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Totally agree. I found the report absurdly hypey and not realistic at all. If the shares are so undervalued, why is the company handing them out to a stock promotor? And why not use the cash for share buybacks? That would be a far better use of shareholder funds if all this money is about to come rolling in. Who cares if anyone on Wall Street knows about it, better that they don't if all this cash is about to come in.
This report actually made me more suspicious and I'm going to go back and look at everything again.
Yeah, good points. And I suppose we also have to keep in mind that this is not the type of business likely to attract a ton of Harvard MBAs as the club owners. It's one of those businesses that is a little rough around the edges, shall we say. It's probably fair to expect that maybe one-third of the license fees are going to be a little erratic. That's probably a conservative, but realistic way to look at this business.
It concerns me also that the numbers just kind of seem to be here, there, and everywhere. Seems like locations sort of just pay what they want. The license fees should be much more reliable. Suggests either the Scores nightclubs aren't that predictable as a business, or that, yeah, maybe something shifty bookkeeping is going on.
Ah, thanks, there they are. Didn't think to look there, but should have.
Interesting that the licenses don't even mention anything about charging additional fees for nonpayment, penalties, or interest accruing on the amount if they don't pay, etc. Scores has the ability to terminate the license, but that's about it, as far as I could see.
I'm guessing that the part I was remembering as giving the location some time to get established is the part about the first two years it's a flat fee, and then it kicks in to the greater of the fixed fee or 4.99% of net revenues, which presumably could be a lot higher.
Detroit doesn't surprise me as not performing, but Houston loves the "gentleman's clubs" so it definitely surprises me that they are not paying. That one is concerning. Seems like either the location isn't doing well, or there is a dispute.
Interesting that on the license for North West Indiana they forgot to change the written-out amount for a smaller location. Under Royalties and Other Payments, it says "fixed fee of Ten Thousand Dollars ($1,250) per week" lol See below:
Hmmm, doesn't appear to be anything about a grace period before payments or anything like that. I must be remembering wrong. They get an advertising allowance, but that's only after they pay their fee.
Yeah, that was the one I found. But I could have swore that I read a more recent agreement somewhere about a new licensee not having to pay for a period, so they can get established. And then I was wondering if there were other terms where maybe a licensee can stop or defer payments, etc.
Yeah, saw that, but what concerns me is they haven't announced anything about receiving those monies.
Usually that's something that would warrant a press release. Not always but usually. Milestone payment, development agreement, etc
Hopefully they'll mention something soon.
Thx for the help.
I thought I remembered something from that license agreement that was posted about how licensees didn't start paying for the first 12 months or 18 months or something like that. That's why I ask. Does that sound familiar to anyone?
Link to License Agreement?
Perhaps one of you with the search function here on Ihub could go back and locate a copy of the typical license agreement, that I think was posted on this board.
I searched google and found one from like 2006 or something, but that's not relevant. I thought someone posted a link to a fairly recent license agreement and maybe we can determine the terms of how/why a licensee may not have to be paying.
Milestone Payments
Thanks roger. Yeah, the only thing I could find regarding regulatory milestones was that the cumulative amount (broken up into many different events) was $7,500,00 for six different events.
The first event listed in that cumulative amount was Adapt’s first receipt of notice from the FDA that an NDA in respect of a Product has received approval. Perhaps that was a large chunk of money, but I would guess they're still pretty tight on cash.
Money should start rolling in fairly quickly though, only question is how much. The sales milestones are all unknown as well, except a maximum of $48m
Royalty rates are unknown as well, except for the company saying up to double digit royalties. And of course, the company has sold off small portions here and there.
Right now, no way to know how quickly they start covering their burn rate.
But yes, they have been raising money at good valuations. The October 2, 2014 raises that were announced for the overdose and BED products gave each of those products a $50m valuation. And presumably those investors want to make some money.
For my own purposes, I'll still be using approx 4m shares outstanding to value the company. It's realistic that those options are coming at some point. Even if they got a buyout offer tomorrow, the buyer would factor those in. But even at 4m outstanding, things still look upbeat if those guys who invested on Oct 2, knew what they were doing.
