Was reading in the Afr a puff piece regarding an IT/mining company called Smarttrans. The article was basically saying that there Revenue was up this year due to app sales in China and Bitcoin mining.
If the Bitcoin stuff wasn't a red flag already, I decided to delve into the annual reports to see what secrets prevail.
A couple of things.
1. Chairman of directors resigned in November 2012.
2. Not a lot of independence on the board. A few are ex managers of the the business and related entities
3. Revenue recognition is a worry. Basically the annual report specifies the company recognizes revenue when goods or services are delivered to the customer. No refernce to using the standard comment when "collectibility is reasonably assured". Combined with statements like "push" marketing for apps, there are concerns that revenue may be overstated.
4. 59 million in accumulated losses.
5. Accounting Queries. 2013 annual report had an asset sale of 2 million included under revenue..
6. One of the biggest assets is capitalized mining expenditure.
7. Cash flow is a Concern. Without the 2 Million in asset sales and a 2 million capital raising, the cash flow would have been negative.
Other comments: in my opinion, it is very hard to make money from apps. When 12 year olds are writing apps for mobile phones, it is pretty clear that there are no barriers to entry in the app world. If this is where Smarttrans is heading, I fear for its long term viability. As for the Bitcoin stuff...as I understand it, anyone can mine bitcoins..it's just an algorithm. Dangers are that the Bitcoin price will drop, which it has already, as countries start banning its use or start policing it. Also, there are only a fixed number of bitcoins that will ever be produced..and who knows whe the tap will turn off.
But hey, I could be wrong.
Note: not an recommendation to invest/ not invest in Smarttrans. Please see your financial advisor before investing.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment