Seven Arts Entertainment Inc (SAPX)

[sbc357]

Compiling info on dilution and true value of SAPX:
This is from a couple of posts that analyze how the company is using its equity.
These should certainly stay as sticky notes so poeple will know what they are investing in.

At the end of march 31 2011 they had 26K in cash. At the end of march 31 2012 they had a negative balance of cash. At the start of this past reported Q they had 7,798 in cash and at the end of the most recent Q they had negative 25,267 in cash. The sad part of that is they have sold 10's of million of shares and their cash on hand has not only NOT improved but now showing negative.

This is right from the Q.

CASH AT BEGINNING OF PERIOD $7,798 $ 26,818
CASH AT END OF PERIOD $ $(25,267 ) $ 26,574

Then look at this from the Q, More shares that are supposed to be issued for debt.

The Company has evaluated these convertible notes for embedded derivative features and has determined that no derivative liability exists. Assuming all notes are settled via common stock, the number of shares to be issued to satisfy approximately $3,727,660 of debt plus accrued interest is approximately 17,653,000 shares of the company’s common stock .

This is all they do is issue shares for debt. Every Q there are more shares and more shares issued.

Then we have this

The Company converted $2,963,028 of the film and production loans into 5,989,349 shares of common stock during the three months ended September 30, 2011, $906,000 of film and production loans for 3,490,385 shares of common stock in the 2 nd quarter ended December 31, 2011 and $943,580 of film and production loans for 6,749,658 shares of common stock in the 3 months to March 31, 2012.

Just look at this rate of dilution

Between October 1, 2011 and December 31, 2011 the Company issued 11,470,808 shares. The total number of shares outstanding on December 31, 2011 was 22,620,288.

Between January 1, 2012 and March 31, 2012, the Company issued 19,348,684 shares at an average price of $0.19 per share. The total number of shares outstanding on March 31, 2012 was 41,968,972. (See Subsequent Events Note 13 for stock issuances subsequent to March 31, 2011).

Then look here in May

Total shares outstanding as of May 10, 2012 was 68,090,174. (including 2 million shares issued to SAP Plc.)

Two months later its up another 36 million shares.

Now as of the 8K today

As of June 30 2012 (the Company’s financial year-end) , the Company had 96,793,011 shares in issue. Since the last reported number of shares on May10, 2012 in the March 31 2012 10-Q , the Company has issued the following unregistered securities.

Its increased another 28 million.

Give me a break this is printing faster then the dallas morning news. The sad part is they did a RS last year and the OS was 2.5 million shares. So the shareholder equity here is maybe .25 a share and that is if we do not see any more dilution. But looking at the current shares still need to be issued for debt that number is going to continue to go up. Tell me what about this balance sheet looks good again.

Just look at the 8K today at the new shares to be issued

New Stock Issuances from May 10, 2012 through June 30, 2012

6,659,364

common shares were issued in satisfaction of $240,000 of film loans previously converted at an average conversion price of $0.04/share. (high of $0.09 and low of $0.02)

18,109,801

common shares were issued in satisfaction of the $796,152 of newly converted debt at an average conversion price of $0.04/share. (high of $0.08 and low of $0.04)

2,568,383

common shares were issued in satisfaction of $200,000 of existing overhead liabilities (loan interest) at an average conversion price of $0.04/share


I think the very sad part is that the CEO keeps releasing the same hold hashed over news or fluff. The more share issued the equity keeps going lower and lower. Remember they have up to 250 million shares they can issue and from the looks of it they are going to keep issuing shares. Nothing would indicate they are not.

The dilution is non stop with this. I have yet to see a 10Q of 8K that did not have a huge increase in shares in the last year. So if you can count on management not to issue one more share you are correct its worth a bit more here but how can anyone trust this management when they are diluting 20-25 million shares at a clip here.

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Now, Aug 11, we get an update (thanks to NotRichYet2 putting some time in to do some more DD) because a new Form Pre 14A was filed on Aug. 9th:
True value of SAPX for common shareholders ???
Can only guess based on the last 10Q put out by the company.
Last 10Q was for March 31, 2012 - So will use only REPORTED #
Total assets $ 41,269,929
Total liabilities 16,291,126
__________
Net Share Equity $ 24,978,803 with at the time 30,421,315 O/S

Now in the Total assets there is $ 24,111,370 FILM COSTS - this is the value of the FILM library which get amortized (written down) over time. Currently earning $60/month and DROPPING as these films get older. Anyone think they are worth $24 million? $12 million?, $6 million? - market value more like 3 to 5 Million

Next we have Total assets $ 9,540,859 MUSIC ASSETS - This is your DMX + $1M for BIG JAKE - no current income - But when this DMX album finally gets released they need to RECOUP that $9.5M frist before any real profit to bottom line. Due to DELAYS (4) most DMX Fans by now have downloaded off the internet what they wanted to thier iPOd or something by now.

What can one say about the $ 19,522 in Property and Equiptment?

Next is the $ 7,598,178 Current ASSETS made up mostly of RECIEVABLES - Thats good, because its needed to offset that $16M in total liablities.

Now keep in mind that as of March 31,2012 there are known to be 125,125 Series A shares (par $10) out and 60,000 Series B shares (par $100) out. BOTH of whom have FRIST CLAIM on any ASSETs of SAPX before common up to $ 7,251,125 as of MAR 31

Since this 10Q the COMMON SHARES O/S has increased to 133,226,259 a 102,804,944 INCREASE since MAR 31st and climbing.

What I am getting at by making this post is that the true value of SAPX common shares is speculative and subject to interpetation.
My own view based on the above INFO is that SAPX for common shares is worth less than ZERO and dropping. So that DMX release better not fail because that TAX CREDIT is a hoax, the $250 buyback is a JOKE, a R/S of 1 for 100 (or even MORE) provides a LARGE % drop afterward, DELISTING fron NASDAQ, so 2013 could be a REALLY BAD YEAR for SAPX, if not eariler.

Fundamentals are very clear with SAPX

There is just too much wrong with this stock for it to really be a viable investment.

http://www.stock-bb.com/seven-arts-pictures-plc-nasdaq-sapx/316-%24250-000-one-heck-sign-belief.html
http://stock-bb.com/seven-arts-pictures-plc-nasdaq-sapx/317-little-history-lesson-who-audits-sapx.html
http://www.stock-bb.com/seven-arts-pictures-plc-nasdaq-sapx/315-%248-800-000-tax-credit.html



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