Roger, just one quick follow-up.
How do you see them covering their immediate cash needs?
Is it your belief that milestone payments will cover that? Or do you think immediate royalties on the drug overdose spray will cover it? Or sell off more small interests in these devices?
Other possibilities?
Have you seen the agreement that says what the milestone payments are? Would like to see it if you have a link.
On the options, upon re-reading it, I think you are probably correct. Here's the exact verbiage from the 8-k:
"Each stock option has a ten-year term and expires on October 26, 2025. Each stock option is fully vested on the date of grant, but may only be exercised between the following dates: (i) the first to occur of: (A) the commencement of three trials on or subsequent to October 23, 2015; or (B) (1) the approval by the U.S. Food and Drug Administration of the New Drug Application with respect to the opioid overdose reversal treatment, and (2) the commencement of two trials on or subsequent to October 23, 2015; and (ii) the expiration date."
That means they still desperately need cash. Please pass along anything that might point us to milestone payments for further trials or for this current FDA approval.
May I ask why you think the other two trials are a long ways out? How long is your guess?
thx
Share Count Over 3m
I like the potential here, but the true share count is over 3m and I'm actually figuring 4m for my purposes, because there are other option grants coming.
http://www.sec.gov/Archives/edgar/data/1385508/000114420415061548/v423075_8k.htm
Still a very low share count, fully diluted, but those option exercises are what will keep them from having to raise money. 10-K showed only 400k in cash and over 3m in accrued salaries, so they need money
http://www.sec.gov/Archives/edgar/data/1385508/000114420415060795/v421827_10k.htm#fin_002
I'm guessing they'll get a milestone payment for approval also, but don't know for sure.
Still, good long term potential, especially if binge eating and bulimia are approved as well
Anything's possible, I suppose. But even under that sort of scenario, why would you pre-pay? Why would you pay before someone has performed? You wouldn't. And even under some strange scenario like that, the warrants should certainly be contingent upon the bank performing, right? That's why I don't get this.
I mean, think of it in your own life. Let's say a realtor comes to your front door and says he's got a wealthy buyer from Japan who wants your particular house and he'll pay 3 times what it's worth. You say great. The realtor says he'd like his fee right now before the deal has closed. Would you do it? Of course not. You might even tell him you'll pay him 10% commission at closing rather than the typical 5 or 6%, but you ain't gonna pay him until the deal is actually done.
-I've written to the company for an explanation and we'll see if they respond.
Not trying to be a jerk here but you originally said the exact opposite, that's why I made the clarification. You claimed that the benefit was that this was a flat fee for services provided:
If you multiply the exercise price and the number of shares it adds up to almost exactly $250,000. That sounds to me like more than a coincidence but instead a nice round number as a guaranteed flat fee for services provided.
It's the other way around. The company is the one who will receive $250,000 from the bank, if and when the warrants get exercised. After that, the bank gets all the upside in the appreciation of the share price on 3.7% of the company. Theoretically, the bank could make millions (at the expense of existing shareholders via dilution). And as you correctly point out, if the company can keep up the growth, it's way undervalued even at $.301 per share, much less what the future may hold.
That's why it doesn't make sense to me. I don't think the company would qualify for uplisting. Even if they would, they have the cash to do that, so just pay a fee, don't potentially give away millions. If the bank was gonna raise money for them, then the bank should get paid out of the gross proceeds of the offering, as always happens. If the company is for sale, the bank should be paid their big fee only AFTER they've arranged the deal, and that fee would be part of the transaction, as these things are always done.
Point being, that the bank should get paid AFTER it has performed whatever services. The 4k per quarter as a retainer I have no problem with, but other than that there should be no fee until the bank has performed. Instead, with this arrangement, the bank has been given free lottery tickets at shareholders' expense. They've already gotten a locked-in share price on 3.7% of the company, even if they don't do anything worthwhile. That doesn't make any sense to me, especially when the company seems to just be starting to hit on all cylinders.
