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Valuemind, congrats on CESV. I still have some doubts about the transactions that put this company together, and those concerns kept me from buying shares when it was down around 4. In hindsight, that was a mistake.......
R59, ANII's growth in Q3 was helped by a poor y/y comp. Last year in Q3 they heavily discounted some new items to pick up business and that hurt margins. The reverse happened in Q4 04, which saw a huge increase in eps due to strong margins. (Plus, earnings weren't fully taxed.) They will have a difficult comp......but i like the stock in the long run.
Another potential problem is the recent announcement that 421k shares are now freely tradeable:
http://biz.yahoo.com/prnews/051130/law035.html?.v=35
I would put it as a short-term hold, but long-term buy. I was waiting on buying some until after the Q4 release.
Rruff, I have no position whatsoever on this company, so I decided to check the financials because the writer sounds like he has some legitimate beefs.
Here's the most recent Q:
"Ownership of Circle Group is concentrated in management. Gregory J. Halpern, who
owns 29.% of the outstanding shares of our common stock, and all of the
directors and officers collectively own 35%. Holders of our common stock can be
out-voted by management in most circumstances and thereby management can control
the composition of our board of directors and our policies."
Comment: he clearly has an interest in seeing the shares go up. Now, why would short-sellers take such an interest here?
"The report of our independent auditors accompanying our consolidated financial
statements for the year ended December 31, 2004 and the notes to our interim
unaudited consolidated financial statements for nine months ended September 30,
2005, discuss issues which raise substantial doubt about our ability to continue
as a "going concern." The going concern qualification is attributable to the
Company's historical operating losses and the amount of capital which the
Company projects it needs to satisfy existing liabilities and achieve profitable
operations. In positive steps, the Company has closed down its loss generating
businesses, and continues to evaluate and implement cost cutting measures at
every entity level. For the nine months ended September 30, 2005, the Company
continued to experience a negative cash flow from consolidated operations, and
projects that it will need certain additional capital to enable it to continue
operations at its current level beyond the near term. The Company believes that
certain of this needed capital will result from the successful collection of its
accounts receivable balances as the manufacturing plant is fully operating
during the coming fiscal year. The Company believes it can raise additional
funds through private placements of its common stock.
AND
RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AS COMPARED TO THE
SAME PERIODS ENDING SEPTEMBER 30, 2004
Revenues
Revenues decreased by $49,576 or 28% to $124,993 for the three months ended
September 30, 2005 from $174,569 for the three months ended September 30, 2004
Revenues decreased by $115,410 or 22% to $404,385 for the nine months ended
September 30, 2005 from $519,795 for the nine months ended September 30, 2004.
The decrease in revenues was primarily due to the decrease in demand of our
e-tailer products as a result of budget cuts in the airline and train
industries, and to the decrease in demand of our business consulting service.
Comment: not a very healthy business. Yet, the stock has perked up a bit in the past few months because of speculation that George Foreman's presence will boost sales.....
http://bigcharts.marketwatch.com/news/articles.asp?guid={04F071F4-4235-4770-9474-55587A098106}&n...
Bottom line, the CEO is having trouble raising money from banks, so he needs to use the stock market to get it. He feels that the stock has been held back by short sellers, who are betting that the company can't overcome its poor cash flow. I think the CEO should spend less time worrying about the shorts and more time on collecting those A/Rs and other creative ways to expand his profit margins. Maybe if his company actually made some money, he wouldn't have this "short" problem.
Koz, the level of dilution has nothing to do with revenues. Its all about earnings per share, which is impacted by
a) the rise in net income and
b) the change in fully diluted shares.
The fd share count is calculated using the treasury stock method. If you haven't heard of that, I highly recommend that you look it up. Its a fairly complex calculation that looks at all "stock-equivalents" like warrants, options, and convertible securities.
Generally, if a stock's fd eps shows y/y growth, even with a rise in the fd share count, we can say that shareholders have not suffered from the increase in shares. Of course, shareholder value can be measured in a number of different ways, so no one measure of dilution fits all answers to this question.
