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Hweb, LTFD - I really like the improvement in operations, but are you concerned about the loss of the appeal announced on April 11th? LTFD had accrued the punitive damages of $1.57M on its balance sheet (related to a 2001 court case). Since LTFD lost the appeal, I think LTFD will have to pay the plaintiffs this $1.57M + simple interest of 12% per year (I don't think this has been accrued). Therefore, this is approximately a $2.4M potential cash outflow in 2Q, of which over $800,000 may have not yet been accrued for. This may significantly impact 2Q earnings. What's your take on the matter?
Must admit - I have some booze in me....
But I have very distinctive opinions on UVIH vs CORG and I do NOT like seeing them grouped together on this board:
CORG is a resale CLEC trying to attract residential customers to gain cash flow in order to support an international VOIP business (me and you could start a VOIP business - can you say margin pressure?)
UVIH, although not glamorous, would not give away cash if the Company desperately needed it to survive (see CORG). Therefore, I think potential is favorable or else management will be pulling cash out of the pocket of their spouses.
Here is my historical statement:
http://www.investorshub.com/boards/read_msg.asp?message_id=7356051
Although I don't think CORG is facing 11 anymore, I would not put a penny into this one.
On a completely random side note, has everyone here found a problem trying to pick a winner for sbfantasyportfolio.com? I have problems seeing how an 8-week contest can determine a superior investor.
UVIH 10K Out - I have comments/questions:
1. Net Premium Income is up 1.6% sequentially, but all other areas of revenue are down for 4Q vs 3Q (Investment Income, Commission Revenue, Transaction Fees, Other Revenue).
I'm not too familiar with the insurance industry, but it seems that if commission revenue is down, then the Company sales are slowing? Is this seasonal?
2. Transaction fees are down based on "the Company's decision to stop generating new business from Internet sales operations during the fourth quarter of 2005 and focus on core operations."
Any idea why they would choose this? It seems like if it was Internet-based, it would require little employee time and have high profit margins.
3. There are some funny movements in the cost categories. YTD 3Q05 G&A was $5.25M, total 2005 G&A was $4.0M. Losses and Loss Adjustment increased significantly in 4Q, so I think there might have been some sort of reclassification. On a combined basis, there was an increase of approx. $400K.
4. Due to factors above, Pretax income was down to $.062 per share in 4Q from $.085 per share in 3Q.
5. Combined with the $.062, a 4Q deferred income tax item of $.017 per share is giving UVIH a Net Income for the quarter of $.08, which is still good, but not as positive as the previous quarter.
Unfortunately, I don't think this is as positive as we were hoping for, but as SSKILLZ always says, I could be wrong.
NOTE: I didn't read all the footnotes in detail - would like to hear any insight that other UVIHers may have.
I am not having problems with RB, but I looked for a message board for LFLT on IHub a long time ago - why doesn't it show up under the board listings (I searched by company name and by ticker symbol)?
Answer Key (BTW - Thanks for letting rookies enter):
Sweet 16: Duke, Syracuse, West Virginia, Texas, Memphis, Pitt, Gonzaga, UCLA, UConn, Washington, Michigan St, Wichita St, Villanova, BC, Florida, Ohio State
Elite 8: Duke, Texas, Pitt, UCLA, UConn, Michigan St, BC, Ohio State
Final 4: Duke, UCLA, UConn, BC
Champ Game: Duke, UConn
Winner: UConn
MMGG.OB, Since the Zinc craze is apparent on the VMC Board, I thought I would gather some opinions on this one. I have been a holder for a while; however, they have just raised more money to perform a feasibility study on their zinc property in Mexico and intend to bring it online in the next few years (if they don't get bought out):
I give more credence to this valuation than the next link:
http://greattrades.blogspot.com/2006/01/mmgg-valuation-analysis.html
This one is as of September 2005 and is more of a hype job:
http://www.silverinscripture.com/Zinc101.html
Skidos-Re, SMKT.OB,
That P/E number would approximate 28.6. I got that by taking an assumed post-merger market cap of $51.9 million (94.3M shares x $.55 per share) divided by $1.816 million of annualized earnings (3Q05 earnings of $454,000 x 4).