One of the best things about this company is they haven't diluted in the past. That's why this seems so out of character. Seems like they got smooth-talked by a banker.
Lotta Warrants
Solid earnings report, but I sure hope they know what they're doing with handing out that many warrants -- I mean, that's 3.7% of the company that they just dished out, and those are 10 year warrants. Man, I wonder what sort of services are worth that?
About the only thing I could think of is if the company is trying to sell itself, but I hope that's not the case because the company seems to just be hitting its stride.
I wonder if the warrants are part of the reason for the muted reaction this morning to a pretty darn good report.
On the plus side, at least the warrants were above current market price, but still, I wonder what it's about.
Thx otc. I just wrote to Cashman and asked for a clarification. I'll let this board know what I receive back.
I'm new to this story, but have read every message on this board and gone thru the filings. Looks intriguing. In general, looks good, but their projection of profits seems off.
Is anyone else questioning the likelihood of them making their guesstimate of yearly profits?
On June 30, 2015, (http://tinyurl.com/qj9nxhr) they said:
"The company has now expensed all of the organization and acquisition cost of acquiring Trade Leasing Inc. and is projecting annual sales of 2.6 million dollars with profits in excess of $200,000 for the year ending August 31, 2015."
According to last 10-Q, for the 9 months ended 5/31/15 they showed sales of $1,830,475 and net income of (464,135).
So that would mean that on $800,000 in sales in the 4th quarter they're going to have profits of $660,000 in the quarter to reach their guesstimate???? Did I make a mistake somewhere, or does that seem highly unlikely? Are they expecting a large lump sum not from operations?
Any further history of the company that anyone could give would be greatly appreciated. thx
WWCC Do a search for: "Thad Pryor" scam
Sounds like lots of shady stuff in the past. Class action lawsuit, etc. Unregistered stock sales thru unregistered promoters, etc. It's the same guy in charge, just has let some time pass
I tried to start a chat on their website (the same way one would if you were trying to sign up for their services) and I've been waiting for 40 minutes with no answer.
Looks pretty shady to me.
No reason, absolutely no reason, to not include share count in financials
WWCC Share count not in the financials concerns me
EVSNF How was the call?
I had an appt and couldn't listen to it. Was it overly negative?
Seems like they had excellent results, but market sure doesn't seem to like it very much.
POLXF - Religious Objection?
Mike, this is a serious question, not trying to be snarky. Not trying to pry into your religious beliefs, just wondering if maybe there's something I should know about the company that I don't.
What is the religious objection?
(Feel free to respond privately if you prefer. TIA)
BSQR Borrowing, Strange?
I found this credit line a bit strange, since the company has plenty of cash.
Pros and cons.
Pro: it never hurts to have access to additional funds, or maybe they want to be ready to go should an acquisition opportunity come along, or maybe they've already got their eye on one.
Con: The last conference call had something that concerned me a bit:
We expect continued GAAP profitability. And, accounts receivable balance is expected to increase during the third quarter and continue to grow for the balance of 2015, as we have selectively provided extended payment terms to a highly credit-worthy customer. We believe this new arrangement will leverage our strong cash position to improve our third-party gross margins and profitability.
Our accounts receivable balance and our DSO metrics will therefore grow, with a commensurate decrease in cash and/or short-term investments.
POLXF Another Whopper Earnings Report
http://finance.yahoo.com/news/polydex-reports-second-quarter-financial-131500206.html
Another Whopper Earnings Report
http://finance.yahoo.com/news/polydex-reports-second-quarter-financial-131500206.html
Hi southacresdave,
Have enjoyed your work on SCKT. I'd appreciate a copy of your report.
jtomm at yahoo.com
thx in advance
Another horrific quarter.
The story is always the same, "if it hadn't been for this expense and that expense, things would have been really good! But just wait until next quarter, that's when things are really gonna start to kick into gear!!"
And then the next quarter comes, and you get the same exact story.
Hey Osbourn, nope I don't know anything more about the lawsuits.
Same Old SPIN
It's always, "wait till next quarter, just wait till next quarter, real soon now."
