Ed, finally got around to looking closer at the F/S. When I got them off Sedar, I didn't get a balance sheet, did you? Strange...
Anyway, you are correct about the company's misleading statement that this was "...the 22nd straight quarter that the company achieved progressive growth in its revenues..." YTD July/98 is higher than at April/98, that's what Dean is comparing, and of course that is higher. But the 2nd quarter is only $808,083 vs $894,225 in the 1st. Either the financials are incorrect, or the company needs to retract the announcement above.
Someone made the comment that these are unaudited #'s, so how can we believe them? All interim F/S are unaudited, so we could be in for surprises once the y/e audited #'s come out, but you would think the CA who is the chief financial officer would be competent in that area.
Dean is correct in his comment on gross profit. YTD July it is 15.4%, up from 15% same time in 1997. 2nd qtr is 18.3% vs. 12.6% in 1st qtr. Hopefully, that is a real improvement, and not just a factor of seasonality. I should take a look at prior years' quarters to see if the same trend is true.
Dean says corporate expenses are down 25% due to management salary/fee cuts. But total expenses are up $28,462 from 1997; not bad, I guess, given the 41% jump in sales (from same 6 mos in 1997). He is correct in that the net loss has dropped from 20% of sales, but I would like to see the business plan to see when break even is. If a 41% increase in sales doesn't do it, what does?!?
Dean says that the plant itself is now profitable over the 2nd qtr and generating $50,000 in cash flow. So, based on a gross profit of $148,273 in 2nd qtr, some of the other expenses must be directly attributable to the plant (including non-cash depreciation). Since the total net loss for the qtr is $70,316, and depreciation is 41,592, the corporate office must have used $78,000 in cash for the qtr. I have ignored changes in receivables and payables, of course, but it's a rough approximation. Doesn't that seem a little high?
Anyway, I have emailed the company with these questions, as I'm sure others have (esp. Ed). I haven't added anything to Ed's posts, but ... Well, maybe I'm just a bean counter, but what the hell is this company doing? I'm shaking my head as I watch my small position get even smaller. Do others think there is a point here, or should we all be bailing? Is there anything new on the financing (he said with a snicker!).
Brad |
