To All Really:
I will be posting two items on this thread about NHMCF tonight. The first is a copy of a e-mail to me by Martin Linsky ~ a investor who seems to know his way around a balance sheet. Martin has posted the balance sheet info and basically the same info in this e-mail about a month ago. For those who have missed it, here it is again. The second post will be an analysis of NHMCF based on technical info. I am using Omega software to do the analysis. No, this is NOT a suggestion that anyone buy Omega ~ you just might want to know what I am using. IF YOU ARE SOMEONE WHO INVESTS BASED ON WHAT YOUR GUTS SAY, DON'T READ THESE TWO POSTS. First, Marty's e-mail.
Hello Kathy;
Thank you for typing out the reports. They were interesting enough to get me to try to access Superstocks agin. This time I did manage to find their financials. I have no idea why I couldn't before. You are right. Their financials are awful. I am not an accountant. But I have seen enough of these statements to see red flags. They are carrying a $14.8 million loss carryover which speaks volumes. Their financial statement notes are voluminous adn all indicate a management that does not know how to manage. Or, rather, a management team that uses lawyers to manage for them. What bothers me about this company is that their sales chart in no way reflects the reality of their current situation. For example, they were supposed to have sales of $17 million in 1996, in reality it looks like $.50 mm. They seem to be eighteen months behind their projections. They should have a sweetheart arrangement with their manufacturing supplier since they seem to be one and the same, but one entity is suing the other and holding $.25mm until the dispute is resolved. They are overdraw at their bank by $68K. They paid for their building with stock. The Arjo deal is not closed yet due to some technicality. Well, my guess is the technicality is the $.25mm operating capital loan NHM was supposed to provide them to complete the deal. (And thus the recent warrant announcement to complete the deal). Through some very creative accounting, for example, considering a contingent liability of $4.8mm as an asset, their debt to equit ratio is close to 1:1. Plus, they count assets under dispute of $7.5mm, yet, these are leased assets. I don't quite understand how they can be considered equity. Plus, I wonder if they aren't piggybacking these which would make their debt to equity ratio closer to 1.5:1.
Their Selling, Distribution and Administration is $3.82mm and under "other" expenses they have $1.89mm which has no explanation. You have to wonder where the $5.2mm is going if they are so efficient.
Add to that, their propensity for highly dilutive warrant arrangements, and you have to wonder if they give a ____ about shareholder value in the future. I think not.
To summarize, their balance sheet looks like the balance sheet of a startup company with lousy management but a great idea. Sometimes a great idea can save the day.
As a fundamental investor, I would steer clear of this stock like this.
The momentum investor in me says that this is an opportunity with a good deal of risk and some reward. The fact is that this stock is in the hands of momentum investors. Another fact is that we may have very positive earnings results soon. Put the two facts together and you may want to sit on your position, take the ride up with the earnings news and sell. Then take half your profits and buy some options. .......... (holiday stuff to me KC) Marty.
Well, kathy
PS: I have had a quick look at the technical analysis and their is some Bull signals and some Bear. Later |
