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By dundee

Posted: Wednesday May 4 4:23:15PM 2005

who said I liked accounting? ;) lol Thanks for the discussion. I invested in Petrofield YEARS ago when it first went public. It has always intrigued me. I made a little money back then, but at that point they struggled a little to maintain profitability as they were just at the breakeven point. I understand that the profitability is a bit more stable now. I will try to grab some time to take a quick look at the financials etc. over the next day or 2. I will post my results in a new thread. Dundee

By Broke in Canada

Posted: Wednesday May 4 1:36:52PM 2005

Its been a good accounting chat Dundee. I is nice to talk with someone that likes accounting as much as me. Hey, what do you think of Petrofield Industries? I spent a good two hours last night on crunching the numbers and things look good to me.

By dundee

Posted: Wednesday May 4 10:43:45AM 2005

oops. good catch Broke in Canada. "You said cash from operations is revenue less cash expenses, meaning it is not a complete accrual figure as expenses would not be accrued, only revenues." "cash expenses" is an ambiguous term. I did not mean to say cash-basis expenses as in they were actually paid (not accrued), but rather expenses that are of a cash nature - they have or will be paid in cash unlike such things as depreciation, depletion, stock-based compensation, deferred income taxes, etc. None of these posts took me more than but a few minutes to write so I still have lots of time to do research still. The quick analysis of ILI was DD as I wanted to consider bottom fishing - still have not made a decision though. Best of luck to all.

By Broke in Canada

Posted: Tuesday May 3 10:04:08PM 2005

But Dundee you do make some good points. Hey Charles Shan, what else do you know about Petrofield? I just did some financial analysis and in my opinion Petrofieled looks undervalued. I like it.

By Broke in Canada

Posted: Tuesday May 3 10:02:08PM 2005

Dundee....you are contradicting yourself. You said cash from operations is revenue less cash expenses, meaning it is not a complete accrual figure as expenses would not be accrued, only revenues.

By Broke in Canada

Posted: Monday May 2 5:00:17PM 2005

This is from section 1540 of the CICA Accounting Handbook. Note the part where it says: "changes during the period in inventories and operating receivables and payables" SECTION 1540: Examples of the major classes of cash flows from operating activities are contained in paragraph 1540.16. Enterprises are encouraged to report such cash flows using the direct method. The direct method provides information which may be useful in estimating future cash flows and which is not available under the indirect method. Under the direct method, the major classes of gross cash receipts and gross cash payments are disclosed. This information may be obtained either: (a) from the accounting records of the enterprise; or (b) by adjusting sales, cost of sales, interest income and expense and other items in the income statement for: (i) non-cash items; (ii) changes during the period in inventories and operating receivables and payables; (iii) other deferrals or accruals of past or future operating cash receipts or payments; and (iv) items for which the cash effects are investing or financing cash flows.

By scotty

Posted: Monday May 2 6:35:41PM 2005

Now play nicely, guys!

By Charlesshan

Posted: Monday May 2 12:07:47AM 2005

Dundee, excellant analysis. Job well done! You said that you may look at ILi as a possible bottomfisher, at what price does Ili have to go down too till you would be interested in buying ILi again? Cheers

By dundee

Posted: Friday Apr 29 4:52:19PM 2005

hang on for a sec... I think you are WAY off in the "cash lost from operations" number. Cash Flow from operations was negative 215,525 AFTER the 100K bad debt expense and a $35K foreign currency loss. In my opinion, the burn rate is not really as high as you think. Loss for year: 377K Non cash or theroetically non-recurring or unusual expenses: Bad Debts: 101K Stock Based Compensation: 129K Amortization: since most of this relates to amortization of rental units, I think this should not be added back when looking at burn rate. Foreign Exchange Loss - this is likely due to being stuck holding long-term US receivables that are declining in value along with the weakness in the US dollar. Since Jan 1, the US dollar has stabilized some against the CDN$, so the level of foreign currency loss, should decline. I will leave this in as a "buffer" to be conservative, rather than adding it back even though it should not happen this year unless mgmt is holding US dollars (which would be stupid in my opinion). Actual annual cash burn: $147K or about $37K per quarter. Of course, this assumes that they can operate without bad debts going forward. Apparently the bad debt was one customer in 2004 - at least that is what I have heard. The problem really appears to indeed be one of accounts receivable collections and you can bet that the auditors looked at this very closely. The auditors much have found some comfort level that the remaining AF would be collected otherwise it would have written it down too like it did witht the other 100K that appeared as a bad debt. The MD&A makes reference to the A/R being reduced to about $275K at present. One would certainly think that some of this would relate to revenues during Q1 and not entirely to the old balances. If they collect on some of the A/R, the cash balance at the end of Q1 could have even increased. Not saying it did, but it is just as plausible that it increased vs. decreased. More once I get more time this weekend...

By Broke in Canada

Posted: Friday Apr 29 10:47:41AM 2005

I agree. But considering that they lost $400,000 cash from operations over the last year, and probably about 150k of that was in the 4th quarter, I would say their cash burn is pretty bad. I think the ILI CEO should start selling his hair for cash. And remember, they were profitable the first two quarters. With one entirely disastrous year sales wise, whose to say that cash might not decline by up to 600-700k over the next year. ILI should consider another share issue.

By oilspout

Posted: Friday Apr 29 10:45:13AM 2005

The MD&A acknowledges the increase in A/R accounts is due to slower paying customers. To suggest they will not get paid at all is a bit of a leap (possible but there is no evidence to that effect). With cash at 12.3 cents, no L/T debt and limited payables, the company is not in any immediate danger of going under. That being said their L/T viability depends on closing some deals and moving their product.

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