FormerXBC Inc XEBEQ

RE:RE:RE:Still questioning everything

[AlwaysLong683]

filoux004 wrote: Here TT direct your energies on CTS and RET.a and tell me where the weaknesses are? Would love your input. Peace. Time to move on, new ideas welcome!

OK, I'll bite and play Devil's Advocate re. CTS just for fun.

Financial Statements dated June 30, 2022:

- Too much debt (Current Ratio and D/E Ratio). A small cap company holding this kind of debt in a rising interest rate environment is just asking for trouble IMO.

- Goodwill (422M) represents approximately 24% of Total Assets, so CTS either acquired a number of outstanding companies that were worth every penny of the amount CTS paid over and above the fair market value of those companies' assets at the time of purchase, or CTS may have future writedowns (impairments) against Goodwill. Not a fan of serial acquirers.

- How the bleep do you manage to accumulate so much debt while also diluting the &%^# out of your shareholders....? According to the CTS Income Statement for the periods ending June 30, 2022, CTS increased their shares outstanding by 25% during the 12-month period between June 30, 2021 and June 30, 2022. That's a lot of new shares issued in a short period of time.

I believe CTS is not a pure SaaS company. In other words, they sell / re-sell hardware as a significant part of the offerings they provide to clients, right? Well, hardware sale / resale is usually a low-margin business, and with inflation quite high already and the price of chips and other hardware components rising, I wouldn't want a IT solutions provider to be too dependent on the hardware side to acquire new clients. You either eat the price increases or pass them along to your (smaller than GIB.A) clients and hope they can afford it and are willing to pay it.

What does CTS offer that SFTC and other competitors don't?

Again, just some observations since you asked.....This company may turn out to be a winner, but too risky for me personally.