Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. Inova Technology Inc. (1088211) 10-Q published on Sep 16, 2013 at 5:16 pm
Reporting Period: Jul 30, 2013
The following table sets forth by level with the fair value hierarchy the Company’s financial assets and liabilities measured at fair value on July 31, 2013.
In May 2013, 61,582 units of Tesselon, LLC were sold to the president of Trakkers, LLC for $61,582. The units represent 1.1% ownership of Tesselon, LLC, which has a majority ownership in Righttag, Inc, and Trakkers, LLC. As a result of the transaction, the Company recorded $18,579 to non-controlling interest which represents the non-controlling interest’s share of the net assets of these entities with a resulting credit to additional paid-in capital of $80,179. For the three months ended July 31, 2013, the non-controlling interest’s share of the earnings of these entities was nominal.
Of the total outstanding debt, $11,605,760 was in default as of July 31, 2013. Principal owed to Boone Lenders, LLC (“Boone”) increased due to the paid-in kind interest described below. $295,556 of legal fees were added to the Boone notes.
Net loss increased from $117,598 for the three months ending July 31, 2012 to a net loss of $1,095,873 for the same period in 2013. This is mainly due to higher interest expense and professional fees and lower gross profit.
Desert’s projects sometimes require bonding. Our ability to obtain bonding is related to our financial condition; if we are unable to obtain boding at certain times this could affect our ability to accept projects we win bids on.
Management believes adjusted EBITDA provides a more useful measure of company performance. This is because there are several measures included in GAAP net income which are related to warrant/derivative accounting. We consider these items to be unrelated to operating income and performance, and they do not impact our cash flow or debt service. However there is a limitation in using Adjusted EBITDA; each company may use a different definition of Adjusted EBITDA and therefore it is hard to compare them to each other. For example our company might use different add-backs to net income than our competitors, thus making it more difficult to compare us to them. We compensate for this by regularly including adjusted EBITDA in our filings so that our performance can be measured over time.