|
August 2011
A Bee in a Hailstorm: Lihua International, Inc. (NASDAQ: LIWA)
I wrote about this Company back in March, noting primarily that it “was trading near $13 in November and is currently trading in the $8.82 range, a decline of 32% in five months. Lihua International Inc was trading in its current range ($8.82) in mid October before it spiked to $13.”
The stock is now trading in the $7 range, as of today, so it’s off 20% from that March number.
I think what’s important to investors about this Company can be found in three major components: 1) it’s a China based outfit, 2) it deals in Copper, and 3) all the recent controversy surrounding the Company itself.
With regards to the first two, though certainly not a commodities expert, I know that people on a local level steal copper scraps from junkyards and cemeteries and place a very high value on it in local black markets. I also know that beyond local needs, copper is globally instrumental to high-end technology, ranging from semiconductor circuits to big coils needed for electrical grids, and that the biggest deposit of it in the world is in a mountain range, purchased by the Chinese government some years back, in Kenya. Please correct me on this if I’m wrong.
As far as LIWA being a China firm, I’m pretty certain the Company has to pass the muster of any Exchanges (and their rules and regulations) it trades on in the PRC.
So onto the recent controversy; and there’s lots of it… From what I could briefly see this morning it’s based on two premises: A) Management, and B) Mathematics.
So what’s new?
The stock seems to be holding its current price range even though it is certainly a bee caught in a hailstorm. I would like the share value to hold for the sake of individuals and innocents until all the upper level parties can get things sorted out, hopefully in the near term (3 mos).
A lot of companies have their internal/external trouble with management and numbers and I’m just saying that ‘cool heads should prevail’ and not send the stock into a tailspin; hurting some indy investor somewhere that has bought a couple of hundred shares in the past.
Management, financial pundits, lawyers, shareholders, government agencies, exchanges, and judges always seem to reach the truth of things; in time.
So my concern, always with the owners of the Company, the shareholders, is that share price valuations don’t suffer while all the top-tier players go about sorting out the facts that will eventually lead to the truth.
Everybody step back and take a breath.
So what do you think?
July 2011
Mojo Ventures Inc (MOJO.OB) has caught the eyes of a lot of my colleagues and one of the editors here at SmallCap Network (SCN) has even tried the energy drink; he thought it, “Very, very good.” So I looked over the stock and two asset-products popped out at me.
Just to reduce any confusion, the stock just started trading on the Over the Counter Bulletin Board on July 12 and we show the ticker for MOJO at our site as MOJO.OB while other financial search engines, like Google, show it as OTC: MOJO. Of course I prefer our site details, but in any case, wherever you’re reading about it: just MOJO will do as the ticker wherever you are looking for more information…
With that said, MOJO is in brief, a New York based beverage and packaging company that has just entered the publicly traded sphere and a congratulations to management is in order: it’s not easy taking a company public.
The first thing I noticed about MOJO is its price, rank capitalist that I am. It is currently $0.68. Lovely. So many stocks go public at ridiculous valuations that new buyers don’t buy; they wait for a dip. MOJO management has made sure to be inclusive of curious investors who don’t want to buy new issues at Mid-Cap and Big-Cap prices. Management has been smart getting out of the gate.
What MOJO is selling is: energy drinks, sports drinks, wellness beverages, ready to drink iced teas, and vitamin enhanced kids drinks.
If you were to say ‘that is a well traveled road’ you would be exactly right. I’m old so I remember when there weren’t any energy drinks, but I, like you, and like every major beverage producer in the world, began to notice that convenience stores were placing ‘energy drinks’ closer and closer to the cash register for point of purchase reasons, and soon there were entire coolers with brand names plastered all over them.
It has now become an extremely competitive market. Companies come; companies go.
That’s the second thing I noticed at MOJO, which by the way I really liked and led to my final investing conclusion: this company has again, very smartly, jumped into the mix with more than one product to produce revenues and that will give it some staying power in a long-term perspective.
MOJO seems to have its supply chain and distribution lines well figured and I’m confident it will sell its higher profile products “’en mass” from the ‘git go’ if you’ll forgive the colloquialism. And while sports, energy, and vitamin drinks, in addition to teas, will certainly be the Companys’ mainstay in both branding and sales, there were two assets the MOJO lists that I think could be long-run gold mines.
One is an intellectual property and the other is a drink product.
