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I'm sure the driving records will influence the cost but at $1.6 million for annual insurance cost, I don't see that Pro Star is paying too much.
When I look at a competitor, Patriot Transportation (PATI) I see they paid over $3 million for their 4th quarter 2015 insurance cost. They had roughly the same revenues that Pro Star had for that quarter compared to our annual. I believe Patriot hauls flammable liquids so their insurance would be more expensive than ours.
Someone posted that Roger said the 2015 mileage on the fmsca website was for one month (maybe December?). That makes sense but should be corrected.
You're right, the fleet expansion would have increased the cost.
As far as other insurance types that are included in the $1.6 mill--
From yesterday's filing:
The Company provides for the estimated costs of automobile, cargo, reefer, trailer interchange, property, casualty, general liability and workers’ compensation claims
Maybe there were workers comp claims? We can't know unless they elaborate in the upcoming 10-K.
Hopefully some day they will host quarterly earning conference calls where these questions can be addressed.
I think I read that the insurance cost increased from $200k in 2014 to $1.6 million in 2015. Not sure why that would be.
The good news is we won't have to wait too long for more details since the 10-k is due this month and shortly afterwards the first quarterly earnings report.
lol.
We'll not be losers for long...
From the Pro Star website--a new section for Investors:
Founded in 2012, Pro Star Freight Systems, Inc. (OTC: HPTG) provides common carrier shipping to long-haul freight operators of varying sizes. As a result of an acquisition in December 2015, Pro Star Freight System's, Inc. is now the sole licensee of HydroPhi Technologies Group, Inc.'s intellectual property and technology portfolio. Pro Star operates a fleet of more than 150 trucks and 30 trailers serving the continental United States.
The Company provides dispatch management services from three dispatch centers, with one located in Illinois and two additional centers in Serbia, all of which are staffed twenty-four hours per day. Pro Star’s operational capacity includes freight bill entry, call logging and tracking, mobile data and logistics communications and Electronic Data Interchange (EDI) transactions among other responsibilities essential to the management of an innovative transportation and logistics company.
http://psfsi.com/
First glance shows no negative surprises. I'm happy & relieved to see the financials. Expect the share price to reflect the value this new combined company has.
2014 revenues $26 million
2014 profit $1.15 mill (Twice the estimated amount)
2015 revenues $27 million
2015 profit ~Break even
Revenues not as strong as hoped but up over 2014 & excellent for a company trading at a market cap of $4 million.
2015 Insurance costs seem to have impacted earnings. At first glance it appears to have cost $1.6 mill in 2015 vs. $200k in 2014.
Pro Star uses factoring to collect their revenues quicker.
Not much debt--or cash.
Hydrophi looks like it has $1.38 million in convertible debt left on the books. (Not 100% sure about this yet) But that's not bad. If it all converted today it keeps us around 500 mill shares. And it won't all convert today. $1.38 mill represents a few weeks of revenues for Pro Star.
Revenues and profits will continue to grow in 2016 IMO. Pro Star stated in a recent PR that the purchase of the 30 trailers will save the company $250k in annual expenses this year.
HPTG’s total short interest was 41,200 shares in March as published by FINRA. Its down 70.42% from 139,300 shares, reported previously.
http://www.riversidegazette.com/hydrophi-technologie-otcmktshptg-shorted-shares-decreased-by-70-42/
Toxic Debt:
Let's assume there is enough toxic debt remaining to take the share count up to the maximum authorized level of 600 million shares. (I don't believe this scenario, but just to illustrate my point I'll assume it to be a possibility).
Fair value of stock is ~1X sales (approximate industry ave)
30 mill/600 mill= $.05 per share
Let's consider a worst case scenario:
There is so much toxic debt that the company needs to increase authorized shares to 1 billion shares.(Ridiculous but let's consider it)
Fair value of stock is:
30 mill/1 bill- $.03 per share
So even if that ridiculous scenario turns out true, the stock is severely undervalued here at just over $.01.
Now let's assume a more likely scenario:
HPTG uses some of its revenues/profits/cash to payoff any remaining toxic debt. They have already spent ~$1 million to expand the business since the merger. This strongly indicates that the company either has cash or has the availability to get financing.
In this case the stock should reasonably trade at $.075 per share.
30 mill/400 mill= $.075
Isn't it reasonable to expect the company to do everything possible to prevent toxic debt from converting? The only reasonable answer is yes.