I am not opposed to investing in a company headed for a reverse merger; however, in this case I am very leery given the value placed on recently issued TXP shares. In August '04, they gave 5% of the company to MobilePro, implying a total company valuation of $3 million. As recently as March 2005, they issued 165 million shares at a value of $45,000, implying a total company valuation of only $60,000. On June 30, 2005, they issued 14.5 million shares to Cornell for $150,000, which implies a total company valuation of $2.3 million. Based on these numbers, I wouldn't touch it because I think either it is significantly overvalued or management is a little sketchy.
Lentinman,
You are right, the winner did not have to be a paying member, but did you notice that my SMID post was the closest to 10,000,000 on the VMC board at 9,999,994 and was posted at the exact same second as the winner?
Proposed $1 Wager:
Anyone care to bet that all the posts occuring around this time on a Friday night are less informative and useful than "normal" posts as all the idiots with nothing else to do (including myself) try to stastically play the odds and hit the 1,000,000th IHub post?
I apologize if I lowered your IQ by having you read this message. Happy trading to all.
Skep.
I have been closely watching GamezNFlix since last Thanksgiving. Are any of the longs concerned that the web site interest (per Alexa) has not shown any improvement since before the holiday season, or is this considered irrelevant?
Question for all you long-timers:
How much of a P/E discount is warranted for a pinkie in exchange for an OTC stock? For instance, if an audited company reports the same EPS as a pink, do they warrant a 10% higher P/E ratio as a benefit of incurring the SarbOx costs? Just wondering in the case of SNKI, to be specific.
Skidos, looking at the numbers, TXP actually has grown quite a bit - what is their advantage of accepting the reverse merger - couldn't they just generate a lot of cash as a private without having to deal with SOX or other issues of being public?
SMID.OB - haven't seen much discussion here, but I would expect the recent multi-billion dollar highway bill to have a signicant favorable impact on SMID, especially with their new expanded geographical outreach - are all the other VMCers' already in and out of this one?
Additionally, OT - Lentinman,
I'm confused - is IHub that restrictive that they are forcing the winner of the contest to be a paying member of IHub? Seems that the qualifications to win would go against their public access policy. I only ask you specifically because your tendency toward frugalit is well-known and I see that you just joined IHub as a recent subscriber.
Skep.
Lentinman, re SMKT.OB,
I just quickly looked at this one because I can't sleep, and here's the deal. SMKT has no revenues and is basically a shell w/approx. 50 million shares outstanding. They are doing a reverse 10-for-1 split to get down to less than 5 million shares and then issuing 89 million shares to TXP, a private company, in a reverse merger. At SMKT's current share price, this will give the "new" company a market cap of approximately $50 million.
According to a proxy issued by SMKT, the company being "acquired" did have Net Income of $454K in 3Q05 (http://www.sec.gov/Archives/edgar/data/1171749/000114420406004008/v034539.txt), which would give the "merged" company an annualized P/E ratio of approximately 27.
Anyway, I would think that this stock doesn't qualify for the board given that the merger has still not officially been approved and remains speculative in nature. I certainly don't plan on buying any, but kudos to Skidos if it becomes a success.
OT: Asset Retirement Planning Book - I have been asked to find a good book related to how to pass on retirement assets to family members at the most beneficial tax-advantage. I remember on this board several months ago that someone provided a link to a book on this issue. Has anyone read it or remember who the author was? Thanks in advance.
Skep
Any speculation on why we suddenly have so much volume today?
Does anyone here have concerns about the recent presentation posted on the company's web site? According to the presentation, total revenue for '05 will be $16.2 million, which implies only $4.45 of revenue in 4Q05. Additionally, '05 CF per share is projected at $.45, which implies only $.13 in 4Q. Finally, Net Income is $.18, which implies $.08 (that one I like). Do you think the projections were done a while ago or that the Company is being overly-conservative and sandbagging?
SILCF.. More news - from what I can gather, it looks like a design win from EMC.
Yes, thanks Bobwins. I had done my own numbers because I wasn't sure if you were going to update for 4Q and I came out with a little more conservative CF per share at $.222 and same Net Income per share. Major differences was I think there will be lower production in 4Q given what was said by management about having only 1100 on as of late November and slightly higher share count, offset by lower operating costs because I assumed $8.30.