The “Idea” in development is a patent pending liquid/powder dispensing cap technology for the beverage and pharmaceutical industries and the drink is called “UP Immune” which is an immune support dietary supplement. So…
So this… The amount of money made by Abbott Labs with its Ensure product line is literally astronomical. I can recall when Ensure was just a single product calorie booster given to the aging and sick to ‘ensure’ they were getting mega-doses of most of the table of elements. It was expensive and usually only sold at pharmacies: Today it is much cheaper, sold everywhere, and has at least a half a dozen content variations. I think MOJO and its UP Immune has tremendous “Growth Potential” in the long run.
And the dispensing cap technology MOJO is developing is just the sort of product that generates huge licensing revenues from third parties once it is brought online. Think of the folks who own the patent for the pop-up top dispenser used by every maker of liquid dish soap and bottled water.
And even though they may seem ‘abstractions’ in the more mainstream MOJO product line, I think they are the two asset factors that would draw me in to buy shares in the Company.
What do you think?
It’s funny in national economics how some regional locales start generating interest and activity and take on ‘Hot Spot’ status. People start pointing to the return of Detroit or the state of Ohio’s fiscal house being put in order.
Because of a big $12 billion deal recently with Australian mining giant BHP Billiton buying up independent oil and gas producer Petrohawk Energy; all eyes have turned to Texas. Petrohawk sold its positions in three of the most popular shale formations in the United States: the Eagle Ford, Haynesville, and the Permian Basin areas in Texas (which stretch into Louisiana).
And that brings us to Houston-based Bering Exploration (BERX) (“Bering”) which was actually making lease moves and inquiries in the same area even as the Billiton deal was in the works.
Let’s get the past out of the way so there are no surprises…
Bering is a development-stage company that was formerly a pharmaceutical concern known as Oncolin Therapeutics It changed its name to Bering Exploration, Inc. in September 2010, a little less than a year ago. Thus its 25% ownership, an asset on the books, of Intertech Bio.
So Bering is in essence, a new company less than a year old; that started with a 5% back end after payout working interest in a single well being drilled in South Texas, along the Texas Gulf Coast. That’s Ground Floor and that’s what this investment story is all about. The Company has come a long, long way since then with interests in four premium shale and oil & gas fields in Texas. From small acorns do mighty oaks grow...
June 7, 2011 /PRNewswire/ -- Bering Exploration, Inc., (OTCQB: BERX) announced today that it has received approval to be licensed by the Railroad Commission of the State of Texas to conduct drilling and operations in Texas.
Before we get to some numbers and some truths about corporate structure, let’s begin with a few outstanding items that are worth mentioning. First up, the management is first rate. Here’s a snipet from the Company’s Web site and from a letter posted by the CEO…
“We encourage all of our people to maintain safe operations, minimize environmental impact and conduct their daily business with the highest of ethical standards. We care about the areas in which we live and work. We also believe that it's important to enhance the economic vitality of these areas by giving back and promoting employee volunteerism.” Sincerely, J. Leonard Ivins Chairman, Chief Executive Officer.
Ivins has spent his whole working life in Oil & Gas and and has even done some work as an FDIC and RTC contractor. He knows money; he knows the energy business.
Next up, Bering, in a very short period of time, has secured leases, interests, letters of intent, and exploration agreements in four of the most sought after developments in the Texas region that have given rise to the economic term ‘Hot Spot’.
And though they’re not required, Bering files it important documents relative to shareholder transparency, like annual reports, with the SEC and publishes a press release on a national wire service so; ‘everyone can see’. Bravo.
So Where and What does Bering Exactly have Going in Texas and the Gulf?
The Eagle Ford Prospect: Bering has leased the mineral rights on approximately 1,200 gross acres targeting the Eagle Ford shale play in Central Texas with potential gross reserves of 3,000,000 barrels of oil and 120 well locations. This prospect has an aeromagnetic survey and the company expects to utilize it and other advanced techniques to maximize oil recovery from the Eagle Ford, Austin Chalk, Buda and Edwards zones. The prospect also contains one well bore that has been abandoned and the company will evaluate the possibility of a re-entry.
Bering will retain a 100% working interest and an 82% net revenue interest with a two year lease term.
The South Chambers Prospect: Bering has acquired an interest in a South Texas oil and gas prospect that has potential gross reserves of five million barrels of oil and 46bcf of natural gas.
The Gulf Coast Prospect: Bering has entered into a Letter of Intent to participate in a new prospect located in the Gulf Coast area that has potential gross reserves of 120 BCF of natural gas and up to 10 million barrels of oil.
