So this FTK. They got as consideration: "$17.6 million funded by offsetting $17.6 million from the 2024 order shortfall payments (the "OSP") due from ProFrac Services, LLC;"
So ProFrac is their major customer but doesn't pay them?
Then Profrac just filed a 13-g, and they own 54% of the company. So a controlling interest based on the 6 million warrants they also got as part of the deal. This seems like more of a drop down of assets to FTK. FTK is basically qa sub of Profrac.
Furtheer Profrac accounted for 61% and 64% of revs in 2024 and 2023. But how much did FTK actually get paid by Profrac? Accounts receivable from Profrac held by FTK amounted to 46% of sales to Profrac for 2024 and 64% of revs for 2023. So very little in the way of allowance for doubtful accounts here.
Now there is this item from the Auditor's Opinion(They gave a clean opinion):
Critical Audit Matter
The critical audit matter communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Recoverability of contract assets
As described in Note 2 to the Company’s consolidated financial statements, the Company’s contract assets represent consideration issued in the form of convertible notes and other incremental costs related to obtaining the ProFrac Agreement. The contract assets are tested for recoverability on a recurring basis and the Company will recognize an impairment loss to the extent that the carrying amount of the contract assets exceeds the amount of consideration the Company expects to receive in the future for the transfer of goods under the ProFrac Agreement less the direct costs that relate to providing those goods in the future. As described in Note 4, the Company had recorded contract assets, net of $69.0 million as of December 31, 2024.
We identified the evaluation of the recoverability of contract assets as a critical audit matter. There was subjective auditor judgement in evaluating the key assumptions used in the Company’s contract asset recoverability assessment, specifically the forecasted product revenue and related forecasted costs to provide products over the term of the ProFrac Agreement.
The whole sales agreement, there was zero cash consideration paid.
Something doesn't seem right here and this after just a cursory look at news release and 10K.
Between the accounts receivable and the contract asset on the balance sheet, there's a lot of critical assumptions I wouldn't make as to collectibility. But that's just me.
Market Data 
Markets 
AI
