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Gold/Mining/Energy : Nuvo Research Inc -- Ignore unavailable to you. Want to Upgrade?

To: twentyfirstcenturyfox who wrote (12074)	2/6/2003 10:15:08 AM
From: Montana Wildhack	Read Replies (2) \| Respond to of 14101

Hi Fox, On 1 it is usual that the date of record is in the future when the mailing is received. I don't have experience in rights so much of what I'm saying comes from some detailed interviews with players directly in the field. I'm not certain wether that will be the case here; but, its quite clear that investors are in a hold pattern for the time being and that's why volumes are low even by DMX levels. This also makes sense to me since the game doesn't really start until the date of record passes. Only then do the rights exist and provide a potential. How that changes the trading patterns during the exercise period I think will be interesting to watch - nevermind the concepts of believing the company has future value or can create new value during the period. Another good point was raised by a stockhouse poster and by Wily about paying attention to the trading activities during the period. Many people will be pursuing their own interests. Some will simply be selling the rights, others will be trying to trade simply in the rights, others will be waiting to see if the value of the rights go up. There are a couple of points here I think that bear mentioning. When rightsholders exercise there will be no indication in the market that this has been done. By exercising my rights with cash, there is no trade either in the shares or in the rights and no visibility. Even when we flip by selling the equivelant cash and then exercising, the only market visible action is the selling of the shares. Therefore flipping causes downward pressure even though the net shares held rises. As you said, this does give the fresh capital to DMX. On your 2nd point, note that the loan secured by Markham did not become an NR. I don't know how this apparent gap is being filled - but I think its safe to say DMX is hustling to get this RO out there. One final point here. The rights offering if exercised will not dilute a persons percentage ownership of the company. This isn't a key criteria for most investors who don't hold an appreciable percentage anyways. The real focus is on getting value out of the investment. In this most important sense the RO is clearly dilutive as Acqua was and OXO is. The best way to assess this I believe is to estimate a potential earnings figure and quantify the difference. Lets say that 2 years from now DMX is not dead; but is earning revenue in the US, Canada, and some in the EU. It doesn't matter what number you pick so long as its a reasonable number for clarity so I'll pick $.50 per share EPS as the value. Currently then DMX would have made a profit of $26.2 million resulting in the $.50 eps. If the RO is fully subscribed that eps will drop to $.40. Note that the profit breakeven point doesn't change at all with the number of shares outstanding nor does the cash neutral point (revenue activities fund cash needs exactly but do not necessarily make a profit eg: amortization). These are the first two goals for DMX as they have been all along this long struggle to succeed and they remain unaffected. Wolf