The Permian Basin Prospects: Bering has signed a three year exclusive exploration agreement with Glaux Oil & Gas, LLC (Glaux) for the development of numerous leads and prospects in approximately 500,000 gross acres in West Texas. Glaux has identified approximately 25 leads and prospects in the area and will work exclusively with Bering to develop these prospects using Glaux's access to exploratory leads that were identified using a proprietary aeromagnetic survey and other advanced oil finding technologies such as telluric and seismic.
Why Are These Prospects Significant?
Here’s why…
The Billiton – Petrohawk deal effectively raised the prices on all of the oil leases in the major oil shale plays in the Eagle Ford acres to approximately $20k. That means Bering could soon become the target of a buyout by a bigger company and that will boost valuation even if it never is acquired. And look at the other “Players” in the surrounding area: Mid-Caps, $50+ a share prices, and huge growth estimates. And Bering is right in the middle of these guys.
Last year, Eagle Ford shale plays generated approximately $2.9 billion in revenue. The number of drilling rigs in the area and the number of drilling permits applied for has seen nearly unbelievable percentage gains.
In a bigger picture scenario: According to the Congressional Research Service (CRS) in a report released this March, the United States’ combined recoverable natural gas, oil and coal endowment is estimated to be the largest on Earth. According to the new report, an updated version of a 2009 paper, the United States’ resources are larger than Saudi Arabia, China and Canada, combined. The report estimates that the U.S. has 163 billion barrels of recoverable oil and enough natural gas to meet the country’s demand for 90 years.
And now about those truths and corporate structure…
What you’re going to find here is typical, normal if you will; for a ground floor company and management doesn’t mind that a new investor knows what they’re buying. Refreshing.
Numbers and Information from the Annual Report
Bering is trading today in the $0.67 range. The stock has a 3-Month average daily trading volume of 114,414 shares, so no liquidity problem here. With 24,030,000 shares out; it has a market cap of $16.1 million. Its FYE is March 31. A/O June 30 last month, Bering had virtually no short sellers (1.47% or 45,845 shares) to apply any downward pressure.
While Bering does trade on the Pink Sheets (BERX.PK) it also trades on the OTCQB OTC Market Tier with the same symbol: BERX. Its CIK is 0001229089. I’m guessing here, but I think management in the coming year will make an application for either the AMEX or NASDAQ Exchanges. The Company works with the venerable Holliday Stock Transfer company in Arizona.
Morningstar reports Bering has a P/E of -34.5 and TTM return of assets of -132.82. But don’t let that put you off: an investor has to remember this Company has only been in operation 11 months and has been accruing assets all along; so I find that the P/E and the -132.82 to be outdated numbers. A re-evaluation of assets and performance will be more realistic in the coming year.
Here’s Something I Really Like: Honesty.
As I said above, management at Bering has trying very hard from day one to be an exceptional concern with regards to its corporate governance and here’s the proof in the pudding: In its July 14 10K Annual Report filed with the SEC, it noted: The Company had no revenue for the period from April 1, 2010 through March 31, 2011 and posted an operating loss of $556,637 or $0.02 per share (basic and diluted). They don’t have to report that, but they did. Highly commendable.
What that tells an investor is that management, going forward, is willing to ‘tell it like it is’ and that it recognizes it works for the shareholders. Again: Refreshing.
As a “Ground Floor Texas Oil Play” I think Bering is really worth a good look-over. The Company's website is available here: http://www.beringexplore.com.
Every once in a while a financial writer comes across a little known stock that has a story to it; a developing story, a story about a future and that’s what I think I’ve come across here. See what you think…
We’ve all seen the celebrities who have wound up in front of a judge for one reason or the other and are put on probation with conditions, or put under house arrest until the court date arrives, or the probation serves itself out. Well the “keeping track of” such offenders is more and more done by ankle devices that make sure someone wearing it doesn’t go outside a parameter or get too close to one that’s prohibited.
That’s where SecureAlert Inc (OTCBB: SCRA) caught my eye and then my attention. They make the electronic ankle bracelets letting everyone know, who is exactly where in real time. The price of the stock caught my interest: a $0.09 close yesterday on lots of liquidity; 713K shares (a/o 3:59 PM EDT Jul 14, 2011).
9 cents? So I did a little digging and here’s what I found…
The Target Market for SCRA
By mid 2009, jail authorities were responsible for supervising more than 70,000 offenders outside the jail facilities, including 11,800 under electronic monitoring; 11,200 in weekend programs; 17,700 in community service programs; and 12,400 in other pretrial release programs.
And get this, each year in the U.S. more than 750,000 offenders are released from federal, state, local, and tribal prisons and jails, and 5 million offenders in the U.S. are on probation or parole. That’s a lot of 24x7 monitoring. That’s a BIG market.