Correction on my earlier eps post for JMIH:
FD eps was 0.0126 v. 0.0122 in Q1. Didn't add the extra decimal, but I'm sure most of you caught the error.
Headline on JMIH is misleading. Yes, net income was up 19%, but fd eps was exactly flat y/y: 0.126 v 0.122 reflecting the increase in fds.
Also looks like some pretty big ramp-up expenses coming:
"The Company expects to incur expenses of up to $1.5 million in 2006 for a variety of start-up and operational costs, largely related to inventory, new boat molds, equipment and miscellaneous expenses."
Pretax income for Q1 was only 221k....can they remain profitable while growing revenue?
Pressure on margins looks like it will continue:
""While we are excited about the growth of our company and strong financial results, we are closely monitoring general economic conditions, and rising energy and raw materials costs. Although we are, through a variety of initiatives, proactively addressing the impact of these costs on our operations, there can be no assurances that we can continue to compensate for these increases without an adverse affect on our operating results."
I have no current position in JMIH, because I'm not sure if this quarter's margins and eps are sustainable.
But be aware that the SHO list does not address the OTC market place.
Telephonics, that isn't accurate. The Reg SHO list does in fact cover OTC:BB securities:
http://www.nasdaqtrader.com/aspx/regsho.aspx
"NASDAQ publishes Regulation SHO Threshold Security List for NASDAQ issues (NNM and SmallCap), OTCBB issues, and Other OTC issues.
Short interest data is only available for listed securities on the NYSE, Nasdaq NM, or AMEX. Perhaps you are confusing this with the RegSHO list?
Researcher, re: OUTL. Did you have a chance to read through the management discussion of results in the Q1 10Q? Looks like the company will be hitting some difficult comps coming up......not sure that the Q1 results (esp earnings) are repeatable in Q2 and Q3:
"Based upon current production orders, the Company currently believes that its
sales levels for the second quarter of fiscal 2006 are likely to be slightly
lower than in the first quarter of fiscal 2005, but ahead of the prior years'
levels. The net results for the second quarter will be affected by the level of
sales, product mix, and could also be affected by increases in energy and other
costs. In addition, the second quarter of fiscal 2005 experienced the benefit of
a significant recovery of bad debt that arose prior to fiscal 2005; the Company
does not expect to benefit from such an unusual event in the second quarter of
fiscal 2006. The bad debt recovery increased the Company's second quarter fiscal
2005 earnings by approximately $1.2 million pre-tax ($0.7 million after-tax),
and fully diluted per share net income by $0.22. Due to the fact than many
clients purchase the Company's services under cancelable purchase orders rather
than long-term supply agreements, and the sales volumes of the Company's longer
term agreements are not guaranteed, predictions of the Company's net sales and
future results of operations have been difficult. Based on the project-oriented
nature of the Company's business, the Company remains vulnerable to
significant period-to-period fluctuations and the Company's largest clients have
historically tended to vary from year to year depending on the nature of the
number and size of the projects completed for these clients. The loss of IMP,
P&G, or one or more other principal clients or a change in the number or
character of projects for particular clients could have a material adverse
effect on the Company's sales volume and profitability.
Based on historical activity, the Company has often experienced weaker sales
volume and profitability surrounding the third quarter. In fiscal 2005, in
addition to the third quarter being particularly strong, those historical
effects were also offset to a significant degree by an insurance recovery and
the profits from the sale of unused equipment, neither of which is expected
during fiscal 2006. In the third quarter of fiscal 2005, these items, on a
combined basis, increased the Company's earnings by approximately $0.3 million
pre-tax ($0.2 million after-tax), and fully diluted per share net income by
$.05. Since these unusual factors in fiscal 2005 are not likely to reoccur, the
Company has no reason to expect that fiscal 2006, will see trends substantially
different than those in years prior to 2005. Actual future results could vary
significantly and are highly dependent upon the amount and timing of orders
received from customers, and other factors mentioned in prior periods."
