Wednesday, September 28, 2005
China Expert Technology (CXTI) Q1
On the balance sheet, the costs and estimated earnings in excess of billings on uncompleted contracts jumped from zero to $9 million.
AR dropped by more than $4 million.
Loan to a director of $3 million was paid.
Prepayments jumped by $3 million.
Receipts in advance jumped to $1.9 million (curr liability)
Amount due a former officer increased by about $300K
Current ratio is still around 3 with enough cash to pay down half of current liabilities.
Equity is up to $15.5 million from $12.6 million
Total assets jumped by more than $4 million.
47% gross margin
SG&A still very steady
Net income $2.9 million, 12 cents per share (not totally diluted)
Cash flow from operations is ugly: used $3 million. But this is known about the business model. Cash is burned up front. First milestone payment is at 6-9 months plus another 1-2 months to receive cash.
Nothing else in cash flow not mentioned above.
This investment worries me about the concentration of customers (only 2 and they're government).
Total costs incurred in contracts: $42 million
Total billings: $33 million
The remainder is the $9 billion on the balance sheet.
Still no stock options granted.
Two contracts in Fujian province: $18 million, $14.5 million
One is in the development stage, the other started in March 2005.
These will require about $10 million in cash beyond what the company has.
Cash is going to be the big issue during 2005.
I expect some dilution in 2005.