SHU what’s the deal?

[mikeyf]

I think it's beyond reasonable doubt that their backlog numbers are significantly inflated, but here is the snag. They could be inflated by 50% and the company could still do pretty well. 

You are clearly making false inferences and don't know how backlog works.

The most important thing to know is initial backlog dollar totals are based on CONTRACTUALLY SIGNED AGREEMENTS with customers. You can't "inflate" the numbers. Where did you even get this idea? I don't work at Pareteum, so I can only guess, but I will eat my shoe if I'm wrong in guessing that the backlog is accessible to all senior and executive level staff and the numbers are closely monitored and updated with every new contract, revision, and invoicing. What you suggest by saying the numbers are "inflated" is that there is a wholesale corruption at play by upper management to manipulate the numbers to deceive the investor.  And by the nature of how backlog works to drive invoicing, this corruption would leak into the GAAP numbers (so they would have to over-invoice the customer to hide the lie!).  That's an absolutely ridiculous notion!  They are the words of a conspiracy theorist.  If that were proved true in any way, I would immediately sell ever single one of my shares, not just half!

Now let me explain to you what's really going on:
What you perceive as inflation is more than likely base contracts revising upwards due to increased subscribers and/or up-selling acquired services.  Are you in denial of the fact that this sector is rapidly growing and subscriber numbers are growing?  You're throwing out to your readers an implausible bear thesis that is actually more than likely a plausible BULL THESIS.  Let me give you a working example:

Let's take this deal: https://www.pareteum.com/news/pareteum-e...-contract/

5 points of my example:
1. Asia is blowing up right now.  
2. This particular contract will grow beyond the 50M base when all said and done because of my first point  
3. The base contract is for 10 million subscribers (throwing out a random number here)
4. Revenue conversion is at 15%, 30%, 55% per year
5. They deployed in January.  

Now three months into deployment: One Development contacts Pareteum and says, "Our subscriber base is growing much faster than expected and we''ll hit our subscriber threshold soon. We need a quote for 2 million more subscriptions and also send us a quote for iPass wifi services".  So what happens?  That 50 million dollar contract just got an upward revision of at least 20%.  In your typical backlog, there would be a dedicated column/category for prorated subscriber adjustments to existing contracts and/or added services and it would be recorded as such.  Pareteum is not going to send out a PR for this, you'll only find out when they quote the total backlog figure (with no context). Bottom line is backlog mysteriously grows by $10+ million in their PR's but revenue will only grow by an additional 1.5M in that first year of that contract.  That's where your perception of inflated numbers comes from.  So when Hal says they are converting at greater than 100%, this is the sort of stuff going on behind the scenes.  

Finally, I want to make it completely clear that I am making inferences based on how backlog works because I own a backlog driven business.  The accuracy of the backlog is the cornerstone of my business. It isn't some numbers jotted down hastily on a piece of paper... it's an integral part of the overall accounting process. I put this example in front of you as a consideration to your conspiracy theory that the executives are manipulating backlog numbers.  I joined this forum for good due diligence and I get this instead.