-----------------------
FWIW, I found the candor expressed in the 10Q to be refreshing. But I don't think I'd be buying here until the stock absorbs the next two quarters.
Here's my quick take: at an adjusted TTM pe of 16.5x, I think the stock looks reasonably valued, with a lack of immediate buying catalysts in front of it. Its not expensive by any means, and the dividend provides some small return while you're waiting......
Re: Form 144 selling. I found the answer to one question. I believe that the Form 144 seller must wait at least one year before selling any unregistered shares:
http://www.insiderinsights.com/form144.php
"Exemption from registering the shares doesn't necessarily mean holders have carte blanche to trade as they please, however. If there are less than 500 unregistered shares to be sold, and the total value of the shares is less than $10,000, they can be sold at will. But if both of these minimums are not met, the SEC's Rule 144 holds up numerous hoops for sellers of unregistered shares to jump through. These requirements aren't nearly as onerous as registering the shares, but they are enough to make sure that a company doesn't undertake a "stealth" offering of its shares by issuing them in dribs and drabs.
The conditions Rule 144 lays out are as follows.
1) The unregistered shares have to have been held by the selling party for at least one year. It was originally two years, but the SEC lessened the holding period with a 1990 rule change.
2) The sale must be made through a brokerage firm.
3) There must be information freely available to the public about the issuer of the securities.
4) The number of shares being sold cannot represent more than 1% of the issuer's shares outstanding, and also must be less than the average weekly trading volume of the shares over the preceding four calendar weeks.
If these criteria are met, a person may file a Form 144 with the SEC giving notice of their intent to sell a specified number of unregistered shares within the next three months.
Telephonics, I have several shorting related questions for you. Do you know the rules surrounding convertible debentures and hedging? Can a hedge fund involved in a deal immediately short up to the amount of shares they plan to convert?
I'm thinking of a particular case involving CXTI.ob. This Chinese tech company filed an 8k on Oct 27 announcing a "toxic" $6MM convertible debenture:
http://www.sec.gov/Archives/edgar/data/1039726/000113705005000314/platinumcontract8k.htm
Within days, the stock fell sharply from the 1.60 range down to 0.80. It stayed down just long enough for the hedge funds involved in the deal to convert $1.6MM of the $6MM into 2.3MM shares of stock:
http://www.sec.gov/Archives/edgar/data/1039726/000113705005000359/platconver8k.htm
Here's my question. CXTI never showed up on the Reg SHO list during the past month, so clearly the hedge funds were able to short up to 2.3MM shares with no problem. Now what? Can they sell these newly received 2.3MM shares if they have not been registered? Or can they sell some of them as long as they use a Form 144?
Also, what happens to those short positions if and when the hedgers sell the underlying stock? Are they forced to close them out?
Thanks!
Stockpeeker, thought you might find this of interest regarding the tariff issue:
http://www.bloomberg.com/apps/news?pid=10000087&sid=aU8vzaaGhoUI&refer=top_world_news
I think the tariffs are a non-issue, but I do expect the Yuan to float upward gradually over time....probably at a rate of 3-5% per year.
I expect DAAT to increase their prices next year to help reduce this pressure on GMs.
That is an interesting coincidence. I'm surprised that Cornell hasn't been more profitable, although what we see is just the realized net gain, which doesn't include unrealized gains:
Net gain + income: 23.4MM
Size of fund: 200MM+
I'd also bet that they unload a bunch of losers at fiscal year end to reduce their cap gains hit for shareholders.
It would be nice if we could get a glimpse at Cornell's full portfolio, but I don't think they have to file one with the SEC....yet.
Ruff, I don't think we're all that far apart. I understand and can appreciate why a fund/institution would want to hedge their downside exposure, especially with companies that are using them as the lender of last resort. I'd bet that the vast majority of stocks that use toxic converts are circling the drain anyway.....