So long as they add value to HTPG, I don't care what they do. But I wonder why the name is Empower Medical. Doesn't sound very medically oriented. What you said makes sense in that they may focus on marketing for Medical companies associated with Astoria Capital.
Some details on Empower Medical SA:
Empower Medical SA, formerly HydroPhi Technologies Europe SA, is a Poland-based company active in advertising and marketing sector. The Company is primarily engaged in outsourcing of marketing and advertising services. Its services portfolio includes activities connected to integrated marketing for the electro-consumer market, such as creation, production and management of point-of-sale (POS) materials, promotion and animation of sale, quality merchandising and servicing conferences, congresses and fairs, among others. The Company coordinates also print and advertising production for its clients through its Production House service, as well as offers development of information technology (IT) systems for sales promotion and marketing activities. In addition, it is engaged in financial services, such as financial leasing, credit granting, and real estate operations, among others. The Company's majority shareholder is Astoria Capital SA.
http://markets.ft.com/research/Markets/Tearsheets/Business-profile?s=HTE:WSE
Looks like Roger Slotkin is still on the Board:
Directors & officers
Name Title Compensation Age Officer
since
EdwardMisek
Chairman of the Management Board
--
--
2015
No Bio available
GrzegorzWojciak
Vice Chairman of the Supervisory Board
--
--
2014
RogerSlotkin
Member of the Management Board
--
--
2014
ReidMeyer
Member of the Supervisory Board
--
--
2014
DavidWaldman
Member of the Supervisory Board
--
50
2014
Yes, the 10-k should show December 10th-31st revenues and profits.
My guess is revenues should be roughly $2 million for those 3 weeks.
It seems to me that all this talk about toxic debt/dilution is an attempt to create fear. I think there is a good chance that the debt can be repaid before dilution takes place.
Consider this--Prostar bought land and trailers worth over a million dollars (combined) since the merger was completed. That speaks to their creditworthiness and or cash on the balance sheet.
Since ProStar now is aligned with shareholders in wanting to increase the price per share, wouldn't you think that it's extremely important to them to prevent dilution of the shares if they could?
To be able to spend $1mill on the recent expansion purchases indicates to me that they CAN take care of the debt. IMO.
Monque2, good post as usual.
I wonder if HPTG will (or already has) sell its shares in HydroPhi Europe/Empower Medical. Maybe to help pay off any remaining toxic HPTG debt?
Regarding the HydroPlant, I'm all for any plan that enables HPTG to realize revenues from it. If licensing the HydroPlant to companies which service/sell parts in the aftermarket for diesels brings us revenues then that's fine with me. If there is any path to monetizing that tech the company should pursue it IMO.
One way or another, late or not, we will get the audited financials for ProStar soon (this month). When the market sees the revenues of ~$30 million our stock will get the valuation it deserves. 1X revenues gives us a price of $.075 per share. A more conservative .75X revenues gets us to $.05. Even when looking at a PE of 20 on ~$1 million of profit for 2015 we get to that same nickel per share.
Providing no negative surprises on the historical financials that we'll see this month, a bright growth OUTLOOK for 2016 can make this 5-7 cent/share valuation seem low.
This looks interesting:
Industries | Fri Mar 4, 2016 3:06am EST
BRIEF-Hydrophi Technologies Europe to change name to Empower Medical; issue series F and G shares
MARCH 4
Hydrophi Technologies Europe SA :
* Resolves to change its name to Empower Medical SA
* Resolves to issue 33,428,300 series F shares via private placement without preemptive rights
* Resolves to issue 15 million series G shares via private placement without preemptive rights Source text for Eikon: Further company coverage: (Gdynia Newsroom)
http://www.reuters.com/article/idUSFWN16B077
The HydroPlant technology gives HPTG a competitive edge IMO.
The HydroPlant is the wildcard with this stock. It's why I bought in a year ago and IMO is what sets the company apart from other trucking company investments. There is a reason why Pro Star chose HydroPhi Technologies over other potential merger candidates.
As I understand it, Pro Star only owns 5 of the trucks in their fleet, they lease the rest. I'm not sure if they could install a device on leased vehicles. But 5 is still a good 'test' to start with. If the tests are successful they can expand their fleet with older, less costly trucks that reduce emissions and improve gas mileage similar to that of new trucks. Expansion at a much lower cost.
Once the competition hears of this, they might be willing to purchase the HydroPlant. Plus, HydroPhi will be able to present new documented data to to third world countries where their potential market is much larger.
IMO the HydroPlant is a wildcard that gives this stock an edge beyond a growing, profitable trucking company.
