Well Well Well.The following facts are from the Financials of...

Well Well Well.

The following facts are from the Financials of M2.

Remember do your own research.

Dont just listen to cheerleaders on message boards. Technical analysis should only be used to support a company that has strong financials.

The board of this company should answer some serious questions.

Please explain.!!!!


1. Acquisition of a wholesale telecom provider increased turnover by 25% yet bad debts fall 50% from 501 k to 230 k (see Balance Sheet)

2. Licence income falls from $4.9m to $1.6m million. A material drop and what will the Licence Income be in this financial year. If it dropped $3.3 million will it drop to Zero this year. This is a material amount in their Profit & Loss Account given their profit of approx $2.4m

3. Wages increased only $4.06 to $4.15 with turnover up from $28.2m to $42.8m.

4. So the turnover increases due to buying a wholesale business that has lower margins. What are the effects if one customer were to delay or forfiet payment given the current ratio for this company is 0.9.

4. Bartercard increased oustanding from 367k to 591k. Is this a non cash item or is the value of Barter Points in the balance sheet stated at realisable value.

5. Cash on hand fell from 4.2 m to 2.6 m but included in this cash balnce is $1.7m as money on trust from "fly & travel" So if we take out the money that is HELD IN TRUST this company has 900K in the bank at 3oth June. See the balance sheet.

6. Goodwill at 2006 being $2.8 m with addition of $5.8 m in 2007 for value of $8.7 mill at 30 June 2007 no write off ?


The business has assets of $9.2m but in this amount is $8.7 m in goodwill. No doubt this reflects the value of the customer base. But who owns the Wholesale Customers. Is it the company that buys and resells telecom services from M2 or is it M2 itself. Im sure if you asked the Wholsale customer he would claim ownership.

Both company's cannot claim ownership of the same customers base.



From the Balance Sheet
Ratio's 30th June 07
trade receivable 7.7m
trade debtors 11.6 m
current liabilities 12.2
current assets 11.0m
inventories 60k


7. quick ratio: current assets /current liabilities 0.90 therefore question for Directors. It means they have 90% of the short term assets to meet 100% of the short term liabilities. So question for directors ! Can you pay debts as and when they fall due.


8. Is this company funding its business with short term recievable debt?


9. Earnings per share profit/average number of shares 2006 .36 2007 .40 but what are the numbers if you exclude non cah item like bad debt provisions and bartercard increases??


So if we exclude the non cash items such as the increase in Bartercard 271k and Decrease in bad debts 224k this gives us 495k. So if we subtract this 495K from the Profit & Loss Statement, what is the real profit increase this year. Or is it a decrease. Hello anyone listening.???

So was there really any increase in profit last financial year?

The wholesale model is notorious for bad debts. Thats why carriers outsource the model rather than maintain relationships with a multitude and nefarious resale customers.

Enough said,