Retail shareholders will ALWAYS be the last to know of important events. The internet has leveled the playing field somewhat, but insiders and large investors will control the market in very thinly traded securities.
Deals of the sort you mention, private placements and convertibles, ARE fully disclosed in SEC filings. What is illegal is the front-running that had been taken place before the filing of the agreement. Of course, I'm firmly against any illegal forms of shorting based upon inside info (and the reverse is true also, i.e insider buying before a buyout)
Don't rely on company PRs. They have their own agenda....so its always wise to check the SEC filings.
Telephonics I completely agree with your points. I'm just disagreeing with Bartermania who feels that ALL shorting must be eliminated. I don't take that extreme view.
Bartermania, I understand why you hate shorting. I don't like it when I see a stock I own show up on the Reg SHO list either. But let's consider the alternatives. If you want to abolish all forms of shorting, who will be hurt most in the short run?
THE SMALL DEVELOPING CO.'S AND THOSE THAT ARE NOT PROFITABLE.
Sometimes changes in laws can have unintended impacts. If you don't allow shorting of any kind, I can tell you that one of two things will happen to the companies that you feel deserve the most protection from the hedge funds.
a) Lending capital would dry up, and those companies unable to get conventional loans would have to severely cut back their operations or simply go out of business.
b) Private placements might still get done, but at smaller dollar amounts and even greater discounts to market value.
Bottom line, there is no such thing as a free lunch. IMHO, abolishing shorting of all kinds is over-reaching and pretty radical. Abolishing speculative, naked shorting.....yes, that I can get behind.
Even though I disagree with the extent of the damage that you feel shorting creates, I admire your passion for the subject. Thanks for establishing and keeping up this board.
Guess who showed up on the Reg SHO list yesterday?
Maybe we owe the CEO here an apology. Looks like we've got some hedgers who think it best to lock in their recent profits.
My guess is some shorting took place when we crested over 0.80; those shorts are now showing up in the system.
Anyone following TBYH.ob? With a lot of Chinese stocks up strongly the past month, I'm surprised that this one appears to have slipped under the radar.
They reported a huge increase in net income last quarter on flat y/y revenue growth:
http://biz.yahoo.com/prnews/051121/lam078.html?.v=28
That translates into fd eps of 0.08 for Q2 only (taxed at 14%). Q1 was merely break-even, so perhaps its just a one quarter wonder, but they are in the business of designing handsets for the Chinese market (CNTF is listed as a competitor). Their primary customers are CECT (XING); Panda Electronics, and Siemens Mobile.
Quote:
""We are pleased to report an exceptional quarter for our shareholders while we witness favorable business trends for our company," stated Mr. Xiaofeng Li, Chief Executive Officer of T-Bay Holdings. "For the quarter, our cost of revenue declined from $7,167,000 to $4,513,000 which is an extremely favorable trend for our business. Revenues from design fees for the quarter were about 60% of total revenues, in which our design business operates with much higher margins than our manufacturing operations in Shanghai."
Murry Zuhe Xiao, Chief Financial Officer of the Company added, "We are seeing more and more design wins in the marketplace. This quarter represents a significant increase in revenues from our designing operations. Our design fees consist of the fee from the overall design and also a royalty stream from the sale of our clients' products. Therefore, the increase in revenues could also be attributed to strong sales increases of our designs in our clients' products."
Not sure if annualizing is appropriate, but the the China market for cellphones is expected to grow tremendously over the next few years with the advent of 3G licenses. That should provide some demand for the company's design services.
Last year, the company earned 0.15, using 30MM shares as a proforma count. (The company only recently came public in the US via a reverse-merger shell deal, similar to CXTI, AOBO, and many others).
I have them as earning 0.22 fd, ft on a trailing 12 mos basis. With the stock at 1.38, that puts the PE at 6.3x. If they can match Q2's results for the rest of the year, the company could earn around 0.24 for FY06.
Might be worth a look. I think its a decent buy here in the 1.30s and should deserve to trade closer to 10x earnings.