New article on HPTG from HotStocked this morning:
http://www.hotstocked.com/article/92955/hydrophi-technologies-group-inc-otcmkts-hptg.html
Bottom line is HPTG is worth 5-6X its current price IMO.
If what Pro Star management stated as their revenues and profits for 2014 turns out to be true, I believe the audited financials will confirm this valuation.
The P/L statement I recently posted for Patriot Trucking were "Quarterly" numbers. They had ~ $27 mill in revenues for the 3rd quarter of 2015. I just wanted to post their financials to give us a base to compare Pro Star (annual) numbers against.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=120670387
I especially wanted to point out that that the lower price of diesel fuel does not necessarily increase net profit since surcharge revenues might be much lower.
Using Pro Star's estimated $27 mill in revenues (in 2014) at a Price/Sales ratio of .73X revenue (Trucking industry average as of Jan 2016) Pro Star would be worth about $.05 based on 2014 numbers.
($27mill/383mill shares X .73= .0511)
Based on potentially higher 2015 revenues it should worth more than $.05 plus there is the value of the HydroPlant and our investment in HydroPhi Europe.
Trucking Industry average P/S ratios:
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/psdata.html
I agree about the HydroPlant going to the back burner for now.
But at the very least the company needs to find ways to monetize it in the near term.
We all know the HydroPlant has value and it sets us apart from other Trucking Companies. Just having the technology should allow for the stock to be priced at higher than the industry averages with regard to P/S and P/E ratios IMO.
I think the HydroPlant could have played a part in Pro Star deciding to merge with us over other options they may have had. Maybe a portion of the profits from the trucking company can be used for further R&D on the HydroPlant?
I remember that the company said that a marine application for the device could be quite lucrative. Also, there was talk of a heavy equipment application. Plus, maybe they will test it on the older trucks that they now own.
I bought in because of the Mexico deal announcement a year ago, so I hope they continue to explore ways to make the HydroPlant a success.
If my memory is correct, they value the patent at $600,000 on their 10-K and their stake in HydroPhi Europe is valued at around $400,000. So there's $1 million of market cap associated with the HydroPlant. That's a significant percentage of today's market cap.
That's right. Between the trailer advertising, service center revenues, and leasing revenues there is some upside to the revenue projections.
The 71st day after the deal closed was Friday-- so I fully expect to have all our questions by the end of this coming week. (Adding the 4 business day grace period to the 71 day deadline)
Patriot Transportation is a publicly traded competitor who recently announced their quarterly earnings which happens to be close to our unaudited 2014 revenue amount. The P/L statement below can give us "some" idea of what we can expect for 2014 numbers. Notice the lower surcharge amount for 2015 revenues due to lower fuel prices. $1,300,000 vs $4,400,000.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED AND COMBINED STATEMENTS OF INCOME
(In thousands)
(Unaudited)
THREE MONTHS ENDED
DECEMBER 31,
2015 2014
Revenues:
Transportation revenues $ 28,009 27,292
Fuel surcharges 1,362 4,425
Total revenues 29,371 31,717
Cost of operations:
Compensation and benefits 12,572 11,983
Fuel expenses 3,825 6,005
Repairs & tires 1,809 1,814
Other operating 1,090 1,137
Insurance and losses 3,018 2,839
Depreciation expense 2,148 2,108
Rents, tags & utilities 949 941
Sales, general & administrative 2,399 2,322
Corporate expenses 958 919
Loss (Gain) on equipment sales 4 (184 )
Total cost of operations 28,772 29,884
Total operating profit 599 1,833
BP Claim Settlement 1,687 —
Interest income and other 3 —
Interest expense (35 ) (26 )
Income before income taxes 2,254 1,807
Provision for income taxes 879 705
Net income $ 1,375 1,102
Comprehensive Income $ 1,375 1,102
Earnings per common share:
Net Income-
Basic 0.42 0.34
Diluted 0.42 0.34
Number of shares (in thousands)used in computing:
-basic earnings per common share 3,273 3,243
-diluted earnings per common share 3,277 3,243
Thank you for posting Roger's reply!
Using the "unaudited" numbers for 2014 & the data stating the monthly # of trucks from the FMCSA website, I can make a case for 2015 revenues being somewhere between $29 mill and $53 mill.
$53 million estimate math
2014 Average truck units=86 (1026/12 I added each month & divided by 12)
2015 Average truck units=169 (2026/12)
86 trucks generated $27.3 mill in 2014 or $317,441 each
169 trucks could have generated $53.6 million ($317,441*169) using the same ave $/truck as 2014.
