After the acquisition, it will be fair to consider that VYST will exist to trade within the Furniture Industry. Confirmed from the link below, the trailing PE Ratio for the Furniture Industry is 36.53: pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/pedata.html
The PE Ratio is important because to get the Fundamental Valuation to consider for where VYST could exist to trade compared to the other stocks within its Industry or Sector, we must multiply the learned Earnings Per Share (EPS) by the PE Ratio for its Industry. The links below should help to better understand the PE Ratio logic as being the growth rate to help assess the fundamental valuation of a stock: investorshub.advfn.com/boards/read_msg.aspx?message_id=57154170 http://www.investopedia.com/terms/p/price-earningsratio.asp
To first understand what this is and the importance of what it means, I think it is important for one to understand that "Liabilities" and "Expenses" are two different things. "Liabilities" apply to the Balance Sheet and "Expenses" apply to the Income Statement. The $31,319,398 listed on their Balance Sheet as an Accumulated Deficit is nowhere near as bad as I believe it is being perceived by some. An Accumulated Deficit is used as a Tax Shelter for tax write-offs. It's a non-issue and basically a psychological paper entry because it will only affect the Balance Sheet and not the Income Statement for valuation purposes to derive an Earning Per Share (EPS). This will have no negative effect on the outcome for what the company's EPS will be now or in the future, but instead, on the contrary.
An Accumulated Deficit greatly enhances the company’s position as a huge acquisition candidate. This is very attractive for a huge positive Revenue generating company with a significant amount of Gross & Net Income to merge into VYST via an acquisition. Therefore, Rotmans Furniture, with its over $35 Million in Revenues and while having a 48% to 52% Gross Profit Margin and a 19% Net Profit Margin is a great candidate for VYST.
This is huge because the $31,319,398 is available to be used as a 2 year carry back and 20 year carry forward Tax Net Operating Loss (NOL) to reduce the taxable income for the company’s future tax years. The company decides how they want to apply the Tax NOL. This is very important because this is what will help the company to trade to meet the minimum $4.00 per bid for 30 consecutive days to meet the NASDAQ share price requirement. VYST will only need to maximize the Tax NOL by carrying it forward for one year. That means that the $31,319,398 will all be applied to the financials of VYST for the one-year time frame to have $31,319,398 applied to its coming year profitable Income Statement after completion of the acquisition of Rotmans.
$31,319,398 = Tax NOL One Year Carry Forward
Again, I was told by the company that Rotmans generates over $35+ million in Revenues with a 48% to 52% Gross Profit Margin and a 19% Net Profit Margin. The fundamental formulas that I will use to derive the valuation for VYST are below so that all may understand:
Revenues x Gross/Net Profit Margin = Gross/Net Income Gross/Net Income + Tax NOL = Adjusted Gross/Net Income Adjusted Gross/Net Income ÷ Outstanding Shares (OS) = Earnings Per Share (EPS) EPS x Price to Earnings (PE) Ratio = VYST Share Price Valuation
From these variables, we can derive the Fundamental Valuation as indicated below from two different models: Gross Profit Margin Model and the Net Profit Margin Model:
Gross Profit Margin Model The company informed me that from their over $35 million in Revenues, they have a 48% to 52% Gross Profit Margin. I will use the 48% to remain conservative. Consider below to derive an Earnings Per Share (EPS):
$35,000,000 Revenues x .48 Gross Profit Margin = $16,800,000 Gross Income
$16,800,000 Gross Income + $31,319,398 Tax NOL = $48,119,398 Adjusted Gross Income
$48,119,398 Adjusted Gross Income ÷ 250,000,000 (OS) = .192 EPS
.192 EPS x 36.53 PE Ratio = $7.13 Per Share Gross Valuation
Net Profit Margin Model The company informed me that from their over $35 million in Revenues, they have a 19% Net Profit Margin. Consider below to derive an Earnings Per Share (EPS):
$35,000,000 Revenues x .19 Net Profit Margin = $6,650,000 Net Income
$6,650,000 Net Income + $31,319,398 Tax NOL = $37,969,398 Adjusted Net Income
$37,969,398 Adjusted Net Income ÷ 250,000,000 (OS) = .151 EPS
.151 EPS x 36.53 PE Ratio = $5.51 Per Share Net Valuation
The company told me that FINRA will likely have them roll Rotmans’ financials up into VYST as the financials for moving forward because of how huge the acquisition would be for the VYST. This is why from the recent VYST news released, it was indicated how they are making VYST debt free in preparation for the acquisition. I was informed that they are prepared to roll 3 years worth of audited financials up into VYST to consummate the acquisition.
Never buy or sell based on my posts! My posts are just my opinion!
AI
