EnviroTechnologies International Inc. (ETII)

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Understanding HNSS’s 2010 Share Structure

Definitions to know:

Authorized Shares – When a business applies for incorporation to a secretary of state, its approved application will specify the classes (or types) of stock, the par value of the stock, and the number of shares it is authorized to issue.

Issued Shares - When a corporation sells some of its authorized shares, the shares are described as "issued." The number of issued shares is often considerably less than the number of authorized shares.

Outstanding Shares – If a share of stock has been issued and has not been reacquired by the corporation, it is said to be "outstanding."

Treasury Stock - When a corporation reacquires shares of its own stock and does not retire them, the corporation is said to have "treasury stock." (Treasury stock will be discussed later.) The number of outstanding shares is equal to the number of issued shares minus the number of treasury shares.

number of outstanding shares = number of issued shares – number of treasury shares

http://www.accountingcoach.com/online-accounting-course/17Xpg02.html

12/31/2009: Issued and Outstanding Shares - 343,544,509

06/30/2010: Issued and Outstanding Shares - 305,857,509

*150 million shares were likely in the treasury at this time and thus were retired upon the sale of MedBioWeb leaving the total O/S at around 155 million shares

07/15/2010: Issued and Outstanding Shares – 155,857,509

“…sold an interest in MedBioWeb, Corp., in exchange for 150 million shares of its common stock, thereby reducing the actual issued and outstanding shares of Healthnostics, Inc., to 155,857,509.”


9/30/2010: Outstanding Shares – 155,857,509

*We know that there were no shares in the treasury on 9/30/2010 since the outstanding shares on 9/30/2010 remained the same as the issued and outstanding shares on 7/15/2010
11/8/2010

“…announced the sale of its subsidiary, MedBioWeb Corp., to a consortium of investors for cash and publicly-traded securities valued at $2 million.”

Note that HNSS received $700,000 in publicly-traded securities for the remaining interest of MedBioWeb. I estimate that to be around 70 million shares at the time (~$0.1 per share)

12/7/2010

“The Company expects to report net income of $.01 per share on 195 million shares outstanding (based upon the weighted average of shares outstanding for the year),…”

Note that this is the first time that HNSS's O/S is shown in a weighted format. This is at a time when their O/S is likely still 155,857,509 shares as shown in previous PRs. That is a nearly 40 million share difference.

12/14/2010

“The Company expects to report net income of $.011 per share on 188 million shares outstanding (based upon the weighted average of shares outstanding for the year),…”

Note that the weighted O/S structure has now been reduced to 188 million shares or a reduction of 7 million shares from the previous PR showing HNSS’s O/S.

1/20/2010

“Net income from continuing operations was $677,255 or $.004 per share on 170,833,333 weighted average shares outstanding.”

Note that the weighted O/S structure has now been reduced a second time to ~170 million shares or a reduction of 18 million shares from the previous PR showing HNSS’s O/S

Looking at the numbers:
Started with:
O/S structure of 155,857,509
Weighted O/S structure of 195 million shares
*Difference of 40 million shares

The weighted O/S was finally reduced to 170,833,333
*Difference of 25 million shares (195-170)

155,857,509 – 25 million shares = 130,857,509

Also remember that a weighted O/S is harder to reduce especially when you start to get closer to the end of the year since that method of showing the share structure is based on all shares through-out HNSS’s 2010 year. That means that it is very likely that HNSS actually reduced the O/S much more than what the weighted O/S is showing. I feel that could be another 5-10 million shares that management had to retire in order to show a 15 million share reduction in the weighted O/S given that HNSS had 344 million shares for the first 6 months of 2010.

130,857,509 - ~7.5 million shares = ~123,357,509 shares

Lets just say that HNSS reduced it's O/S by 35 million shares. It is very possible that HNSS still has another 35 million shares of its stock (through the final sale of MedBioWeb) that it could retire without having to buy back any of its stock.

That would bring the O/S down to ~85 million shares.

IMO