$29 million estimate math
A more conservative estimate is to use # of miles times the aver per mile charged in Chicago of ~$2.
Using the 1.3 million miles driven in one month (Say in December 2015, when they had 180 trucks) Apply that to May 2015-December--8 mo's-- same # of trucks= 10.4 mill miles.
157 trucks in Feb, Mar, April is 87% of 180 trucks apply .87*1.3 mill=1125 miles X 3 months= 3.4 million miles
115 trucks Jan is 64% of 180 trucks. Apply 64% X1.3= 824,000 miles
Add 10.4+3.4+.82= 14.5 million miles driven in 2015. Multiply by $2 per mile average gets you an estimate of $29 million revenues for 2015.
$29 mill in revenues is great-- even on more miles driven-- because as fuel prices dropped in 2015, so did the fuel surcharges that trucking companies collected.
All this is IMO. It's just using what's out there to project possible revenues for 2015 until we get the audited numbers.
In any event, any trucking company generating close to $30 mill or more in revenues & is profitable, deserves a market cap of 75%+ of their annual revenues. That translates into $.05 or more as fair value for this stock IMO.
Where I got my number of truck units from:
https://ai.fmcsa.dot.gov/SMS/Carrier/1848543/History.aspx
Right, there is the leeway allowance. The leeway is 4 business days, so if we add that, it takes us to the end of next week. Either way, the wait is not much longer.
I believe the company will do everything possible to avoid being late.
You may be right about the 71 days starting on December 10th.
11/24/15 was the date of the stock purchase agreement
12/10/15 was the date of the closing of the transaction
Here's what I found while searching for when audited financials are due in mergers:
"The financial statements of an acquired business must be filed no later than 71 calendar days after the date the initial Form 8-K was filed reporting the closing of the business acquisition"
link to the article:
http://securities-law-blog.com/2014/04/15/sec-reporting-requirements/
There were other articles showing the same information.
It could be that Friday, February 19th is the date. That is the 71st day after the closing transaction was announced.
I see HydroPhi Europe released their quarterly report on time yesterday.
(Hopefully this means our 8K/A is not far behind)
They had no revenues but cut their loss considerably.
BRIEF-Hydrophi Technologies Europe Q4 net loss narrows to 58,046 zlotys
Feb 15 Hydrophi Technologies Europe SA :
* Q4 revenue 0 zlotys versus 402,811 zlotys ($102,075.67) a year ago
* Q4 net loss 58,046 zlotys versus loss 561,356 zlotys a year ago Source text for Eikon: Further company coverage: ($1 = 3.9462 zlotys) (Gdynia Newsroom)
http://www.reuters.com/article/idUSFWN15U067
http://www.newconnect.pl/index.php?page=1045&ph_main_content_start=show&ncc_index=HTE&id=90902&id_tr=4
From the report (which is not translated--so I could be wrong) I noticed that HPTG owns 16.97% of HydroPhi Europe.
There are 51 million shares outstanding and at today's price of .17 Zlotys that equates to a market cap of 8.67 million Zlotys. Since $1=3.95 Zlotys that gives HydroPhi Europe a market cap of roughly $2.2 million US.
HPTG owns 16.97% of the $2.2 million US market cap which is ~$370,000.
Subtract the HydroPhi Europe value of $370,000 from HPTG current market cap and it takes us below $2 million. ProStar's revenue and profits being valued at under $2 million is far too low. Far too low!
Excellent. Thank you!
HydroPhi Europe announced their reporting schedule for 2016.
Feb 15, 2016 is the date for 4th quarter of 2015. Could HPTG have the same date in mind? Meanwhile the 71 day limit gets very close for the audited financials of ProStar.
HydroPhi Technologies Europe S: Schedule periodic reports in 2016. (EIB)
1/26/2016 9:07
The Board HydroPhi Technologies Europe SA, based in Wroclaw shall make public a timetable to publish interim reports in 2016. Passing interim reports will take place on the following dates: 1.RAPORTY QUARTERLY PROGRESS: - report for the fourth quarter of 2015. 15.02.2016 r. ; - report for the first quarter of 2016. 05.16.2016 r .; -raport for the second quarter of 2016. 15.08.2016 r .; - report for the third quarter of 2016. 11.14.2016 r. 2. INTERIM REPORT FOR THE 2015 ANNUAL. 06.01.2016 r. Any changes to the transfer dates of interim reports will be announced in a current report. Legal basis: § 6. 14.1 of Schedule 3 to the Alternative Trading System "Current and Periodical Information in the alternative trading system on the NewConnect market".
http://inwestycje.pl/gielda/komunikaty/item/89769
Translated by Google Translate.
