Hi all – I wanted to get one quicker article out with some thoughts about the 10Q that were too long for Twitter. I already Tweeted a bit of this, but I can get into more detail here. Note – this won’t be a predictions post, I already did one of those here. These will just be some general reminders and thoughts about the 10Q in general.
Timing
I see this asked a lot, so let’s answer here as well 😊. The 10Q will almost certainly be out on Tuesday, January 18th ideally as markets open. 10Q’s are pretty difficult filings, so I would expect Steve and the team to take the full amount of time allotted.
Just to clarify, it’s normally due on January 15th (45 days from quarter end), but that’s a Saturday. So it’s due on the next business day. In the US, MLK day is Monday and markets are closed. So Tuesday, January 18th it is!
If you are unsure where to get SEC filings, all of AITX’s filings are posted here.
Results Lag
I tweeted about this, so let’s expound upon this a bit. 10Q’s and 10K’s are awesome in that they provide us with a ton of valuable info about the company. You can get detailed financials, hear management discuss progress, get the details on financial instruments the company has entered into, and so. So I’m super excited to dig into that again, I’m chomping at the bit!
The one downside, it’s old news! The period is September 1, 2021 to November 30, 2021. Therefore, we’re not going to see a lot of the recent sales and deployments even factored in here. So it’s cool to see all of this stuff, but please please please remember that this is a very retrospective look at the company. It is NOT accurate about how the company is performing today.
So I don’t want to see any of my readers asking about Six Flags, new ROAMEO deployments/sales, all of that. It all happened after the 10Q period! Think of this review exercise of the 10Q as a way to reflect on how the company did over those 90 days and where they’re headed now.
Profitability and Revenue
I just need to say it because I know some bozos are going to be flooding Twitter with it. AITX will not be profitable over this period. If you’re expecting otherwise, I don’t know what to tell you. It won’t even be close. Lucky for you this is more obvious than the concept of gravity, so it’s already priced in (despite what Stocktwits morons might think).
Revenue, on the other hand, will be the highest ever for a quarter if we are following the AITX guidance. So look for the headline of the press release to really focus in on that. It will likely be higher than both Q1 and Q2 combined. But more on that in my predictions article 😊.
Balance Sheet
We’ll still be firmly in negative shareholder equity territory. But again, this is painfully obvious so don’t be alarmed when you see it. However, we should see the company in an extremely strong cash position versus prior quarters. I had some estimates out there from some prior articles of a tad over 3m, but it could be more even. Again, this is cash as of November 30th, it very likely good be even HIGHER right now.
So don’t get hung up on the balance sheet too much. Cash is really what we need to pay attention to. It is the absolute lifeblood of the company right now until AITX (hopefully one day) reaches profitability.
Outstanding Shares
I probably shouldn’t dignify this with a response, and I’ve talked about it enough. But just to get this out there… you will see dilution quarter over quarter. Get over it. It was good dilution; it was reinvested into the company with growth to show for it. I don’t know what else to tell you! It’s like talking to a cat trying to explain that to your average Stocktwits user. I think a cat is probably more intelligent than the Stocktwits meme makers though.
Going Concern
You are still going to see that the company is at risk of not being a going concern over the next 12 months. This means that it will need outside investment to continue operations for more than 12 months because the business is not generating enough cash flow.
I know Steve is trying to get that removed because of all the cash they raised in the S-3. But it’s going to be there and once again, don’t be alarmed. This is very common in a startup stage company going through this level of exponential investment and growth. This is all part of the risks of a company like AITX.
Recurring Revenue
I’ll end with this, but recurring revenue is the key metric for AITX. I could go on for many articles about this, but recurring revenue is the key performance metric to judge the company on. It shows the amount of money AITX earns each month from leasing its products to customers. On the other hand, non-recurring revenue is when AITX just sells a product to a customer, and they do whatever they want with it.
Recurring revenue is how the AITX model is supposed to work, and it is a much better judge of performance than non-recurring revenue. Just think of it like this: recurring revenue = stable cash flow = constant customer contact = more repeat orders = customers for life. It’s that simple.
The reason I mention this is you will see a fairly high number for non-recurring revenue this quarter versus recurring revenue. That’s good and all, and we shouldn’t turn our noses up at non-recurring revenue, but we’ll want to see the recurring revenue growth quarter over quarter.
Wrap up
That’s all folks, thanks for reading my thoughts on this. I’m looking forward anxiously to the 10Q release, and I hope you are too!
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DISCLAIMER – I CURRENTLY HOLD A LONG POSITION IN $AITX. THIS ARTICLE IS NOT FINANCIAL ADVICE AND IS INTENDED ONLY FOR EDUCATIONAL PURPOSES. I AM NOT A FINANCIAL ADVISOR. AT THE TIME OF WRITING THIS ARTICLE, PERSONS AFFILIATED WITH THE COMPANY ANALYZED ABOVE MAY BE PROVIDING MONETARY COMPENSATION AS MONTHLY PATRONS THROUGH MY PATREON. THIS COMPENSATION IS NOT PROVIDED IN RETURN FOR ANY SERVICE, WRITING ABOUT A PARTICULAR TOPIC, AND/OR FAVORABLE OR UNFAVORABLE OPINIONS. MY PATREON SUPPORTERS HAVE NO INFLUENCE ON THE CONTENT OF MY ARTICLES.
