I'd like to add an old Crossy pick ESAN (Entrada Networks) to the portfolio at current level of .26. (Crossy had originally mentioned it last year at around .18 if i recall correctly.) For those unfamiliar with this one, Entrada was a spinoff from Sorrento Networks and was trading on the Nasdaq until they got bounced to the BB a few months ago due to share price being under 1.00. What attracted me to this stock was the large insider buying that took place last spring between .13 and .16. In the meantime, they had good technology and were selling for less than book value of .30.
Last spring the stock took off for a quick run to the .40's on a profitable quarter of .01/share, but then sunk. The next quarter they made .03, and last quarter they earned .07!!!!!! So why didn't the stock go up? Well, they had an unpopular merger announcement with a private co., Savant Consulting, owned by the CEO's brother, which would have resulted in the outstanding shares rising from around 13M to ~ 50M - and with 74% owned by Savant. Very bad deal!! Everybody was pissed, some posters threatened complaints to Elliot Spitzer, etc.
So here's the kicker: they just announced the merger is OFF!!!!! (See the 8K this past Thursday.) No explanation given, but the fact is, they're still a co. with only 13M outstanding shares, selling at 60% of book value, trading at a price/sales of 0.17 and a trailing p/e of around 2.5. Definitely worth a gamble at .26 in my opinion. It seems this has a great shot at being a 4-10 bagger over the next year.
Downside: you don't know what kind of shenanegan the officers will pull next: the co. has a credibility problem. At least they were smart enough to terminate the merger (unless there was a lawsuit filed). But then again, all CEO's are really crooks so you can't trust any one of them, i.e, it's basically the same sort of risk with any co.
Period Ending: Oct 31, 2002 Jul 31, 2002 Apr 30, 2002 Jan 31, 2002
Total Revenue $4,059,000 $3,366,000 $3,223,000 $3,400,000
Cost Of Revenue $1,872,000 $1,824,000 $1,907,000 $1,507,000
Gross Profit $2,187,000 $1,542,000 $1,316,000 $1,893,000
Operating Expenses
Research And Development $285,000 $284,000 $284,000 $406,000
Selling General And Administrative Expenses $895,000 $856,000 $829,000 $1,278,000
Non Recurring N/A N/A N/A $248,000
Other Operating Expenses N/A N/A N/A N/A
Operating Income $1,007,000 $402,000 $203,000 ($39,000)
Total Other Income And Expenses Net ($89,000) N/A N/A N/A
Earnings Before Interest And Taxes $918,000 $402,000 $203,000 ($39,000)
Interest Expense $53,000 $51,000 $52,000 ($18,000)
Income Before Tax $865,000 $351,000 $151,000 ($21,000)
Income Tax Expense N/A N/A N/A N/A
Equity Earnings Or Loss Unconsolidated Subsidiary N/A N/A N/A N/A
Minority Interest N/A N/A N/A N/A
Net Income From Continuing Operations $865,000 $351,000 $151,000 ($21,000)
Nonrecurring Events
Discontinued Operations N/A N/A N/A N/A
Extraordinary Items N/A N/A N/A N/A
Effect Of Accounting Changes N/A N/A N/A N/A
Other Items N/A N/A N/A N/A
Net Income $865,000 $351,000 $151,000 ($21,000)
Preferred Stock And Other Adjustments N/A N/A N/A N/A
Net Income Applicable To Common Shares $865,000 $351,000 $151,000 ($21,000) |
