Marshall Holdings International Inc (fka MHLI)

[stervc]

MHII Critical Share Retirement Thoughts…

Maybe, just maybe MHII really are turning things around for the better. It does help with them being on the OTCBB as I will explain why I think they should fundamentally be trading over .30+ per share as a minimum because of this recent share cancellation.

Personally, I wasn’t sure if they would file this, but they did. This past Friday after the market closed, MHII quietly filed a Form S-8 with the SEC to deregister 2,025,050,000 shares to cancel from their Outstanding Shares (OS). If you do the math, this is like them retiring or deregistering 91% of their OS.

2,025,050,000 Deregistered + 202,000,000 New OS = 2,227,050,000 Old OS

2,025,050,000 Deregistered ÷ 2,227,050,000 Old OS = 91% Shares Cancelled

Keep in mind that the goal of any stock we buy, as an investment, is to hope that they achieve profitability which would mean that the company would not need to sell shares to raise capital because growth would have been sustained by its profits. Capital would be “earned” from its product, business, or service it offers and generates for Revenues. This is the growth we want to exist in any stock any of us buy as an investment.

It appears that MHII is there; profitable. Personally, I don’t care if they are selling rocks to make a “Net Profit” in the market. Whatever they are selling is working to obtain a Net Profit. Net Profit is Net Profit and the market should eventually fundamentally realize and appreciate this as its share price should warrant what has been filed with the SEC.

Before reading below an explanation of the .30+ per share fundamental valuation, please note that MHII had a bad history for doing reverse splits in the past which is what spooked me enough to not pick up many shares. I might be kicking myself for this later as that seems to be the norm for the majority of the penny stocks today. I recommend only doing the same if your decision is to buy to remain conservative. However, what they are now doing might have merit so consider removing your emotions to research the first major step taken this past Friday since the company is saying more news to come.

** MHII is on the OTCBB and has a history of filing with the SEC on a regular basis.

** A Form S-8 is what gives fully reporting companies the power to register and “deregister” shares quickly and easily without having the automatic SEC examiner review.

** MHII filed a Form S-8 to deregister 2,025,050,000 shares to cancel from their OS effective immediately as of 25 May 07.
http://knobias.10kwizard.com/filing.php?repo=tenk&ipage=4961523&doc=1&total=&back=2&...

** This means that MHII actually had done what they stated they would do in the PR below released on 23 May 07 which means that the new OS = 202 million shares:
http://biz.yahoo.com/iw/070523/0256617.html

** The MHII PR below released on 22 May 07 declared Revenues of $2,573,000 and Net Profits of $651,000 in the First Quarter of 2007.
http://biz.yahoo.com/iw/070522/0255849.html
This means that after they paid their Expenses, they have remaining a profit of $651,000 for the first quarter.

Considering they continue with their current growth as like this Qtr as a minimum…
* MHI Revenues of $2,573,000 x 4 Qtrs = $10,292,000 Revenues Annualized
* MHII Net Profits of $651,000 x 4 Qtrs = $2,604,000 Net Profits (Earnings) Annualized

** MHII stated in the PR on 23 May 07 that as a result of the share restructure to 202 million shares, MHII earned 0.0031 per share for the quarter ending March 31, 2007 or an Earnings Per Share (EPS) of 0.0124 per share on an annualized pro forma basis. Using a conservative P/E ratio of 12 would reflect a conservative trading price for MHII as below:

12 x .0124 = .148 per share

But…

** MHII closed this past Friday at .006 per share on the OTCBB within the Diversified Investments Industry which had an Industry P/E ratio of 31.20 P/E ratio as of this past Friday, 25 May 07 as confirmed below:
http://biz.yahoo.com/p/423conameu.html

Using its Industry’s P/E Ratio would reflect below:

31.20 x .0124 = .386 per share

The P/E ratio is the Price to Earnings growth rate for the industry in which a stock trades. It’s an expectancy growth rate of a stock in relation to the industry it’s in.

** Given its current price of .006 per share and an Annualized EPS of .0124 per share, the Price to Earnings (P/E) ratio for MPII is currently:

MHII P/E Ratio = .006/.0124
MHII P/E Ratio = .48

Another “fundamentally expected” consideration for share price for MHII in relation to the growth rate for stocks that trade within the Industry that MHII trades can be concluded by replacing MHII's current P/E ratio of .48 with its Industry’s P/E ratio of 31.20 in the equation directly above to determine if MHII is undervalued or not while solving for X being the expected current “share price” we are trying to determine:

X/.0124 = 31.20
X = .0124 x 31.20
X = .386 per share

This fundamentally supports a .386 share price. With its Industry’s P/E ratio being 31.20 and MHII’s P/E ratio being .48, this means that MHII is 31.20 ÷ .48 = 65 times lower than where is should be trading considering the growth rate for the industry that MHII trades while currently at .006 per share. This could fundamentally justify a share price as indicated below:

.006 x 65 = .39 per share

Please don’t take such to mean that MHII is going to go up 65 times ASAP! Heck, I don’t know? I am only pointing out how fundamentally from what MHII filed with the SEC, certain new found valuations could be officially considered. Previously in other stocks, I made posts from a speculative point of view from lack of facts in hopes of what a company would do. This time, MHII has actually filed with the SEC to confirm the numbers I posted above. So this isn’t me talking. It’s MHII talking to the investing community through the SEC.

(Normally the P/E Ratio logic and the EPS logic doesn’t warrant the same share price as it did here with MHII. It is purely coincidental.)

If this was a pink sheet stock, I think the chances of the market eventually realizing the restructuring of MPII would be very minimal, but since it’s an OTCBB stock which files with the SEC regularly, I think there is a decent chance for the market to eventually realize the undervaluation of MHII. These are only my opinions as to how I see things. I urge all investors to please do their due diligence (DD) to be at peace with themselves.

v/r
Sterling