Anyway, a CF range of $.222 to $.285 at CF multiple of 5x is $4.44 to $5.70 Canadian, or approx. $3.80 to $4.85 US, which I think would we all be happy with. I think one of the reasons for the current low valuation is related to reserves, which Rival doesn't update quarterly. If Rival proves that reserves have been increasing with successful drilling, then I think we will get a more reasonable valuation. I don't consider this to be a high risk, because why would 2 high-level people come to a Junior like Rival and put in a lot of their own money if they weren't expecting growth in both production AND reserves.
Have a good weekend all.
Can anyone explain the Canadian tax situation to me? I noticed Rival accrued $398K in 3Q05 for "Future Income Taxes" and that the balance sheet has $957K of long-term liability for future income tax, insinuating that it does not have to be paid for over one year. Do Canadians not have to pay their taxes for over a year? - If so, maybe I should move to Canada.
GZFX, DonsHub - I don't see how they will become Cash Flow Break Even at 20,000 subs. Based on my calcs from 3Q, the average monthly revenue and COGS per sub was $14.61 and $8.21, leaving $6.20 per sub per month as contribution.
I estimated monthly SG&A at $171K, Cash Consulting and Professional Fees of $109K, and monthly advertising of $25K. To cover these monthly costs, 48,500 subs would be required.
Additionally, GZFX has spent about $87K per month in CapEx and DVD/Game library investments. I am not sure how much of this will be required on an ongoing basis, but at the 2005 pace, this would require an additional 13,000+ subs for a total of over 61,000.
Otherwise, I can see why there would be big demand for the product, but the high share count and overhead makes me a little leery.
GZFX - Traffic Chart Link:
http://www.alexa.com/data/details/traffic_details?&range=1y&size=medium&compare_sites=&a...
It looks like the Circuit City promos beginning in October have ramped up traffic to the site. Not sure how much this will translate into revenue - Plus, they are sharing customer fees with Circuit City.
I don't own this one, so I haven't followed it too closely, but was there a substantial decline in price from 2Q to 3Q? Why did revenue drop so drastically with the same number of customers?
otc, GAMM - I have spent a lot of time reviewing their recent K's and Q's and have the following thoughts:
1. GAMM is definitely a high-risk, high-reward situation. Currently, 100% of their revenue is coming from one licensee, VIP Sports, which has made significant deposits into GAMM and therefore has a vested interest in the well-being of GAMM, which should reduce this risk (however, since 100% of revenue is from one customer, I am surprised that GAMM doesn't have to report under FIN 47(R), similar to GIGM's treatment of its poker software subsidiary).
2. VIP Sports is growing, which should lead to growth for GAMM, assuming that it keeps the IGW Software from GAMM's subsidiary as its primary service. As recently as November 9th, VIP just purchased two other smaller gambling sites. There is some risk that VIP is a takeover target by a larger gaming company, at which point it would be unclear if GAMM's software would be eliminated or not.
3. A new licensee is suppose to come on in the fourth quarter. I am assuming this licensee is Phantom Fiber (PHFB.OB), which quite frankly, isn't that exciting. If it is a larger gambling site operator, that could be huge.
4. Liquidity issues remain, but I think if GAMM can get to $1.2M in quarterly revenue, this would represent approx. $480K of EBITDA, which would then be used to pay CapEx and Software Development costs. Assuming those can be reduced, the liquidity issue may go away with 2 quarters.
5. I disagree with the blowout 4Q theory because I think the outlook from management is referring to total company revenue and not just recurring licensee revenue. Therefore, they are already on pace to outperform 2004 based on revenue. It would be nice if 4Q05 outperforms the $1.03M of revenue from 4Q04.
6. It appears that the development of the new product, Tyche, began around late 2004. Therefore, by the completion of Tyche around the end of the year, there will be approximately $1.4 million in additional Software Development costs to begin amortizing. This will result in incremental COGS of $120,000 per quarter for the next 3 years, reducing Income by approximately $.06 per share per year.
7. Because of this amortization issue, and assuming very little growth in 2006, I am estimating $4.8M of revenue will lead to a pretax income per share of $.107 to $.125, which justifies a much higher valuation than the current share price. However, I think there is definite potential for huge growth if new licensees are obtained or lesser grow as Leisure and Gaming (VIP) continues to grow.
