Tuesday, December 27, 2005
Two more companies
58% of revenue was from 3 customers (hospitals), this percentage has been dropping over the years. The number 3 customer just dropped their relationship to do it in-house starting April 15, 2005. They lost a key customer in 2003 and another one in 2002.
CEO owns 9.9% of the stock. Mercury Asset Management owns 26.3% of the stock.
Assets are mostly AR, PP&E, and cash. Current ratio is 2. About 1/2 equity. Some of the AR is factored.
31 million shares. At least 2.3 million warrants and options. Assume about 34 million totally diluted shares (no warrants/options issued in 2004). Earned about 10 cents in 2004, but generally only about 7.6 cents in years prior.
Cash flow from ops is consistently lower than earnings due to AR, prepaid stuff, factor reserve, PEDC incentives. Real free cash flow average for the last 3 years is probably around $100K or less. So real free cash flow is perhaps 1/3 of a cent.
Looking at Q3 2005:
Share count is the same. Current assets dropped, so did current liabilities. Current ratio about the same. Equity dropped to $818K from $924K (treasury stock is unchanged). Net loss for quarter and for the year due to lower revenues (probably that big lost customer). Free cash flow actually matches earnings in 2005, which is good (had been crappy) and capex is close to depreciation.
One customer is 80% of AR! And that customer has cash flow problems! But they are supposedly improving. Another customer had 7% of AR and that was all written off.
The stock is probably worth at least 5 cents. It's selling for 4.5 cents.
UNFY (sec), process automation software for insurance and transportation. No customer concentration. Revenues have declined slightly every year since 2001. Every year the bottom line gets worse. They started losing money in 2004 and it got worse in 2005. And share count has been dramatically increasing.
Assets are mostly cash, AR, and goodwill. Current ratio slightly better than 1. Not much equity. Free cash flow is a bit worse than earnings.
Q2 ending Halloween 2005: Lost money in Q1, barely above break-even in Q2. Cash flow from ops is terrible due to deferred revenue, other accrued liabilities, and AP.
This business "doesn't have enough freeboard" to use a sailing term.
Did I read in December that you bought back into CXTI?
I am considering it. Hate to foul up your blog with TA but CXTI has formed a very nice ascending triangle since November. :-)
Back in ETLT and SUWN. I'd be happy to read anything you care to write on SUWN.
I googled Sherb&Co and it is NOT good. Lots of dilution potential too, I've learned. Its a nice chart but I doubt if I'll be around long.
I didn't mean to sound all that ominous about SUWN. I'm curious if you knew anything I didn't know. Sherb & Co isn't some tiny accounting firm, they have 50 public companies (although I haven't checked out those companies).
Yeah, I bought CXTI back in Nov and some more in Dec.
And don't worry at all about writing stuff in the comments. That's what they're here for.