It's been over a year since I enjoyed sparring with Kern on AOL's MF boards re. his accounting for barter transactions for future marketing expenses so that they comprised most of the reported revenues, his use of nobody-ever-heard-of-them public accountants, and the dubious efficacy of the products purportedly offered for sale. His responses were beligerant. This guy was in a league of his own for being an obnoxious scam artist. The whole situation was absurd.
Today I took a look at the filings and news for the first time since then. I have to admit I got some real satisfaction from seeing that they were forced to change their accounting for the barter. It was ridiculous what they were doing.
Then I saw the news release announcing the board had shoved the guy out. I took even greater satisfaction from that.
As far as the company as it stands now:
With a mkt cap of $34 M and revenues (w/o barter) of $3.8 M, this puppy has a PSR of 9, which is mighty high. The price/book is also quite high.
If the stock fell to a PSR of 1, the stock price would be 5/8. That's probably about what the stock is worth.
They burned $3.7 M of cash from operations last year. As it happens, they have $3.6 M of cash on hand. So by the end of 1998, they will be broke. They surely can't get debt financing, so they will have to sell some equity, perhaps through a discounted convert deal, and further dilute the stock. The mechanism is thus in place to help bring the stock down to its fair value eventually.
A year ago I was unable to borrow shares, so I quit following the stock. Now that I look again, I notice that the short interest has fallen, along with the stock price, to 744 k, which is still about 15% of shares out, but less than it had been. I wonder if it is possible to borrow shares now. |