No one particular company has so far emerged as a major player in the fragmented Electronic Monitoring industry, which is one of the reasons I like SCRA: they have a good shot at leading the competitive pack. Intervention software reduces recidivism by 30% and can save governments between $40 and $450 a day per offender. That’s a lot of money for struggling local and state governments and Federal enforcement agencies.
The SCRA Primary Product
The ankle ‘bracelet’ if you will has immediate offender violation intervention via voice communication technology on ReliaTrack, SCRA’s proprietary technology. As a side note, the Company owns and or is in the process of attaining 13 relevant intellectual property patents.
The SCRA ReliaTrack has a 90 decibel Siren and audio/vibration alert, it’s waterproof, tamper-resistant and even has “Predictive Behavior Software” that anticipates crimes by analyzing offenders habitual movements. Pretty cool.
And the software is smart and easy to use for vendors: which is very, very important. It has Satellite, hybrid, regular, and street mapping views, a simple interface for creating, editing & scheduling inclusion/exclusion zones, and its field-tested product failure rate is .3%.
And in the last 4 years, SecureAlert has a proven track record: 63,585,000 hours of intervention experience (unmatched by its competition), 45,048 offenders monitored on interactive tracking, and 10,563,000 alarms handled.
So What’s the Company Like?
Well it has, like all companies, strong points and weak points.
I like that David G. Derrick has been SecureAlert’s CEO and Chairman since February 2001. He’s literally ‘seen it all’ and ‘knows’ if the Company is on the right track or not.
One of the strongest points going for SCRA is that the Company “Cleansed” the balance sheet a while back by improving shareholder equity by a $17 million spread; a $13 million shareholder deficit to a $4 million shareholder equity. That’s the stuff; clear up the books.
Another big plus is that its Gross Margins have finally topped 50% and management is aiming at 65% in Q4 ’11. The average daily revenue per device is at $5.60.
The bad news here is that the Company has lost money the last two years; the bright side to that story is that it lost $10m less in 2010 than in ’09.
Another weakness at SCRA is in dealing with the past. To get money on the table, the Company issued some preferred shares that give away too much common stock when cashed in causing dilution worries. I know investment banking and it isn’t a rarity that a company has to make deals to stay alive that cost it down the road.
But the upswing of this is that management has acknowledged it and is dealing with it. Good. On the plus side: SCRA has NO law suits pending, has been chipping away at SG&A costs, and seems key on getting the bottom line fundamentals stronger and stronger.
And here are a couple of parting thoughts…
Public Perception can be a ‘Monster’ and many a good company has tried to attract the wider, broader financial community even though they are a ‘penny stock’ with all the inherent stigmas. SCRA literally knows this and has brought on some seasoned advisors to re-invigorate its trading image. For my two cents, make a pitch at NASDAQ. Couldn’t hurt and might bolster investor morale.
I like the fact that SCRA pulled off two international deals; one in Brazil and one in the Bahamas. Management is obviously thinking outside of the U.S. and looking at Russia, Mexico, and the emerging markets of India, China, and Indonesia as targets for growth. Good. I think their product would do well, very well overseas.
The reality is prison over-crowding, fiscal budgetary constraints, and concerns surrounding recidivism and parole/probation costs in every large population is a drag on economies and anything that provides safety to the public interest and inexpensively has a place in the future.
I also think the $0.09 ‘entry level’ price for new investors and current shareholder aggregators is quite attractive.
What do you think?
June 2011
This stock was brought to my attention, so I had a look at it and wanted to ask what you thought: the stock is SunSi Energies Inc (SSIE.PK).
The management at SSIE is hard at work building on the momentum they’ve created this year. While the Company motto is a ‘Pure Play’ in the Solar industry, which it is, the investment motto to my thinking is that it is a ‘Momentum Play’ at the moment with the potential of turning into a ‘Buy’ if management can manage a few fundamental moves.
I think this stock has some merit in being a ‘True Niche’ in a Sector based on ‘Hope.’ Good enough. I think the SSIE management is ‘Clued In’ on where the Company is headed and what it takes to ‘Get There.’ For example, SunSi Energies has launched an investor campaign to let possible shareholders know that it even exists. Good. And there have been some solid results like the Company’s trading volume increasing from under a thousand to four times that much; investors like liquidity.
