I have been following this company for several years. The hand ringing over the past quarter is a familiar sight. This company has proven over time that it can not survive without issuing more shares. They made a big deal out of being on the NASDAQ for more than 15 years. Companies this age are usually in a position where they are generating enough cash from operations to run the business. Instead it is just the opposite. The share count increased from 8.021mil to 8.779mil while cash decreased to 7.706 from 9.580 mil with AR increasing about 2 million all in only one quarter. The balance sheet carries more than 7 months of sales in either the AR or Revenue In Excess of Billing. Considering that the split adjusted price peaked at $3750/share in 2000, the long term trend is clear. Unless earnings, and ultimately cash, can grow faster than shares issued that only means one thing for the shareholders. That happening in a 15 year old company that has never done it before is unlikely.
with cash down this low watch out for either another note offering to tail winds to convert to stock at some
ridiculous low price or another secondary offering. i say it's another note offer to tailwinds. 2 years ago
months after tailwinds converted their notes to stock for a huge profit another note was issued to them
which was just converted in this last qtr. it's a very predicable cycle. expect more dilution.
i don't care if net income goes up as it is usually more than offset by newly issued shares.
count on it.
Sentiment: Strong Sell
Convertible notes provide conversion at a price higher than the stock price at the time the notes are issued. That Tailwinds made "a huge profit" simply means they bought the notes when the share price was much lower. Big deal.
As far as "cash down this low", it isn't that low.
Go read the cash flow statement.
i expect this stock to be trading between 7 & 8 by September due to lack of growth of earnings per share. sure, revenue & net income may be up but you can be sure that earnings per share will
be either lower or flat. what pe should this stock have with lower or zero eps growth?
Sentiment: Strong Sell
"while cash decreased to 7.706 from 9.580 mil with AR increasing about 2 million all in only one quarter."
If you are starting a new project, it would not be unusual to see this. You have to pay employees and lay out cash in advance of the first invoice to the client.
So, cash went down $1.8 million and AR went up $2.0 million - they invoiced for more than what they spent in the quarter.
However, even further, if you want to focus on the balance sheet, you need to consider the entirety of the current assets and total assets and not just the one or two line items you want to pick out. In just the one quarter you point to and make a big deal out of, current assets went from $41.1 million to $41.8 million and total assets went from $98,554,138 to $101,149,271 - an increase of $2.6 million. Got a problem with that?
If you have a MBA, I don't think your concentration was in finance or accounting.
" The share count increased from 8.021mil to 8.779mil while cash decreased to 7.706 from 9.580 mil with AR increasing about 2 million all in only one quarter."
You are reaching the wrong conclusion regarding the increase in number of shares. The last issuance of shares to raise cash was March of 2012. The increase you see over the past quarter is primarily due to option and warrant exercises (only natural when the share price doubles), compensation, and exercising the conversion option on a note (again, makes sense with the rising share price). Please read the 10-Q carefully and you can see all of this.
The increase in AR is also justifiable with the increase in sales. Without knowing all the details of the contracts and payment terms in place, I think you are once again jumping to the wrong conclusion.
It would also be a good exercise to go and read the income statement in detail to understand all the figures, why they differ from the same period last year, and why EBITDA is up yet the EPS is down. There's nothing bad or fishy going on, but people only want to focus on whatever negative things they can throw out. That's fine - it will ultimately create more bargains for those who do read the 10-Q carefully and pick up cheap shares.
The shares are not trading on the facts, but the nonsense that people here throw out on a day to day basis.
That's all well and good - longer term the shares will still go higher, because the fundamentals are all there.
Please - beat the share price down even more - I want more shares.
I saw this as a big winner 6 months ago, the business has only gotten stronger to this point.
Increases in AR are justifiable to a point. I have heard the excuse that because they do business in China they naturally have a longer DSO. This doesn't make sense given that they are contracting with Western or Japanese companies. Though their history they have gone through similar patterns and the long term has not been profitable for shareholders. The problem with this company's cash drain is that it fits a pattern. Increased sales, increased profits, increased AR and decreased cash. Then more dilution. Remember they still have another 6 million plus shares authorized. Also, as stated previously, this is a 15 year old company. It should be generating enough cash by now to fund its growth. If they can't generate cash without selling shares something is wrong.
As far as the peak share price goes, I will stand by the 3750. You can find this if you use the Google stock chart and go back to 2000. Even if you are correct however, a drop from 800 peak to 10 is still an astronomical fall. Like everyone, I like to be right but other than that, I have no financial interest in this company. If you buy more shares, good luck. I am obviously not predicting success.
mdmba makes perfect sense... he uses facts and logic... you and others im afraid are falling for the insider buying again..... i dont like when insiders buy at much higher levels of current stock price... they did before the reverse split and they are slowly diluting again.... i would sure love to know what the insiders are truly up to.... trust them if you like... i wouldnt be surprised to see them announce a lower eps for 2014 and drive the stock back to the 7-8 level then buy more shares saying how 2015 look great..
i had a tiny trust for them up until the stock pluged to about 9.50 from 14.01.. that is unacceptable for a so called growing company... i have heard the ceo on different interviews and he and his brothers imo are up to no good..