiate it's contracts?

Lordy.....