Management has lied repeatedly.
Questions About Ownership and Fraud
Today's news certainly appears good on the surface. But I'd suggest going back a couple of pages on the Ihub board and reading some of the due diligence that was found. Not trying to talk you out of anything, just want you and any newcomers to be aware of the risks as well. There's a reason it's selling at this level -- everyone involved appears to have a fraudulent past, and there are family lawsuits which question the ownership of the assets. Per the last 10-Q, 2 of the 3 operators have ceased making royalty payments.
No worries, thx for the correction.
I like the company's technology. A large CEO buy in the latest offering like that would have been huge news.
From what I can tell, his position has remained relatively unchanged since early 2011 when his initial ownership statement showed him owning 5.4M shs, and now he owns a little over 5.3M.
Initial Statement in 2011:
http://www.sec.gov/Archives/edgar/data/898379/000091419011000078/xslF345X02/edgar.xml
Latest:
http://www.sec.gov/Archives/edgar/data/898379/000143774914001232/vill20140129_sc13ga.htm
The CEO just purchased 4.5 million dollars worth during the offering.
RBIT It is absurd to use 4m shares outstanding in any calculation. That is simply false. Anyone can go read the documents for themselves. All of the other stuff is *projections* from a company that has never been close to profitable -- and all they're even suggesting is EBITDA, not profitability, and they've never even been close to EBITDA positive. By the time any of those wild projections would come true, there will be around 8m shares outstanding.
Everyone else should be aware that this stock is undergoing an organized promotion by Superman. It will almost certainly spike and then collapse. Those telling you what a great buy it is will be selling.
RBIT -- No, as I read it, the warrants being issued are a separate matter.
Right below the table of contents are the details. Then continue on to the "Summary of the Offering". After the offering, they will have:
2.9m shares outstanding
1.75m warrants outstanding at 6.55 strike for 5 years
but that does not include the other 1.5m shares to be issued by mid 2014 which was a matter involving warrants that existed previously:
"Effective as of November 13, 2013, certain warrant holders agreed to exchange warrants to purchase 496,060 shares of common stock for 1,554,734 shares of our common stock (the Exchange). The warrant holders are committed to exchange their warrants which will be cancelled; however the shares will not be issued until after our next shareholder meeting, which must occur prior to July 1, 2014 and at which time we will request to increase our authorized shares of common stock, provided our shareholders approve such increase."
A few other exlusions bring the total shares out to around 5m, with another 1.75m warrants.
RIBT -- I would guess closer to 5m shares out after all is said and done.
The offering says 2.9m shares after the offering, but also says,
"The total number of shares of our common stock outstanding after this offering is based on 1,152,452 shares outstanding as of December 10, 2013 and excludes (i) 1,554,734 shares of common stock to be issued by July 1, 2014 to certain warrant holders in exchange for the cancellation of warrants to purchase up to 496,060 shares of common stock, and (ii) 134,250 shares to be issued by July 1, 2014 to a note investor.
After all the over-allotments, etc., I'd guess closer to 5m shares out.
Good stuff, Osbourn.
Yeah, when I read Val's bio in the proxy, the first thing that came to mind is that he's trying to wear both his military service and his religion on his sleeve, but gives very little specifics about his business experience. Trying a little too hard to project a "you can trust me" image.
The zoominfo bio that you ran across actually is more what I would have liked to see. But maybe he stopped using it for a reason -- that reason being that things can be checked.
One of the things in that bio was:
"Mr. Holms founded Holms Building Service, Inc. in Missoula, Montana in 1972. Holms Building Service was involved in a number of projects throughout the state of Montana and at one time was the second largest commercial metal building contractor in Montana."
That looks like more lies.
Here's the link from the Montana SOS that shows it was incorporated in 1976, filed its last annual report in '78, and then after what looks like 4 years of inactivity, it was involuntarily dissolved.
https://app.mt.gov/cgi-bin/bes/besCertificate.cgi?action=detail&bessearch=D042690&trans_id=besa13329195831123d00
I highly doubt it was the second largest commercial metal building contractor in the two years that it appeared to actually be doing anything.
