After a period of blog silence, I now have some time on my hands to get some thoughts down for this weekend’s rapid fire. Let’s get right to it.
There will be a separate article on this, but the big news around SIRC is the recent turmoil in the company with all of its former c-suite executives resigning and Dave Massey returning as CEO. There was recently a Q&A Dave Massey did which you can listed to here.
My honest feeling coming out of that Q&A was not great… not a disaster, but not great. There wasn’t much there that inspired me with confidence. The company still has huge cash flow problems, need extreme levels of financing relief just go keep going, are clearly aggressively recognizing revenue, they were duped by Aribiter, and to cap it all off, are being sued yet again by one of their past acquisition’s owners.
All in all, I’m still long, holding, and have even averaged down some. So I’m sort of shooting myself in the foot with my above paragraph! But I think there’s still a potential play here, but the risks have certainly ratcheted up over the last six months or so. So I think the share price drop is completely justified.
Two things here on AITX.
First, I owe you all a write-up on the most recent 10Q. Looking back at my notes when it came out, I thought it was pretty underwhelming but still held the same promise as before. I was not thrilled with stagnant revenue for the trailing 9 months year over year with a very similar level of cash spend. A big caveat, RMR is going up healthily, the previous 9 months in 2021 was skewed up by one-time sales. So all in all, it’s progress, but maybe not as much as we were all expecting, or at least as much as I was expecting :).
However, we have been hearing more news about sales really picking up, and I’ve never expected the growth of AITX to be a nice linear upward line. So take that as you will. More to come in a separate write-up.
Second, alluded to above, we’re getting some great sales PR’s from the company as well as revealing GXO as their big logistics client. Love it, love it, love it.
To be quite honest, there hasn’t been too much to write about since my last article because it doesn’t seem like much has actually happened. They still have the CE, we’ve received no new financials, and the weekly updates are pretty stagnant. To sum up the last few updates, they’re basically just saying they have an enhanced back-office team who’s now working on it. That’s it really.
There’s an update video on Monday, so maybe there will be something more substantive. But my current thought is we’re not seeing pink-current and the CE removed until April or May at least. I think they will aim to release the FY 2022 annual report (and all of the previous re-releases) as close as possible to the pink-current deadline of mid-April. But that is very optimistic, I think.
Similar story to CYBL, still nothing from them in terms of revised filings or a Q3 2022 10-Q. I think they are probably going to release their 2022 10k on time (by mid-April) and subsequently re-release all of the reports from 2020-2022 that they said were wrong. All in all, pretty disappointing from them, but at least they are working with a competent auditor now and it should theoretically not be an issue going forward. Wait and see here, I’m still holding but I have not averaged down. There’s just no way to know how well the business is doing…
This still remains a relative unknown compared to everything else I follow, but I’m going to keep on covering anyways 😊. As a quick reminder, they’re a holding company with three divisions: custom countertops in Tulsa, medical payments processing/billing solutions, and green technologies (basically nothing). They have no debt, very strong balance sheet, no dilution for a long time, profitable, and generally stable growth. The market cap hovers around $1.9m depending on the day.
Since I last wrote about this stock, I sold almost my entire holding when it went over 0.01 which I thought was pretty overvalued. It has since gone down to its previous holding area of around 0.005-0.006.
I have already begun re-purchasing shares and building up my position back at around a 0.0053 cost basis as of writing this. I want to get out an article on my price target for them, but I have it around 0.008-0.009 depending on the method / assumptions.
I still think this company is a pretty big steal where it’s trading at now, but I don’t anticipate exponential returns barring some crazy black-swan type event.
This may be another separate article, but I’ve been following XALL for a few years now. They are mostly involved in developing payment solutions as a long-term goal, but short term all of their revenue and profit comes from an IT staffing subsidiary. I’m not long on this company yet as I think their financial reporting is a little insufficient for their current market cap.
However, I think this company has loads of potential as it builds out its back-office function and improves reporting quality. Allegedly an audit is in process, but for better or for worse, the company does not blast news and it moderately quiet.
What can’t be ignored though is that they are growing their staffing business considerably, they are profitable, and it is a growing industry. In my opinion, any payment solutions they develop will be a cherry on top if they’re ever developed. My best-case scenario is them getting acquired in the next two years or so at a nice premium.
More to come here.
My Other Close Watch List
Here are my updates on the other companies I’m watching closely:
- RELT – very illiquid still, but strong growth potential in the home building and home improvement areas. Even with rising rates, I think labor shortages will keep this business afloat, even with a real estate market like Austin softening.
- MRCR – same as RELT, this is in the construction and contracting industry. They’ve divested dud divisions and are focusing on their higher margin activities. It still feels a bit overvalued, but I may add soon. They’re profitable and have a healthy balance sheet, yes please!
- DDDX – this remains on my radar, but I haven’t seen the financial progress yet which warrants an investment. I like the industry potential and I like what they’re doing, but it’s too soon for me. I need some more tangible financial progress.
That’s all I’ve got, thanks for reading!
THIS ARTICLE IS NOT FINANCIAL ADVICE AND IS INTENDED ONLY FOR EDUCATIONAL PURPOSES. I AM NOT A FINANCIAL ADVISOR. AS OF THE TIME OF POSTING THIS ARTICLE, I HAVE A LONG POSITION IN RJDG, AITX, ALPP, and SIRC.