| To: mark s who wrote (57) | 4/29/1997 3:55:00 PM | | From: David Wideman | | | |
Mark & all,
Excerpts from a Broker/Analyst News Update published by Windward
Communications on Jan. 7, 1997:
11/29/96 - then Stratford President, Mr. Arthur Smith and his spouse &
associate Board member, Ms. Lee Monaco, were removed from their respective
offices by a vote of a majority of Stratford's shareholders.
Roy McMillan was sole remaining Board member. (Per Tom @ ICC, McMillan
had previously been asked to join Board to lend it credibility. When he
came on board, he realized that Smith/Monaco were out of control, hence
the shareholder decision to remove them & retain McMillan.)
Brief bio of current Directors:
Mr. Roy A. McMillan - President & Chairman
Established & managed the Canadian Economic Assistance Program in English-
speaking Africa.
Then served 3 years on Board of Executive Directors of the World Bank.
Since 1989, McMillan has served as Advisor, Finance for the Canadian
International Development Agency; Advisor, project development & project
finance for Ontarion Hydro Int'l ($100M investment in Peru electricity)
in 1993-94; and established a company in Atlanta, now under negotiation for
sale, which holds patents for innovative designs for Nuclear Spent Fuel
Containment.
Mr. Douglas S. Friedenberg (45)
Has been President of Firebird Capital Management, a financial advisory
firm, since 1993. From 1991 to March, 1993, serves as President of Unicorn
Capital Management, an investment firm. From 1983 to 1991, he was an investment
manager at Morgan Stanley. Freidenberg also serves as Director of Datametrics
Corporation.
Mr. G. Collin Rayner (58)
Received law degree from Osgoode Hall in 1964.
He is corporate counsel for the Bank of Montreal and has a number of
business interests. He is the owner of Ternagami Wilderness Center, a
world renowned outdoor recreation facility.
On December 30, 1996, the company announced that an agreement had been
reached with Smith & Monaco whereby they relinquished all claim to further
involvement in Stratford, and all claims against the new directors & officers.
The new team has committed to expand the Board to 5 members as soon as possible.
NOW FOR THE FUN PART - $$$
From the same publication by Windward -
For starters - years 1 & 2:
<<With a first year production capacity of 9M pounds of additive, mgt.
believes that a realistic sales expectation for first year is 4M pounds. . .
Revenue expectations for the first year would then be $16M . . .
Management believes that the net margins may exceed 25% based on initial
analysis of production costs & requirements. Management further believes that if
market acceptance follows current indications, sales may double in the following
year. These statements are based on management's conservative revenue projections.>>
And by the fifth year (2001, I guess):
<< . . . NocaCrete managament believes it can capture 10% of this market,
or $250M per annum by the fifth year.>>
Now, just for kicks, get out your calculator and figure:
$250M @ 25% divided by 8.6M shares x PE of 20 = too good to even think about.
Of course, "the proof is in the pudding" & manufacturing faciltiy isn't
even open yet. Management sounds like they're taking the conservative
approach to things, so it may take awhile for this one to develop.
Until I hear something to the contrary of the above, think I'll just hide &
watch, let McMillan & Co. do their thing. I hope they do it well.
Hope this helps,
David |
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| To: David Wideman who wrote (58) | 4/29/1997 4:50:00 PM | | From: MCorbley | | | |
David
Thank you for the excellent information. Does anyone know: Does year 1 refer to a time beginning about 60 days from now as mentioned earlier in this thread when the plant begins functioning? Does this also mean that the company is currently not producing any Novacrete? Are they still planning to generate additional revenue by licensing the "recipe" to other companies?
Michael |
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| To: MCorbley who wrote (59) | 4/30/1997 11:53:00 AM | | From: David Wideman | | | |
Michael,
Some answers, to the best of my knowledge:
<<Does year 1 refer to a time beginning about 60 days from now as
mentioned earlier in this thread when the plant begins functioning?>>
Year 1 = fiscal year from June97 - May98.