Pappy, in my conversations with the company, I've been told that DAAT is holding out for a Nasdaq listing on the guidance of their primary market maker, Kean.
Wade, re SUWN. The actual guidance given by the CEO contains some wiggle room:
""In summary, our organic growth should allow us to achieve annual revenues of $25 to $30 million and earnings in a range of $0.06 to $0.08 per share in the next 12 to 24 months. "
I've read the PR over and over but still can't figure out the exact guidance. Does he mean 25-30MM in FY06? or FY07? My guess is that it is further out than this current FY, because they would have to average 7.3MM in rev per quarter to achieve that. New production came on line in September, but that means they only had about a month or so in Q2 to take advantage of that.
They did 12.1MM in revs for FY05. Q1 revs were down slightly from last year because of production issues. Q2 will begin to show some improved results but we probably won't see bigger topline growth until Q3.
Chinapop I just went through the 10Q....here are some of my notes:
http://www.investorshub.com/boards/read_msg.asp?message_id=8523171
Sskillz, I noticed that CXTI had a one-time consulting expense during the quarter:
"This increase in general and administrative expenses was largely due to a commission of $623,578 paid to an independent consultant for the sourcing of an e-Government contract with Huian County in the Fujian Province of China.
-from CXTI's Q3 10Q
Pretax income would have been 3422 v 2610, an increase of 31% y/y.
That would have added a tax-adjusted 0.02 to the 0.104 reported.
Other notes: tax rate dropped in the quarter to make up for higher rates charged earlier in Q2 and Q1. Normalized rate appears to be around 18% (9mos avg). Actual rate in Q3: 12% v 17% y/y; 9mos rate: 18% v 21% y/y.
No mention of the toxic convertible financing which caused the huge drop a few weeks ago.
Company appears to be on track to earning 0.40+ in fy05 and trades at 5x with a growth rate of 20%+
PC, as others have pointed out, DAAT doesn't usually put their income statement on their earnings PRs. While I and others have asked Collins to consider doing this, he hasn't done so....yet.
Didn't you see the 10Q filed on the same day? A serious investor should ALWAYS read that first before buying (or selling), and not rely completely on the PR!
Gilead, was there any discussion in the CORG CC about how much they expect advertising expense to increase in the coming quarters? Which margins were expected to improve....gross or pretax? Thanks...
Agreed. The message contained in the NT-10Q was the same as in Q1, but the stock has attracted a LOT of ST traders and they ALWAYS shoot first and ask questions later.
Riskanalyst, the catalyst for the drop in CXTI.ob is the notice of late filing for the Q3 10Q, which came out around 11:30 AM.
The ST traders quickly dumped their shares, assuming that this means bad news.
I would bet that 99% of them don't realize that this has happened to CXTI.ob before. They filed a NT-10Q for Q1 and filed the regular 10Q one day after the deadline, and it was a huge quarter. The wording on the NT was exactly the same:
"The review of the financial statements has not yet been completed."
I'd expect a similar pattern with the 10q probably being filed by the end of this week. There is a lot of anticipation building over this report, and because many recent owners of the stock have huge gains in the past two weeks, they elected to shoot first and ask questions later.
Stockjama? I don't remember that I.D. Could it have been Stockjock?
Jtomm, great post, thanks for bringing up some accounting issues that a lot of us enjoy discussing.
I hear what you're saying about trying to identify the intent here. Is the preferred issue stock? or debt?
I think what you're arguing is that AEY is showing a better balance sheet than it should. If we took the 12MM pref and considered it as LT debt, then shareholders equity would be reduced by that amount, down to $9.1MM. LT debt would rise, and total debt/equity ratios would look much worse than at present. That might hurt the company's ability to get additional credit, but it would also increase earnings per share because the interest expense is tax-deductible. Currently, its not and pref interest expense gets subtracted from net income.