8. Some interesting links related to IGW Software (GAMM's product), VIP Sports (Brand Name of Licensee), and Leisure and Gaming PLC (Public Parent Company of VIP):
http://online.casinocity.com/software/software.cfm?start=1&id=3542
http://online.casinocity.com/sportsbooks/vip-sports/
www.igwsoftware.com
http://www.lngplc.com/Investors_Announcements.html
http://www.lngplc.com/Press.html
Anyway, otcbargains, I am guessing that you are probably the only one that has actually read this far, so I would be interesting in hearing what you think related to these issues.
GAMM - Are you guys concerned with GAMM's liquidity and cash flow situation? Currently, current liabilities exceed current assets by $584K. Approximately $290K of this is debt, which can most likely be replaced by new debt at interest rates ranging from 12% to 15%. However, I'm not sure how the other half of the deficit can be cured. In 3Q05, GAMM's EBITDA was $287K and CapEx and Capitalized Software Costs totaled $352K, so excluding changes in working capital items, which IMHO cannot be considered a reliable cash inflow stream, the Company burned $65K before considering interest payments and debt obligations. Looks like some large customer deposits in 2005 are substantially improving liquidity.
I like the casino software industry as well (I own some VCAT), but I think the accounting manipulation of moving a significant portion of wages and salaries to Capitalized Labor is what is causing the low valuation here and favorable YoY comps.
Bobwins - Thanks for the update. Did you consider the new shares that Rival issued in the PIPE associated with the new executives or did you assume that the recent large open market transactions were the Company buying back shares to offset the PIPE issuance? Thanks in advance - I'm excited about the opportunity facing this stock as well.
SMID... Consider me bitter-
I intended to purchase a lot more around $3.25, but it obviously did not happen. Is the Slender Wall product a beneficiary of the recent events in New Orleans? I know that individuals on this board own SMID - what is the justification for the recent run in price?
CORG: Do you know how to reconcile their basic shares to diluted shares. Looks like they are increasing the count by 2.03 million, but they have approx 987K options outstanding and 1.5 million shares that can be converted from P/S?
CORG: watch out, I think sky is falling. I think this is a high-risk situation which I would avoid.
1. Margin pressure - The Company stated, "By successfully negotiating commercial agreements with Verizon Communications and Qwest Communications we eliminated the effects the Review Order has on our ability to offer our consumers services utilizing UNE-P, while creating an environment of certainty because the agreements provide us with a known cost quantity. We anticipate that our costs associated with providing service will increase approximately 10% under the pricing terms of these commercial agreements."
2. I believe that growth will stop, but also keep in mind that previous growth was very costly. In 1Q05, the company added 3,000 lines with over $900,000 in sales/marketing costs. This is over $300/line. Each line will now generate approximately $16 per month after increased COGS and assuming same Bad Debt expense (20 month payback with many customers that will not even last 20 months). If the company is able to add enough new customers to offset churn, the Contribution Margin will approximate $2.6 million. Including Other rev, G&A, depreciation from 1Q05, along with a decreased sales/marketing expense of $600,000, this results in operating income of approximately $300,000, which is a decline of 30% from 1Q05.
3. If you include the $1.5M of preferred stock outstanding convertible to common at $1/share, this increases outstanding (diluted) shares to 6.1 million, which would amount to $.05 of Operating Income per share in 2Q05. I think this is optimistic because assuming 4% churn, Cordia will lose 4,700 of its ending customer base as of 1Q05 and will likely have to pay more than the $600K I assumed to replace them.
4. Cordia has $950K of restricted cash resulting from its agreement with Verizon. If the Company does not generate cash quickly (as of 1Q, A/R + cash approximate A/P + accrued liabilities), then it will quickly burn through its remaining $73,800 and may be looking at filing for Chapter 11.
pnnymn, I am with you long and strong on HYRF (non-VMC stock), but am very curious as to where you see the upside on CORG.
MVCO - Yes, I found it from Hweb, but unfortunately never pulled the trigger in real life as I don't like to diversify my portfolio more than three or four stocks. What I liked about MVCO was the large loss that was going away along with minimum downside. It's definitely had pretty impressive performance and is helping my stats here.
