6 Reasons why NTG might set up a show to raise $1 millionCongratulation for those holding ntg stocks before yesterday. I sold all mine for the following reasons:
1) During the second quarter ending June 30, 2013, unbilled revenue rose by $1.63 million from $1.07 million on March 31, 2013 to $2.70 million on June 30, 2013(note 11 in 10q). This unbilled revenue increase is over 80% of total revenue ($2,033,070) recorded during the record second quarter, 2013, and thus very significant.
2) Though revenue rose 76% during the quarter, cost of sales merely rose 6.55%. NTG contributed the increased profitability mainly due to increased revenues in product licenses which are market oriented and highly profitable. But it is very hard to understand why regular product license fee is unbilled and why such large unbilled product license fee could be claimed as majority revenue during the second quarter.
3) Past due but not impaired over 90 days increased $1.24 million or over 300% during the second quarter from $0.41 million on March 31, 2013 to $1.65 million on June 30, 2013.
4) The number did not add up: past due but not impaired for 30-180 days on March 31, 2013 was $0.71 million, while past due but not impaired for 90-180 days on June 30, 2013 was $1.65 million (I thought the maximum should be $0.71 million, instead of $1.65 million); annual interest payment in the past year was over 20% total debt even if its line of credit interest rate is prime + 4%.
5) The last time NTG was awarded a big contract (letter of intent) comparable to the ones in the past two months was in April, 2011, from a similarly unnamed gulf region telecommunication company. Unfortunately, that contract was cancelled in July 2011, merely 3 months later.
6) NTG released its second quarter financial report yesterday, unusually early, considering it was used to release its second quarter financial reports at the end of August every year.