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Friday, May 19, 2006

ETLT has filed their 10-K!!!!!!

It's here!

GAAP earnings are 12 cents per diluted share vs 15 cents (restated) in the prior year, so ETLT was selling for a P/E of around 3. But the real share count now is just over 40 million shares, so the earnings are more like 10 cents. Cash flow from operations is horrible, but a big improvement over Q3, due to changes in accounts receivable. Also $1.2 million capex.

Cash + short term investment is over $28 million. Since total liabilities are less than $2 million and there are 40.6 million shares (on May 16, 2006), this means the quick liquidation value is above 65 cents per share. In other words, you could liquidate the company in a wild panic and still make a 62% profit above the last stock price.

Thankfully I have the whole weekend to process the statement.

UPDATE 6:07 PM same day:
Check out page 32. If E-Sea had been owned by ETLT for the full year, earnings for the year would have been $6,040,339 or 14.9 cents per share (using 40.6 million shares). If we add in the $1 million for the new E-Sea business and another $2 million for the upcoming big investment, we end up with $9 million earnings, which is even higher than I had estimated back in January in the "smoking jacket" post that "Patty" (no relation to Pat who has been providing valuable info from Heron) thought was so funny.

UPDATE same day:
It's funny that one of the problems ETLT has is that they simply lack the experience in accounting for non-routine transactions.
Our new independent accountants, Ham Langston & Brezina LLP conducted an audit of our financial statements for 2005. In connection with the issuance of its report to the Board of Directors, Ham Langston & Brezina LLP reported two material weaknesses under standards established by the Public Company Accounting Oversight Board regarding some elements of our system of internal controls. They noted the following specific material deficiencies.

(i) The Company lacked the required expertise needed to properly account for non-routine transactions (such as the acquisition of other businesses and preparation of its required financial statement disclosure in accordance
with U.S.G.A.A.P. and SEC rules and regulations.

(ii) The Company has restated its consolidated financial statements for the year-ended December 31, 2004 to reflect the accounting for derivatives. The restatement is considered a material weakness over financial reporting as defined by the PCAOB.

Other than the foregoing initiatives, there were no significant changes in our internal controls or to our knowledge, in other factors that could significantly affect such internal controls subsequent to the date of their evaluation.
There are far worse things that can happen.

UPDATE 4/20/06: I anticipate posting my notes on the 10-K late Sunday afternoon (Eastern Daylight US time). Perhaps 4:00 PM. Did you notice the note about eased restrictions on the cash?

UPDATE 4/21/06: Well, I figure if ETLT can be a month and a half late with their 10-K, I can be late with my analysis of it. I've put a lot of work into it, I'm tired, and I need a break. I hope to finish on Monday. But in other news, this blog is now officially 1 year old!

Bruce, don't forget that the pro-forma results that include E-Sea as if acquired since Jan 2005 probably include that dubious "other income" of nearly 1.5MM. I think that should be backed out of net for proforma. Adjusting for the full dilution, and it would bring proforma, fd eps down to 0.11 for FY05...and that's virtually untaxed.

Regards, ABH
Yeah, you're probably right about that, although I haven't gone back and checked it.
Ok, so I went back and looked. First thing to note is that the goofy income statement was for 2004, not 2005. Second thing to note is that E-Sea's Q4 results show $447K of operating income, and that's within an audited statement. So it's realistic to say that a full year of E-Sea's income might increase the net income by $1.5 million, although the $2 million number seems a bit high.
Bruce, please check again. I'm looking at the 8k filed on 10/6/05 for E-Sea and it clearly shows that this "other income" was recorded in the first 6 months of 2005 (ending June 30, 2005)

Also, check out the cash flow statement for the 6 mos ending June 2005.....how in the world did they come up with net income showing -227 when the income statement for the same time period shows +1867 ?!?

You're correct, sorry. I covered that whole thing back in January here.

So the pro-forma results for the year including E-Sea are bogus and I'm surprised and annoyed that they're still using those numbers.
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