EYII/HYRF - It seems that they should be moving together, but they are not. Here is an email I sent to my investment club:
There is a company, EYII.OB, which just announced a $210 million minimum sales commitment contract over the next 2.5 years:
http://biz.yahoo.com/pz/050812/83792.html
In reaction to this news, EYII’s market cap has gone up over 150% from $10 million to $26 million so far today (166M shares outstanding):
http://finance.yahoo.com/q?d=v1&s=eyii.ob
The products that EYII will sell is from a resale agreement with a water purifying component company named Metals & Arsenic Removal Technology, Inc (“MARTI”):
http://www.sec.gov/Archives/edgar/data/1104120/000127578905000033/marti.txt
MARTI is a subsidiary of Hydroflo (HYRF.OB), which has a market cap of $5M to $6M:
http://finance.yahoo.com/q?s=hyrf.ob
Since EYII is up over 150%, it seems to me the Hydroflo should be getting some movement as well, but it appears that not many investors have made the connection yet. I have bought some for my personal account, but this is pretty high risk stuff as it relates to China and there are several unknowns. Anyway, do you think we should get some for <REDACTED>?
I have also been watching VYST and like its upside potential as well, but I don't like to see the CEO selling shares, especially after several favorable PR's which pushed up the stock price.
http://www.sec.gov/Archives/edgar/data/1075857/000125808805000022/0001258088-05-000022-index.htm
Any comments as to why he may of done this in spite of the bright future that the company is touting? Just being true to my name.
Skep.
Sorry, forgot link to GIGM software sites:
http://online.casinocity.com/software/software.cfm?Id=3559
I disagree with the comment that 2nd and 3rd quarter will be weaker. I know that management stated that it expects seasonality in returns; however, traffic on everestpoker.com has defied this forecast and actually grown significantly in the 2nd quarter vs. the 1st quarter. Therefore, I don't expect any downturn due to seasonality until next year when player growth has lessened.
cl001 - Here are the sites that use Grand Virtual Software, which is GIGM's software subsidiary.
Good news otcbargains!
Check out the alexa chart for partypoker.com (CRYP):
http://www.alexa.com/data/details/traffic_details?&range=2y&size=medium&compare_sites=&a...
As you will note, reach increased from approximately 600 to 2000 from 1Q04 to 1Q05. Per their 1Q05 press release, Internet poker fees more than tripled:
http://biz.yahoo.com/ap/050511/earns_cryptologic.html?.v=1
This is the same indicator we are using as GIGM, and now it appears to be even more justifiable. All we can hope is that the phenomenon continues, eh?
How much are the biggest winners outpacing the biggest losers?
otcbargains - I'm with you in that I'm also extremely bullish on GIGM. However, I find it highly unlikely that DD'ers would drive that much traffic to a web site for a small cap stock. I don't find it that unreasonable to believe that 1 of every 20,000 people who use the Internet per day play poker on everestpoker.com. Additionally, I didn't see anything publicly announced that connected Gigamedia with Everestpoker.com until June 8th, and traffic was displaying a strong, steady increase long before that. The June spike may be DD'ers, but I doubt it. I just assumed they had some sort of tournament that day.
I just bought heavily into GIGM, primarily based on a chart from alexa.com which shows some sharp increases in traffic on the Everestpoker.com web site from 4Q to 1Q to 2Q. I am assuming that these increases will translate to material earnings growth (I would past chart, but don't know how - here is link: http://www.alexa.com/data/details/traffic_details?&range=1y&size=medium&compare_sites=&a....
Not sure why the increase, but Company will be forced to put out a PR if the stock price continues to increase for no explained reason in order to avoid SEC inquiries. Very encouraging, though.
Reviewing all this drivel caused me to go back and look at NWAU's released financials. I have the following question regarding this statement: "Revenue Recognition. Generally the Company recognizes revenue from the sale of a vehicle when a payment is made or the contract is purchased or financed by a third party."
Does this mean they are only recognizing revenue on cars when individual payments arereceived and not at the time of sale?
In response to Watchdog's accounting concern, it appears that CRMT does not break out its assets or liabilities into current and long-term, so maybe that is why poor Watchdog is so confused. If NWAU set up its own financials similar to CRMT, the current and non-current contract receivables would all be listed as one line item, net of allowance for credit losses, just like CRMT, which is apparently the greatest car company ever to exist.
My July 4th weekend has just become much more enjoyable knowing that I have displayed superior intellect over the many fine VMC handicappers who are participating as also-rans in this contest. If I could generate a daily return of 3.76%, a $1,000 investment would turn into over $10 million in less than a year. Don't worry Lentinman, you would still have $3.13 left after a year with your daily rate of return.
Anyway, thanks to those that are taking the time to run this contest and good luck to all in the real market.