But media campaigns aren’t always enough to build traction and a few fundamental moves like getting off the Over the Counter Quotation Board (OTCQB) ‘the pinks’ and at least applying to the OTCBB (Bulletin Board) or the AMEX shows forward thinking and will widen the SSIE exposure to the markets. Also, any buyback, of even the slightest nature, of some shares in the public float will go a long way in building investor confidence. Even if the CEO buys back only a 1,000 shares for their own account.
The SSIE Pure Play
A substance called Trichlorosilane (TCS) is the important core material for producing high purity silicon, an element used in semiconductor chips and solar cells. SSIE intends on being the flagship of developing TCS globally, and I might add, its acquisitions bear that out.
On December 8, 2010, the Company completed its acquisition of 90% of Zibo Baokai Trade Co with the right to globally distribute, without restriction, the TCS production of Zibo and on March 7, 2011 SunSi completed the purchase of a 60% interest in Wendeng He Xie Silicon Co, which has a TCS manufacturing factory located in Wendeng, China.
TCS as a Product
Trichlorosilane (SiHCl3) is a colorless liquid containing silicon, hydrogen, and chlorine. The key difference between solar grade and electronic grade polysilicon is the purity requirement. The process of producing TCS begins by mining for relatively pure silicon dioxide (sand or quartz).
The next step in the process is to separate the silicon from the oxygen which is achieved by heating sand grains containing silicon dioxide with carbon at very high temperature. At the end of this stage, the silicon or metallurgical grade silicon is about 97% pure. In order to reach a purity level suitable for semiconductor device and solar applications, the MGS goes through a purification process, which involves the reaction of MGS with hydrogen chloride. This reaction will finally form TCS. SSIE now has the controlling interest of a factory that does just that.
A Brief Look at the Solar Market
In 2000, the semiconductor industry consumed over 90% of the world's silicon supply while the solar industry consumed approximately 10%. In 2006, the solar industry consumed more than 50% of the world's available supply of polysilicon for the first time ever; Solar emerged.
China is counting on solar energy to get it off of its coal dependency; so too, the rest of the world. Anything ‘Green’ is good. The global solar energy industry has grown by over 849% since 2000.
SSIE Growth and Positioning
In view of its expansion plan, SunSi Energies has already identified North America and Europe as high potential markets for its TCS. Countries, such as Germany and Spain, have led the demand for solar in recent years. The U.S., Asia, and China are not far behind. Whether developed or emerging, the ‘need’ is shared by all.
About SSIE as a company…
SunSi Energies is incorporated in Nevada, obviously for tax reason and is headquartered in Brooklyn, New York. Its FY ends May 31 and for those who want to know its CUSIP is 86800Q 103 according to the SEC.
On March 24, 2009, the Board of Directors approved a 12 for 1 forward stock split; that’s forward, not reverse, a good note to investors. Also good is that SSIE has no legal proceedings going on.
The Company has 27.74 shares outstanding, a public float of 18.72 million shares and an approximate market cap of $87 million. Its last 10-Q filing was for the period ended 02-28-11. SSIE is currently trading in the $3.19 range, its 52-week low being $0.86 and its 52-week high being $3.60. Trailing twelve month numbers show revenue of +$4.62 million and a loss of two cents. Not bad.
All-in-all when you look at the May 2010 period through the February 2011 filings and weigh the SSEI total assets, current liabilities, and stockholders’ equity figures, the equation bodes well as positive growth has moved forward by 20% to 30% while the comparable periods have remained in line. The Company has its losses, but it is primarily based on its acquisitions which typical.
From a third party point of view, I like what I see here so far with regards to a niche product, a solar ‘play’, the Company’s management style, and the SSIE ‘Growing Pains’ all seem normal in as they develop.
So what do you think?
You can check out the Company at http://www.sunsienergies.com/sunsi
May 2011
With 815,739 retail customers in a 'captive' location, Portland, Oregon, any reason this stock should fail?
Regulation maybe?
What do you think?
When I wrote an article on this stock for SmallCap Network, there a few general concerns about the Company that i didn't have room for; so I'll address them here.
I saw on a number of the message boards that ARCO going public was a bad deal in two ways: 1) the Underwriters got in at a much cheaper price then individuals could, and 2) the Market Cap was bloated and not truly reflective of the stocks real value.
I agree on both counts. But there is hope for IPOs. The recent Glencore IPO in London and Hogn Kong, had the major U.S. underwriters complaining about 'unregulated-commodities-trading' and the like. China and the Euro Union charge a fraction in fees to take a company public. This will continue and as for unrealistic Market Caps, that too will unfortunately go on until someone figures out the 'publics interest.'
Please weigh in on this...
