Starcom Systems Cash Position Explained

Disclaimer: I don't have a license to distribute financial advice and therefore this should be viewed as being for entertainment purposes only.

Starcom Cash Position Explained:

It's been notable that since the company's interim results this week there has been a lot of question about the company's cash position. I hope to be able to clarify this in this short blog:

On the face of it, cash of $46,000 admittedly doesn't look too appealing, however when you dig further into the background the apparent lack of a need for cash becomes clearer.

SAS revenues in the first half year came to $845,000 (this is effectively an electronic online data management platform for tracking systems) and now the system is in place I am told this is pure profit on the bottom line - these revenues are expected to increase in the second half of the year and are gathered monthly.

These latest results cover the six month period ending in June, so if we assume that they don't grow their SAS revenues (to keep the maths simple) then in the period since the end of June they will have taken in a further $281,666 over July and August:

$845,000/6 =$140,833

$140,833*2 =$281,666

Although remember in your own calculations that they are expecting SAS revenue to grow in the second half of the year, so you can probably increase this on paper.

Now the company also stated that they used net cash of $200,000 in the half year, so if we take this monthly figure ($200,000/6) multiplied by two to cover the months of July and August away then we have an effective cash balance of:

$281,666-$66,666

= $215,000

Furthermore, you have to add on to this figure extra sales referred to in the results:

"The new version of the Watchlock known as Watchlock Pro was effectively only launched into the market during July 2016, yet some sales have already been booked following the launch." 

Realistically, factoring in a small level of SAS growth and say a modest $25,000 of sales since the results takes us to a cash position of ~$250,000-300,000, in my opinion.

Food for thought...

The Masked Stock Trader