El Gator: Re: <They owe us some satisfactory explanations fast.>
Are not "facts" satisfactory explanations? Are you grasping for rationalization as a phase of denial?
Granted, the only hope is some magic wand touched the business and created a different future. Current, accurate financials, through the third quarter, are the only glimmer of hope. Yet, if released by a management with the history this company has, how do you validate them as reliable?. Someone earlier pointed out that the leopard has difficulty changing his spots.
If you recall, the IT division was the high margin sector that was going to lead the way for FAMH (along with the "re-insurance" business; underwriting outside payroll financing for other staffing companies and the Morton Downey show). Buried in a more recent management quote was a "one liner" that revealed the IT division was no more. Whether that was because the one management individual in Phoenix that headed the IT sector business left (or was "allowed" to leave), or they couldn't crack into the market is irrelevant. All of the "golden eggs" went the way of the DoDo bird.
Now they indicate there will be a one time write-off for the $4.5 million acquisition of Myriad whose purchase from the IRS was to occur over 5-7 years. I expect to hear, soon, that "all the bad news", and major adjustments are behind 'em, giving another glimmer of "hope".
FAMH lost in the business arena through 1997. Myriad lost in the business arena also, and the IRS forced their hand. There is something wrong with this picture. With the mountains of deliberate deception, I would be astonished if the SEC or the State of Texas failed to act in this case.
Positive cash flow from operations will be a telling feature. Evidence of any is, so far, lacking. I expect operations will be trimmed back more. They just couldn't support the 1997 S,G,&A, even if 200,000 went to paying off a "president".
Myriad didn't come on board until May. There probably would have been increased expenses, for several months to absorb operations. I would be very skeptical there are any positive flows during the first half of the year. So, the third quarter will be "tell-tale".
Shares were probably issued in the first part of this year. There didn't appear to be any other source of funds and the 235,000 in assets wouldn't last long at their burn rate. FAMH would have been cash flush for a while so lo & behold, purchase Myriad, and maybe come current on the unpaid withholdings, penalties, and interest. These would have consumed fair amounts of cash.
There is a lot of emphasis on returning shares. Are holders to feel better if they lost 15 cents per share. The only benefit to returning shares to the company is they could then be re-issued to obtain needed cash for continued survival. This could be the sole driver for management's counsel trying to identify any shares issued for "inadequate" consideration. How many existing holders will remain if the company moves to increase the number of authorized shares.
Seeing these burdens removed would look good and create a "warm fuzzy", but the final three questions will probably be: 1)Can the leopard change his spots?; 2)Will there be life after regulatory intervention?, and 3)Are there positive cash flows from operations (without any impact of extraordinary items or stock issuance)to support operations.
As always, these are a poorer individual's humble opinions, and I wish you the best of sound reason and luck. You've got to do your own DD and soul searching on whether it's best to "hold 'em", or "fold 'em". "Denial" inhibits reason. |
