emmerofshmoe, RE: APXR
I have taken the time to read the recent press releases and also the most recent FORM 10-QSB and have made a few notes below regarding this bulletin board stock.
Financial Observations
• It has a market capitalization of $8.65 million and no employees. All services are contracted.
• It recently underwent a name change from Amber Resources and headquarters change to Salt Lake City.
• The company has severe liquidity constraints. As of September 30th it had just $14,733 cash on hand.
• The company has a practice of issuing stock periodically which has a significant dilutive effect. That is how if financed its recent quarter, by issuing 10,929,285 shares.
• It will need additional working capital for its future planned activities and to service its debt because it does not have sufficient cash or cash flow to meet its requirements, which raises significant questions about its viability as an ongoing concern.
• Its strategy is to use short-term loans and equity financing to continue operating, but it has no commitments from any company to provide that funding.
• The company issued on 9/29/04 100,000 restricted shares for $2000 ($0.02/share), and previously on 9.24.04 it issued 650,000 restricted shares for $13,000 ($0.02/share) worth of services rendered to the firm. This pattern is evident throughout its history.
• Apex has another debt principal payment due this month that will more than consume its available working capital at hand today.
Recent News
• The Beaufort Sea/Mackenzie Delta area seems very interesting. However, transporting any gas will be difficult until a pipeline is built.
• The recent activity and interest by all of the large E&P companies certainly bodes well despite the true potential of the area still not having been determined.
• My sense is that Apex is sitting on something valuable but it is undergoing a ramp up in expenses due to increased activity. It is on the brink of going under and hence it is trading here. The folks that accept stock as payment are exacting a steep price (discount) on the management for the risk, although it is through the use of restricted stock.
• I can see Apex getting bought out more likely than I can see them making it alone. What they are worth is a function of what cash flows those properties will provide and how quickly a pipeline will be available to transport the gas – something I do not know. One can then do a discounted cash flow model and figure out what multiple of cash flow to apply to its valuation. I am certain it will be more than what we have today.
I have not bought any stock and have seen it trade between 6 cents and here, so I would look for a retracement upon dilution or bad weather or something else before buying it, and buying it thinking of it as a lottery ticket, not much else right now.
I hope these comments are helpful to you.
Best regards, |