Osbourn, I think that's one where you have to use logic and common sense and make your own decision.
After all, how will you be able to have 100% proof? Val admitting to it would be about the only way. But if you ask him directly and he says that was not him, are you going to believe him? Fraudsters lie, that's what they do. A scammer doesn't throw up his hands and say, "Yep, you caught me!"
When you look at that court case and all the lies he told and the fraud he committed, I wouldn't be depending on him to tell you the truth. He lied about his net worth, he produced phony financial statements, he lied about his interest in oil and gas properties, he lied about his position with the company, he conspired to produce a phony escrow account with the sole intention of deceiving another party, he gave "personal guarantees" that he knew he couldn't live up to, and on and on.
Remember the movie, "My Cousin Vinny"? The judge found out Vinny wasn't a lawyer, but then the judge made the mistake of going back to Vinny for an "explanation". Of course, Vinny just kept making up story after story to keep the judge from believing the truth he had discovered.
And it's not hard to make up stories. In this case, Val might say, "No that wasn't me. That's that dirty cousin of mine on my dad's side. He's got the same name. He's disgusting. That con artist has been ruining my reputation for decades!"
Well, if he says that, does that make it the truth? Or is it like My Cousin Vinny where he's just telling another lie in order to not be found out? You could come up with hundreds of plausible sounding stories.
Like Doc said, you kind of just have to ask yourself how likely is it that this is a coincidence? Same name, same company name, same industry, his home state. How likely is it that a different person of the exact same name, in his home state, founded an oil company of the same name? And then Val founded a company with Allan Holms and Edington, two other scammers. Birds of a feather. What are the odds that he's totally honest and just happened to get innocently mixed up with these two dishonest types? What are the odds that all 3 founders of Roil Energy LLC happen to have OTHER people with the exact same names out there scamming people, in their home towns, and it's not them? And what are the odds that Val Holms then ended up merging with a company run by Edington's daughter and he was just a naive, innocent dupe who got mixed up with all these bad guys?
Those are the questions you have to ask yourself.
Again, you insist on taking things out of context and trying to offer people general legal advice.
You purposely left out that "Allan Holms alleges Roil Energy was originally intended to be the predecessor entity to BRI." A tiny little item.
-Advising people, in general, on how they should handle contracts is obviously immaterial. What matters is how these parties involved handled their contracts in this specific case. (As such expert legal counsel, perhaps you should have been there advising Val not to engage in fraudulent oral agreements as he apparently did previously.)
Funny enough, even the link you provided makes very clear: "The law does not distinguish between an oral contract and a written contract; both are equally enforceable provided they meet the legal standard for enforceability."
In fact, Texaco had to file for bankruptcy over an oral agreement (the largest bankruptcy in American history at the time, I believe). It was actually somewhat similar to this situation, where there was an oral agreement for Getty Oil to be partially acquired by Pennzoil, and then Getty turned around sold out to another company, Texaco. Pennzoil sued Texaco and won so much that Texaco had to file bankruptcy.
Allan Holms appears to be alleging that something similar happened in this case. He may win nothing at all, or he may win a judgment bigger than the market cap of BKKN, nobody knows.
We know for certain that Val started a company with Edington and Allan Holms on the alleged date.
And all 3 of them seem to have a history of telling lies and engaging in fraud.
. . . and everyone involved with the company seems to have a history of fraud. You forgot that one small item, in addition to many others.
Your legal opinion was also that the company would be earning 18% interest on the payments that have stopped, and that was obviously wrong.
When you speak of here-say (sic), it's obvious that you have substantial legal training and are fully justified in trying to convince others you know the case is on shaky ground, and further justified in ignoring Val Holms's oil-digging fraud (everyone should read the case, Val has a history of making fraudulent oral agreements) and simply assuming the brother is the bad guy.
-It's never a good sign when a stock has a message board where someone is touting all the positives and encouraging others to ignore the obvious risks. Nobody would ever invest that way with their own money.