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The Active Network, Inc. Message Board

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  • smartsmallcapinvestor smartsmallcapinvestor Nov 8, 2012 11:35 AM Flag

    Prescient Point Report

    you are delusional if you think their financial situation is good and that cash they show is real. they are borrowing so heavily and fooling investors. The interest expense never lies - why did it nearly triple from the previous quarter and the company increase their borrowing need? The balance sheet shows no debt at quarter end. Even their banks can figure out they are lying to investors. They will pull the plug -- banks have enough problems at the moment, they don't need to support Active. They've already gotten their IPO fees and now no one will trade the over.

    Sentiment: Strong Sell

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    • If you want to call the $239,000 in interest expense an indication of fraud I don't quite know how to respond as it strikes me as being rather strange thing to say. Interest expense can pop up in any one of a number of ways for a company that does not have outstanding debt. Three examples, two of which I'm pretty certain exist here are:

      1) Tax assessment. We know they increased accrued for some prior year sales tax. Those alway involve interest accruals and some states hit you with extremely high interest rates.
      2) Revolver costs. They amended the debt agreement in July. Normally costs associated with debt agreements are capitalized and amortized over the term of the agreement. This could be a reason.
      3) Other. Reach an agreement with a party who you really don't completely trust to carry through to pay interest rather than remitting funds.

      The CFO isn't the sharpest guy in the world and has a lot going on but he is obviously very transparent and trying to be honest. Listen to the conference call, he told you what a new sales rep's base salary is. It isn't easy to get a business like this going and I'm sure he makes lots of mistakes. BTW I'm sure he makes fewer mistakes than you and I would. I'm just saying, this has similarities to a start-up and is not a GE where mistakes are kind of buried as the numbers are just so huge.

      Prescient Point needs to pull their report due to the large number of errors it contains. They can re-issue it and say their prospects are lousy. I don't care what they think, but fix the errors!!!