Understanding the business plan
This is my understanding of Reliq's business plan:
When a sale is made, it's two part, equipment and service.
The company buys the equipment from a 3rd party for cash and resells it to the customer on a time basis, up to two years.
Part of the sale is a service contract. Once the equipment is paid off, the service contract is the cash cow.
There is some point in time where between the equipment payments and the service contract the sale becomes profitable.
When sales are booming that means more equipment needs to be purchased. Service revenue increases, but on a monthly basis, not immediately.
Like many fast growing companies they're spending money now for revenue in the future. Once service revenue is greateer than the equipment sales the profit can be enormous.
This was alluded to in the MD&A 11/29/22. Lisa said this is going to happen in 2023.
If anyone disagrees with my analysis, please let me know.
In summary, this is a long term investment that should be very profitable!!!