Byron,Not sure for your reason to talk down the stock, but...

Byron,

Not sure for your reason to talk down the stock, but perhaps you should get a better understanding of analysing financial statements, especially those for a company undergoing restructuring and acquisition by growth.

In relation to the audit, I'm sure you are aware that the 4E is not required to be audited. Most companies (especially smaller companies) lodge their 4E without audit sign-off, as auditors are busy with much larger clients.

I'm extremely familiar with financial reports and analysing them. I'm not sure where the 'creativity' is located in the financial statements. Perhaps you can point them out.

The current liability position is a function of accounting standards requiring that disclosure. Note 11 (subsequent events note) clearly states that $3.4m of liabilities really are non-current liabilities as they have been extended). And the overdraft has also been extended

Accounting standards also now require upfront expensing of acquisition costs (rather than the past required practice of capitalising them). This contributed in excess of $700k of the loss. The recurring business was EBITDA positive for the 6 month period (which only included a couple of months of the new acquisitions).

The directors continue to provide a forecast guidance of $7-$9m EBITDA. The previous 4C stated EBITDA for the month of June 2010 was over $500k (already on track for $6m pa). I actually think the business will be able to exceed guidance.

The fact that Peter Kazacos has lent the business money (which I think was in position at the time of the original acquisition) is actually a positive sign as rather than issue shares, he is comfortable with the businesses ability to repay it, and shareholders have not been diluted. The board is obvsiously comfortable that it will generate funds to repay the loan.

In relation to your comments about Telstra losing $600m on Kaz, you are very wrong on this. Telstra originally purchased Kaz for $333m in 2004. It sold the super processing business AAS for $215m in 2008 and a few other small parts for $15m in 2007-2008. It sold the remaining Aspect computing business for $200m in 2009 (to Fujitsu). It also kept some other parts of the business. About 3 minutes spent on Google will let you see these transactions.

The simple sums above show just on capital components Telstra made almost $100m on buying and then selling Kaz, even before you take into the account the profits in the ownership period.

Better luck next time in talking down a stock.

I think in 6 months time, this stock should be a lot higher than it is right now once it provides more reports.

Let the debate begin!

Regards
Marv

DISC: I hold HTC