AIAdvertising Inc (AIAD)

[VistaViewer]

Just going thru the SEC Form 10Q for period ending 31Mar2010...

... published on 24May2010, and I am finding some very interesting facts that, seem to me, to be quite peculiar. If my findings are true then this stock is ridiculously UNDERVALUED at the current market price.

Keep in mind that this 10Q report is the most current information available, and the numbers, most likely, have changed somewhat over the last few months. But we should be getting an update by late August.


On the Consolidated Balance Sheet page 3 they list as Assets:

$915,410.00 in CASH. WOW! That is highly unusual for a penny stock.

Under Shareholders Equity they state the Shares Outstanding as 340,579,815

SO, if you divide the cash on hand by the number of shares outstanding you get a result of $0.0027 per share.

This means this stock is currently selling for just a fraction of a penny ( .0005 ) over the value of ONLY the cash on hand. As I write this post the market Ask is $0.0032 per share. This company might be a target of acquisition just for this cash alone

And furthermore, that does NOT even include the Accounts Receivable Net of $266,544.00 which is money owed to the company. I would assume that after nearly 4 months that they would have collected most of that money. And they probably have a similar amount of Receivables as of today. Any collected Receivables would further increase the cash on hand figure and make this stock an even better buy.


At the bottom of page 3 they list TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY as $3,228,714.00

If you multiply the number of shares outstanding by the current market Ask price you get a total Market Capitalization value of $1,089,855.41

So, as of today, this stock is selling for about 30% of its SHAREHOLDERS' EQUITY value. That is a substantial discount to book value. Based on these figures, if the company were liquidated, every shareholder would receive about a 300% premium for their shares. Obviously, with $915K on hand, there is little possibility of a liquidation; this is ONLY an example. And with that amount of cash available it is highly unlikely they would be diluting their share base either.


And finally, the fact I find most peculiar is that under CURRENT ASSETS they list Computer Software as valued at $20,033.00

I am making a broad assumption that this includes all of their product software for Internet Commerce, Virtual Catalog and Magazine, and Email Marketing. So if I am correct then $20K is a truely ridiculously LOW valuation. The product family is probably worth more like $20 million. Something is way out of wack here. Either the $20K is for something else and the product software is not listed as an asset, OR ELSE it is way undervalued by about a factor of 100X.


So, is there something I'm missing here?

I am neither an accountant, nor a math wiz, so if someone would like to check my work or offer criticism, you can refer to the source document here:

http://knobias.10kwizard.com/filing.php?param=&ipage=6975701&DSEQ=1&SEQ=&SQDESC=SECTION_BODY&exp=

Good Luck to All Longs!

VV