Bobwins/Wade, this is in response to a discussion you were having on the VM message board related to Grifco. I seriously considered buying a lot of GFCI when it announced its earnings/forecast, but did not pull the trigger because of the following concerns (although I would have made some substantial profits in the meantime). I thought I would point out some risks of my DD just to generate some sort of response:
Major points of concern:
1. If all these PR’s are true, including March 9th Shared Buyback PR (what a bunch of crap!), what is the point of being public? First of all, why would Company announce buyback before hyping stock to higher prices? Secondly, if Grifco can make all these acquisitions with cash, and the acquisitions and new products are going to generate substantially more cash, why not be private? Wouldn’t the company be much better off generating cash for the owners, not announcing the alleged ridiculous margins that its customers should be paying attention to (and annoyed at), as well as avoiding Sarb-Ox and other hassles of being public?
2. Sketchy trade of ticker symbols between Dial and previous CEO Jarvis. Documentation displays that Dial incorporated Summit Entertainment Group (Ticker: SETG) on October 1. After only one month, on November 1, he resigned as Summit's President/CEO and Jarvis became President/CEO of Summit. Then, on November 19, Jarvis resigned as CEO of LitFiber and Dial took over as the Grifco CEO. Furthermore, Jim Dial allegedly has massive experience with previous companies, but Company chose not to disclose his background or previous ventures.
3. Griffith already filed bankruptcy for original Grifco in 2001. Company was ordered to be liquidated in Chapter 11, but pleaded to be kept in tact in order to accomplish merger that was planned with several other entities. Was unsuccessful in this request with bankruptcy judge.
4. Per BK filing, Grifco Revenue for the 10 months ended April 2001 was $282,800. To have approx. $7.5 m in July to December 2004 represents 44x last reported revenues (comparing on a monthly basis), or estimated annual rev. CAGR of 254%, which is pretty amazing for a company that was liquidated and had to start over.
5. Grifco’s A/R during the bankruptcy filing was only $381,000 ($74,100 due from Grifco International). $251,000 of total A/R, or 66%, was over 120 days old. “Big Name” customers such as Amoco, Chevron, Exxon have little, if any, A/R.
6. If new “Jet Motor” is so revolutionary and high margined with immediate paybacks, why wouldn’t Grifco had already be taken out so a larger player industry could own the technology (at an alleged significant cheap purchase), save on costs, and potentially profit from it or use it exclusively for its own advantage?
7. Other companies that Princeton Research has “featured”/promoted have not performed well. Additionally, King and Princeton have retracted releases which it has made about Grifco (specifically referring to Q&A). IMO, Princeton definitely appears to be a PR-as-in prostitute shop rather than PR as in Public Relations (or IR).
Points of lesser concern:
8. Grifco “acquired” Coil Tubing Technology, which was already conveniently located in the same building as Grifco’s headquarters. Is an upcoming acquisition target going to be “Pipeguard of Texas” (Same building and offers pigging products) – might as well maintain the convenience factor, eh?
9. Admittedly, I am not too familiar with industry, but cannot find enough instances of Grifco, KO-VAC, Global Oil Tools, Coil Tubing Technology to believe revenue forecasts. Additionally, any articles related to terms “Grifco” or “Silver Hawg” have minimal historical results prior to GFCI becoming publicly traded and hyped.
10. Per other posters, Company is difficult to contact at best, including during business hours. Do customers have secret phone numbers for transaction and customer service purposes?
11. I don’t trust outstanding shares and float calculations. Turnover on float too high if numbers I have seen posted are accurate.
12. Web site is really weak and has not been updated since discussed, which was several months ago and would cost very little on a relative basis.
13. Patent issues and discrepancies, as previously mentioned on this board.
14. Grifco is not even listed in the phone book in either city which it is located.
15. Company did not proofread PR dated March 3rd which stated earnings were $2.6M and later stated $2.5M (minor point, but still bothered me).
Just so I don’t seem too harsh, I did tell a co-worker when this stock was at $0.26 that if he bought it, it had a 50% chance of being a 20-bagger and a 50% chance of turning into a goose egg from being a potential scam. Also, I am heavily invested into NWAU, another pinkie, so I am not anti-PK. Sorry to post this long of a message, but I felt that the prior post warranted a response and I appreciate the intellectual banter exchanged on this board.
