Q1 Report - Questions/Comments
Post# of 96874
Posted On: 05/18/2015 11:12:28 PM
After looking at the Q1 report and comparing to 2014 Q3 and Q4 reports, I have the following questions/comments and look for your feedback/insight.
- Inventory reduced by $875k through the sales of NP1 - good to see working capital is reducing and thus driving receivables. Media sales were $2.04M, so it would be worthwhile to understand from NTEK what the breakdown is in Media sales between NP1 sales and movie rentals. Further, what is their outlook on continued NP1 sales - is this likely to continue or are they simply looking to clear out their inventory and move to a royalty based agreement for future production and avoid any inventory carrying costs. Lastly, what is the gross margin they are achieving on the NP1's -my thought is likely low as net earnings are only $333k overall. They may not be making much/any money on the NP1 sales, but they are at least raising cash from items that were sitting on the shelf for 6+ months.
- Prepaid royalties have doubled again - Q3 was $470k, Q4 was $970k and 2015Q1 is now $1874k - supports the continued growth of acquiring movies through the various studios. This asset increase is the main driving factor of their reduced cash position - completely understandable and expected.
- Net of Accounts Receivable/Payable moving in the right direction suggesting improved cash flow in the coming months/quarters to support further prepaid royalties. Q3 was $103k, Q4 was $208k and 2015Q1 is $870k. This is likely driven by NP1 sales in Q1.
- Q2 report is going to be key - with Interstellar, GI Joe, others hitting the market in Q2, they need to be able to show considerable growth in sales to justify the prepaid royalties that have been incurred to date and confirm that the business model is solid and can deliver the results we expect.
Overall, I'm still long on NTEK and have increased my position 130% over the last month, bringing down my cost basis to ~$0.036.
Regards,
-kbulldog.
- Inventory reduced by $875k through the sales of NP1 - good to see working capital is reducing and thus driving receivables. Media sales were $2.04M, so it would be worthwhile to understand from NTEK what the breakdown is in Media sales between NP1 sales and movie rentals. Further, what is their outlook on continued NP1 sales - is this likely to continue or are they simply looking to clear out their inventory and move to a royalty based agreement for future production and avoid any inventory carrying costs. Lastly, what is the gross margin they are achieving on the NP1's -my thought is likely low as net earnings are only $333k overall. They may not be making much/any money on the NP1 sales, but they are at least raising cash from items that were sitting on the shelf for 6+ months.
- Prepaid royalties have doubled again - Q3 was $470k, Q4 was $970k and 2015Q1 is now $1874k - supports the continued growth of acquiring movies through the various studios. This asset increase is the main driving factor of their reduced cash position - completely understandable and expected.
- Net of Accounts Receivable/Payable moving in the right direction suggesting improved cash flow in the coming months/quarters to support further prepaid royalties. Q3 was $103k, Q4 was $208k and 2015Q1 is $870k. This is likely driven by NP1 sales in Q1.
- Q2 report is going to be key - with Interstellar, GI Joe, others hitting the market in Q2, they need to be able to show considerable growth in sales to justify the prepaid royalties that have been incurred to date and confirm that the business model is solid and can deliver the results we expect.
Overall, I'm still long on NTEK and have increased my position 130% over the last month, bringing down my cost basis to ~$0.036.
Regards,
-kbulldog.
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