If you want to consider preferred debt as stock then we have to use the conversion rules under FASB. This article has a good discussion on the issue of contingently convertible securities:
http://www.cica.ca/multimedia/Download_Library/Standards/EIC/English/EIC-155.pdf
Under the present rules, converting all the debt into stock at its conversion price of $40 would be anti-dilutive (i.e. eps would be higher), thus it isn't done.
Your inference that AEY is getting away with a fast one, or using "chicanery" in its accounting is a bit strong, IMHO. Using enterprise values for valuing companies is just one method of reaching fair value. It has its plusses and minuses along with the PE or PEG method.
We've had numerous discussions here about companies with poor balance sheets yet have earnings. I believe the consensus is that in the micro-cap world, earnings trump assets (or lack thereof).....and so that is what this board is dedicated to finding - low PE stocks showing decent growth in sales and eps.
Rruff, I agree with many of your points. Shorting ahead of the news of a floorless convertible and/or a private placement is illegal and should be fully prosecuted. I believe that there is more attention being paid to this issue by the federal regulators, so hopefully that can be cleaned up.
I just wish that those who decry shorts and short-sellers as destroyers of companies, would look at the financials FIRST and note that the chances of these stocks surviving as a public entitities were remote at best. Most of the toxic convertibles are issued to companies that have negative cash flow from ops, no earnings, and/or carrying high amounts of debt.
Apish, re TRMA. They reported 0.81 fd, ft in the most recent quarter, but did a secondary that will dilute immediately:
"* Subsequent to the end of the third quarter, the Company raised
$95.8 million of proceeds, net of underwriting discounts but before
offering expenses, from its public offering of 4,273,500 primary
shares of common stock.
4.3MM / 10.6MM = 41% additional dilution. If they had all those shares counted in Q3, then reported eps would have been reduced to 0.58
"There was nothing wrong with our business," says Dempsey. "We fell prey to the perfect crime."
Hold on. If "nothing was wrong" with his business, then why did he get in bed with these guys? If he didn't know this was going to happen, he needs to have his head examined.
"In the case of Pet Quarters, the suit alleges that Badian's hedge fund lent the firm sorely needed operating capital on terms that allowed the hedge fund to convert the debt to shares at any time. Through naked short selling, Badian then pushed Pet Quarters stock from $4 to just pennies. Badian balanced his massive short selling with cheap shares obtained after he converted the loan to stock.
Without the operating capital, this company would have folded ANYWAY. It appears that no bank was going to loan them money, otherwise they would have tried that route. And no one was willing to take shares in a private or secondary offering either.
I'm just as angry at those that short on bogus reasons, but how is that the case here? Would any of you have bought shares in this company prior to this floorless convertible?? And why?
Disappointing action in CHAR.ob today. Stock back down to 3.50, presumably on the idea that one of the larger shareholders (Allen Holdings) is continuing to unload their 4MM share stake in the company. They sold 347k shares in the past week at prices ranging from 3.50 - 3.93.
Stock has come under pressure because Lukoil bought a controlling interest with its acquisition of Nelson. Now, the next largest shareholder is signalling though its selling that it wants out. Of course, they could just be diversifying and locking in some long term gains. Still doesn't make sense unless they fear that the price could drop further.
The company earned 0.17 fully diluted, fully taxed in Q2. Results will probably be even better in Q3. By my count, TTM fd eps is 0.43 thru Q2, so the stock is trading at 8x trailing earnings. Unfortunately, the company has said little regarding what will happen to it once Lukoil is officially the largest shareholder, and until we have some resolution there, my guess is that the stock will remain very undervalued.
Based upon a similar reserves valuation that Lukoil paid for Nelson, the stock should be trading twice as high as it is currently.
Researcher59, KSWW could certainly move higher given its blowout results. I'm surprised they didn't release their backlog figures given that they posted those numbers in the Q2 and Q1 PRs.
What do you think is an appropriate PE multiple given its industry and given its focus on NYC?
