ULTR to ask for extension for filing 10K. a few thoughts:
there are certainly reasons to sell:
(1) it looks like ULTR will ask for an extension in filing its 10-K. this can only be viewed as negative on the stock, because it means bad news.
(2) bad news = 4Q98 loss, which means a big loss for the year.
(3) 4Q98 loss means ULTR will have used up lots of cash, which would have been available to fund the Talon purchase without borrowing.
(4) 4Q98 sales from credit card inserts (direct marketing) were substantially below expectations. (this approach needs to be killed, because ULTR took the marketing/advertising cost risk, which did not pay off.)
on the other hand:
(1) ULTR is going to be on K-Mart's "planogram" starting in May. this is a big coup for a small company like ULTR, and will mean substantial orders from K-Mart throughout the year, including 2Q98.
(2) the Telebrands deal is on track. Monte Ross will be filming an Infomercial next week, and Telebrands has already begun re-tooling plant to make product. this will need to pass through focus groups, but once Telebrands says "go", ULTR will get royalties on every unit they make. given the QVC success last fall, and K-Mart "planogram" coup, it looks VERY good that Telebrands will do the deal. (they begin with a minimum 1 million units). this means the potential for millions in royalties in '99, which is pure profit (no marketing or manufacturing cost). this will replenish ULTR coffers.
(3) Talon is doing well, and should deliver for ULTR in '99.
(4) AAA deal is still a go and on track.
(5) GPS still has great potential, and Telebrands might be interested in T*Star 24 (which is almost finished and superior to the original).
(6) ULTR has been talking with folks to arrange financing/working capital.
(7) ULTR will be cutting costs and pursuing a strategy of partnering with others to absorb advertising/marketing expenses and risks. for example, ULTR will wholesale its products rather than engaging in the credit card insert approach this year. (smaller profit, but less risk.) |
