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Wednesday, November 30, 2005

revisiting companies 5

revisiting companies 1
revisiting companies 2
revisiting companies 3
revisiting companies 4

HEMA (chart, website, sec) Q3 results announcement and filing: revenues are up a bit from Q2 and prior year. But costs increased even faster and gross profits are down. G&A also increased so they earned only 3 diluted cents in Q3 vs 5 cents in Q2. And share count continues to increase. Cash flow from ops is fairly weak. Large capex. They paid off some loans. This is getting less interesting.
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HFIT (chart, website) sold 1,000 shares preferred B stock for $10 million to acredited investors. Immediately converts into 5.1 million common shares. Also 5-year warrants for 1.5 million shares at $2.40 (plus weighted ave anti-dilution adjustments).

$5.1 million will be used to redeem preferred A stock convertable into 2.2 million shares plus 1.3 million warrants. The rest goes into the business. 3.1 million net shares of dilution for $4.9 million ($1.58 per share cost when the stock was trading around $2.00). Overall, the deal is probably somewhat fair.

A Q3 results press release was piggybacked onto this same 8-K. Here's the 10-Q: The assets are just as odd as they were. Revenue and income was about the same as Q2. They earned $506K.

13 million shares outstanding before this net 3.1 million share dilution. Share count will presumably be 16.1 million. So the earnings per share is 3.1 cents vs 3.8 cents in Q2. For 9 months, earnings are 10 cents, so the stock might be worth $2.00. The ask is $2.12.
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HNNA (chart, website) No news so I assume it still might be worth $18. Best ask is $27.
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MKRS (chart, website) Q3 results: cash down receivables up from Q2. Accrued expenses almost gone while AP nearly tripled. Results about the same. 38% gross margins. Engineering expenses increased by 67% over Q2 due to SBIR Phase II contract from Sept 2004. Net income is only $27K vs $44K in Q3 including a liability writeoff. Cash flow from ops went negative during Q3 due to liabilities. 31.8 million diluted shares. I get this sense that the business is just plain weak and unpredictable.
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MPAA (chart, website) Q2 results: cash, AR, and inventory are up from Q1. They tapped $6.8 million from the line of credit and paid down the credit due to customer by $2 million. Revenues are up something like 40% from Q1 and significantly from prior year. Gross margins are 29% from 17% in Q1 (28% prior year). Earned 19 diluted cents in Q2 (recovering from the 16 cent loss in Q1 which apparently was due to increased costs in opening a manufacturing plant in Mexico for the new busines in Nashville). The 19 cents would be what we'd expect to see in the future, but will there be a decline in the auto industry? Everyone is expecting it.

The stock is selling for $9.65, which is probably at least full price.
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MPAD (chart, website) CEO retires. No other news. Stock went up.
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MEK (chart, website, sec) Cash down, AR down, inventories up from Q2. Revenues down 28% from Q2 (across the board drop). Hurricane related. Operational loss. Equity in unconsolidated affiliate brought earnings positive.

They landed a big account verbal only so far. $45 million in revenues by the end of 2006. This is a full year's worth of revenue for them. They have gross margins of about 30% and let's say 1/3 of the gross profit gets eaten up by other costs. So I'd expect about $9 million in additional earnings in 2006. There are about 13.5 million shares, so I'd expect about 67 extra cents per share in earnings next year. The stock jumped from $4 to $6. This company is always going to be difficult to predict.
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Still need to do these:
MTWD (chart, website)

MHCO (chart, website)

MIOK (chart, website)

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