Just wanted to point out a couple of items with KSWW. First, note that they had a tax benefit during the Q:
"Third quarter 2005 earnings include a benefit of $759,000 resulting from a deferred tax asset adjustment. "
That means that future earnings are likely to be more fully taxed on the income statement, but actual taxes paid in cash will be much less. The company is finally recognizing the valuation allowance that acts as a shield on the tax rate on the income statement. Once it is brought on to the balance sheet (as it looks like it will this Q), then the company "pays" the statutory rate on the income statement.
If KSWW had been paying a tax rate of 38%, then adjusted fd eps would have been 0.06 for the quarter.
The company doesn't say what its future tax rate will be, but my guess is it will be much higher than 2% IMHO.
Hweb, did you ever see any other details on the Jones purchase by AEY? They never filed a subsequent 8k with any details of the company's financials nor the terms of the acquisition. Did they just pay cash?
Mike, the company issued a $6MM "floorless" convertibe debenture to five different hedge funds:
http://secfilings.nasdaq.com/filingFrameset.asp?FileName=0001137050%2D05%2D000314%2Etxt&FilePath...
The most damaging piece of info that traders have seized on is the lack of a minimum conversion price:
"At any time from the date of issuance until the maturity date of the Debentures, the Purchasers have the right to convert the full face amount of the Debentures to common stock of the company at a price of equal to 75% of the average of the volume weighted average prices of the Company’s common stock for the 5 consecutive trading days immediately prior to the date of conversion. In no event will the conversion price be greater than $1.80 per share. "
The assumption has been that the hedge funds would work in concert to keep price down in order to get shares on the cheap. Whether or not they did, trading in the stock created a self-fulfilling prophecy as a lot of confused and uncertain longs exited the stock since the release of the 8k.
EP, its interesting that DAAT gapped up this AM, opening at 2.42 vs its high yesterday of 2.40. As I noted on the DAAT board, the stock showed up on the Reg SHO list a few days ago.
http://www.investorshub.com/boards/read_msg.asp?message_id=8331750
If you note the action from last year, the stock went on a big run in December. Perhaps some other traders have noticed that and are taking positions accordingly.
Worthy, you've had a fantastic run with AOB. I would strongly urge you to diversify your risk within your IRA and sell some, if not most here. AOB will have some significant dilution with the additional warrants fully counted in the eps number. What kind of PE multiples are other new Chinese stocks getting? Unless we're talking internet, the answer is much less than AOB....so the valuation argument is hard to make. You seem to be relying on momentum to continue, but that is a double-edged sword. The current traders/investors in AOB who have pushed this up to 6 will most likely be selling on any earnings news, especially if earnings growth is less than stellar. I'd expect the stock to fall back in the upcoming quarter to digest its substantial gains since May.
My guess for Q3 is rev: 13MM, and fd eps of 0.07-0.08. That would be flat vs. y/y eps results, so I wouldn't want to hold into earnings.
Good luck!
Still no word from the company on whether they closed the deal or not.....
"Pursuant to the Agreement, the Purchasers agreed to purchase up to $6,000,000 in face amount of 7% Secured Convertible Debentures (the “Debentures”) from the company. The closing date (the “Closing”) under the Agreement will be on or before October 31, 2005. "
"If the Closing does not occur on or prior to October 31, 2005, the Company is obligated to pay Platinum a break-up fee of $25,000 in cash."
---------------
Wouldn't it be great if the company announced that it canceled this deal and had been able to secure better terms from another group of investors? I think the chances of that happening are slim, but this story will get very interesting if we've heard nothing from the company before earnings.
Looks like one of the financial consultants who engineered the reverse merger sold another 244k shares around Oct 15:
http://www.nasdaq.com/asp/Holdings.asp?FormType=form144&symbol=CXTI&selected=CXTI
Ralfalf, here is a good source for 144 filings:
https://www.vickers-stock.com/reports/free/tickerorcompanylookup.asp
Also here:
http://www.nasdaq.com/asp/Holdings.asp?FormType=form144&symbol=DAAT&selected=DAAT