Monday, December 26, 2005
Hookah Diving and Union Dentists... both bad
2004: Assets are mostly inventory. Very weak balance sheet. Large shareholder deficit nearly twice the size of assets. Revenues increased in 2004. 32% gross margins. Large SG&A. Very large loss. Interest expense is horrible. Cash flow is about what I'd expect.
Q3 2005: Current ratio deteriorated even more. Balance sheet still horrifying. Still losing money.
UDHI (sec), one of those companies that goes through all sorts of transformations over a short number of years trying to figure out what to do. They ended up acquiring "all of the assets (except the patient list) of George D. Green D.D.S." for $1 million promissory note over 10 years with 5% interest. Dental services for union members.
Green owns 60.6% of the company, yet grants himself huge quantities of stock options (1.7 million shares with about 30 million shares outstanding). He also holds 1 million shares of preferred stock with 10-to-1 voting rights. Salary of over $500K in 2002 and 2003 (when revenues were only $2 million), dropped down to $118K in 2004 (you just know the balance sheet is going to be crap and he had to stop bleeding the company, probably forced by a bank).
Balance sheet is very weak. Current ratio is less than 1/2. The company has notes payable to a bank, which is probably why Green's salary dropped. Get this: $1.4 million deficit with only $447K assets, which are mostly AR.
Revenues are about $2 million. Salaries $692K, but G&A is over $1 million. Net income of $5K. Cash flow from ops is $12K and capex is $12K.
Q3 2005: Some cash and PP&E appeared on the balance sheet. Assets jumped up to $1 million. Current ratio is 1/2. Deficit is $1.3 million. Lost money in 2005. Cash flow statement looks terrible. Ok, I give up, what is the stock price? 9 cents on 31 million shares. It's way overpriced.
Dr. Green commented, "The loss is attributed to some one time costs associated with the Dental Visions acquisition and some other one time costs associated with the issuance of our convertible debentures and $5.0 million Equity Line of Credit funding which took place during the last quarter." Dr. Green added, "The funding in question will play a large part in helping us to prepare the Company for expansion on a national level. We aim to begin with the communications industry and then plan to propose our business model to other unions on a national basis."and also...
UDHI has been providing a Dental Network for the Communications Workers of America (CWA) Local Unions in Florida since UDHI's inception and has expanded the concept and Dental Network throughout District 3This makes no sense to me. Why have special dentists for the union? That's just asking for graft, inefficiencies, corruption, and who knows what else?