Hi all, welcome to another weekend update! Let’s get right to it.
CYBL
This was a pretty big up and down last week or two for CYBL. We started off with their share price imploding again after more major brokers cut off buy orders (discussed here).
Then, we get some pretty awesome news that CYBL’s drones were announced as part of a two-billion-dollar aid package to Ukraine.
It was exactly what the company needed… even with most investors not able to make buy orders, the stock finished the day up 57% from previous close. Which I think is really saying something for a CE company.
All of this ties into what I’ve been saying for the past few weeks. The business of CYBL seems to be doing quite well all in all. They were profitable before the CE and had been growing in key, high growth, industries. However, the CE and reporting fiasco have been the bigger concern for investors, including myself.
So it would be a shame for the investor community to get burned on a penny stock that seems to be doing quite well from a business perspective, but their public reporting has let them down. At this point, only time will tell how long their reporting cleanup will take.
My conservative estimate from the above article was June for them to be fully up to date on filings. I still think it’s realistic they could exceed that and maybe even get their annual reports out by April 15 and be pink current even sooner. But I haven’t heard anything that makes me think otherwise, and the wheels of change move slowly at OTCM.
For now, all we can do is wait and see.
ALPP
Not too much cause for concern, but the company has unsurprisingly put a reverse split up for a vote. Reception seemed mixed, but I think it was sort of inevitable given that they were likely to be de listed from NASDAQ. I discussed more here if you want to read more.
AITX
Quick bit here – the fiscal year ends on the 28th and they’ve been teasing a devices ordered figure for the past week or two. The last press release mentioned that their “expectation” is 300 units for the year.
While it would be cool to see where devices ordered shake out, I’m actually less concerned with that metric in isolation. While it’s directionally where growth is for revenue, it’s a bit of a flawed statistic in itself. Not all units are made equally, and they have very different bill rates. So an order of 50 ROSAs looks great, but 15 ROAMEOs would accomplish something similar, but it’s 15 units less.
Also, ordered devices are not revenue generating until they’re deployed. So it could take months for a sales PR to start earning.
For that reason, I also like to pay attention to actual recurring revenues booked per month, which is also a flawed in itself! This way, get to see what tangible revenue they are earning, but on the downside it’s all lagged and is probably not quite as indicative of the future.
In the end, I try to combine their backlog of devices to be deployed with current recurring revenue and forecast out revenue that way. But even that is tough because we don’t know the bill rates of each device!
If it was easy, anyone could do it! But hope this is some food for thought…
RJDG
A bit of a weird one, but RJDG re-issued the last three years of annual reports plus their Q1 filing last week. I had noticed when they issued their Q1 report that they had revised the 2022 annual figures from what was presented in the annual report. I sort of shrugged it off because it wasn’t that different.
But now we see that they have gone out and revised their last years of reports, which puts them into pink-limited on a 15 day grace period until OTCM reviews.
As you know with CYBL, I’m a stickler for reporting. So this wasn’t great news. HOWEVER, and a big however, the changes they made in re-issuing the reports were more along the lines of “clearing out noise” rather than anything substantially changing.
Remember, RJDG doesn’t have complicated preferred shares or strange ownership structures. It’s a pretty simple company at the end of the day.
So the changes they made were more around some rather, odd, accounting choices they were making that you could pretty easily adjust out anyways. For example:
- They were showing intercompany loans as an offsetting assets and liabilities…???
- They were capitalizing some R&D
- They accidentally had some small notes as long-term debt instead of current debt
- They treated some cash flows from investing activities as operating activities, and same with financing activities.
So it was stuff you could parse out anyways and just seemed like strange accounting they were using for their own internal purposes. The final revenues and net income did not change that much. And most of the changes were due to changes in non-cash items like depreciation and amortization.
I think some of this actually has to do with an audit they were undergoing that has not finished.
Either way, if this company goes CE because of this, I am not concerned, nor has the market. They’ve already met the filing requirements, so it’s just a matter of time. Still bullish here regardless and I’ve been growing my position.
TLSS
A bit of a new one here for me, but I have been watching TLSS silently for about a year or two. But it has really only been in the last six months or so where I’ve truly started seeing potential. They’re aggressively growing horizontally and hoping to gain some synergies out of this.
My biggest concern now is that these were all heavily debt financed, which is good and bad. The good news is that there was limited dilution. The bad news is that they have some serious principal repayments due in the next 12 months that I’m not totally sure they can make.
But it’s too soon to tell as they don’t have a good track record of financials under their belts. So I’m having trouble reliably forecasting cash flow.
So more to come here. It’s a smaller community, but I’d like to get an article out at some point with some thoughts on price targets and forecasts.
ILUS
I joined the ILUS Discord (wow what a Discord channel that is, easily the most active I’ve ever seen). I’ve also been silently following ILUS for the past year or so. I want to start getting articles out… but their company structure is one of the most complicated I’ve seen in terms of subsidiaries and ownership structure (6 preferred share classes!).
Because of this, I’m going to hold tight until their 10k comes out at by mid-April (with NT). But it’s a really intriguing company to cover because it is such a complex and growing company. I think it would be a nice challenge.
More to come here! I’ll end it there for now – thanks for reading!
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DISCLAIMER – AT THE TIME OF WRITING THIS ARTICLE I HAVE A LONG POSITION IN AITX, RJDG, and ALPP. THIS ARTICLE IS NOT FINANCIAL ADVICE AND IS INTENDED ONLY FOR EDUCATIONAL PURPOSES. I AM NOT A FINANCIAL ADVISOR. DO YOUR OWN RESEARCH.