Isn't it unbelievable that the 30 new trailers are worth almost as much as the entire market cap of HPTG?
Yes. The leasing savings of $250,000 they mention plus the new advertising revenues they'll book from these owned trailers can make this purchase quite a lucrative one.
Thoughts about the press release-
The company is committed to growth and is executing on their plans
The company is creditworthy enough to acquire important assets
The company can increase advertising revenues with their new trailers
The company serves some of the largest big box retailers
The company has consistently mentioned increasing shareholder value
Next, I hope they are able to payoff all the toxic convertible debt.
Looks like a purchase of trailers to me (not the trucks). A quick search of Vanguard Dry Trailers revealed that they cost ~$25-$30k+ each new.
http://www.truckpaper.com/list/list.aspx?catid=15022&Manu=VANGUARD&bcatid=28
More expansion at Pro Star Freight---
https://finance.yahoo.com/news/pro-star-freight-systems-inc-130000484.html
I think the land purchase gives us a glimpse of the financial health of Pro Star. They either had $300,000 cash to buy the land or were able to finance it. They will need more funds to develop the land and surely must have the means to do so, else why pursue the opportunity?
Pro Star now has their own URL --no longer a sub domain of a restaurant.
http://psfsi.com/
Pro Star is expanding.
https://finance.yahoo.com/news/pro-star-freight-systems-inc-130000684.html
I think that these Truck Repair Centers may eventually become the place to add a HydoPlant to your truck.
Exactly what I was going to say, I think that Arrow Trucking Co. and Arrow Freight Inc. are two different companies.
So a $4 trade has resulted in a $165,000 market cap decrease this morning?
Hydrophi is undervalued. I don't know much about charts or TA but I can present evidence that HPTG is currently undervalued based on the current market cap of Hydrophi Europe, a separate company that is supposed to distribute the HydroPlant in Europe which HPTG owns a significant stake in (i think it's a 30% stake or so but not sure).
Astoria Capital owned ~40% of Hydrophi Europe amounting to ~20 million shares as of October 2015. Link:
http://www.reuters.com/article/idUSFWN12905D20151012
This assumes 50 million outstanding shares for Hydrophi Europe (20,000,000/.40) listed on the Warsaw stock exchange. Currently they are trading at .17 Zloty.
Link:
http://www.newconnect.pl/index.php?page=znajdz_spolke_en&ph_main_content_start=show&ncc_index=HTE
So that gives them a market cap of 50,000,000 * .17= 8,500,000 Zloty.
Convert Zloty to US Dollars is a .25 ratio.
8,500,000 Zloty = $2,125,000 US Dollars.
Shouldn't HPTG ownership be worth 30% of that PLUS if the Warsaw market values Hydrophi Europe at over $2 million for just the potential of European sales, what market cap value should HPTG be given for the potential sales of the HydroPlant in the rest of the world? At least the same $2 million IMO.
If HPTG was assigned a market cap = to Hydrophi Europe we would be trading at $.0058 per share. 2,125,000/367,000,000 HPTG is trading under that and, in effect, the US market is assigning zero value for recent acquisition of Pro Star.
Pro Star IMO is worth $27,000,000 in market cap to HPTG which is 1X revenues the Trucking Industry average. Add the HydroPlant value that equals Hydrophi Europe's value of $2,125,000 and you have a fair value of $29,125,000 market cap. 29,125,000/367,000,000=$0.079
When HPTG gets to 8 cents it will be fairly valued IMO. That is, UNTIL we see the 2015 financials of Pro Star which I expect to be better than the 2014 figures I used in this example.
Please check my math, logic and facts.
As MONQUE2 mentioned earlier on this board, Pro Star can now expand their fleet at a lower cost. Purchasing used trucks that can perform as good (in mileage, maintenance and emissions) as new ones, thanks to the HydroPlant, can save a lot of money...
Great to see this PR.
Especially like that the Pro Star says :
“We are excited to bring our real world trucking experience to complement Hydrophi Technologies Group’s technology prowess,” stated Pro Star founder, Nikola Zaric.
Also liked to see Roger say:
“We believe the Pro Star business model, growth potential and significant expansion possibilities make this acquisition extremely prudent and should yield significant shareholder value.”