<<Does this also mean that the company is currently not producing any Novacrete?>>
Correct. Plant should be completed by early June, with production to begin
shortly thereafter.
Evidently, prior management had the technology but resorted to hyping vs.
actually manufacturing/selling. Opening of manufacturing facility represents
fresh start.
On one hand, it's easy to say that this fresh start is from "Ground Zero".
However, we do have a few inherent advantages, including what sounds like superior
technology & A-1 management. Although previous announcements - $200K revenue from a
licensing agreement, $900K licensing agreement w/Phillipine co., $4M profit from
joint venture in Greece - are not valid (per Greg @ ICC - "Throw all of the old
press releases in the trash can"), I would think that these acqaintances are still
in place. With new management & pre-existing product awareness, thoughts/hopes
are that we'll be able to "hit the ground running".
<<Are they still planning to generate additional revenue by
licensing the "recipe" to other companies?>>
Although the marketing plan will probably change under new management,
it would seem that the company would continue to utilize some sort of
licensing agreement. IMHO, revenue projections contain all revenue sources,
whether product sales or licenses.
More FUN WITH #'s (from a conservative? standpoint):
From Year 1 projections on report posted on yesterday's report -
Revenues: $16M Assume $10M
Net margin: 25% Assume 10%
EPS (8.6M shares): $.465 $.116
With a EPS of $.116 and a PE of 20, stock price = $2.32 (a 4+ bagger in
one year).
Note: If company shows that it has anywhere near the potential to increase
revenue to $250M by year 5 (as stated in report), market should value stock
at significantly greater than PE of 20 (maybe 40, 50, 60?)
Hoping the best is yet to come,
David |
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| To: David Wideman who wrote (60) | 5/9/1997 11:52:00 AM | | From: MCorbley | | | |
David
I liked your analysis of the earnings potential. However, I imagine that there must be substantial costs involved in finishing the plant and bringing it "on-line." How would you think those costs would affect the earnings projections? Will all the costs end up as long-term debt on the balance sheet. Will there be large "one-time charges" against earnings for the first few years?
Michael |
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| To: MCorbley who wrote (61) | 5/9/1997 12:56:00 PM | | From: David Wideman | | | |
Michael,
All are good questions; sorry I don't have good answers, only IMHO's
(CAUTION: IMHO's can be hazardous to one's financial health!).
I'm not sure that start-up costs will be unbearably "substantial",
i.e. shouldn't take a "GM-sized" factory to reach Year 1 projection of
4M pounds (on a capacity of 9M pounds). My guess is that the facility
will not be much of a sight to behold; just another "concrete plant".
Also, I'm "assuming" (another DANGER sign) that management has built
these start-up costs into projections. Take into consideration that
the article I pulled #'s from (I think it was Windward Communications?)
may not have the same credibilty as a BUY recommendation from Merrill
Lynch, but it's all I've got to go on.
My reasons for being LONG on HARD for a LONG time (that's the plan, anyway):
1. NEW management
2. REAL product
3. GIGANTIC market
4. Investor Communications Co. - No, a company's investor relations firm is
probably not one of the greatest reasons to buy a stock, but I've grown to
trust Mark, Tom, Greg and the gang at ICC. I think ZMAX, GOAE & HARD have
tremendous potential.
From its current market cap of about $4M, I see nothing but great things
ahead. I hope I'm as smart as I sometimes think.
Have a good day,
David |
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| To: David Wideman who wrote (62) | 5/9/1997 3:25:00 PM | | From: Samuel Bolles | | | |
David
Once again, thanks for the update. You are the eyes and ears of Z-G-H.
I'm just curious, how large are your positions in ZMAX, GOAE, and HARD?
Any word on when ZMAX will be on NASDAQ? It was supposed to be by the end of the first quarter.
Thanks again and good luck,
Samuel |
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| To: David Wideman who wrote (62) | 5/9/1997 7:20:00 PM | | From: mark s | | | |
David,
Great analysis. I wasn't aware of the Windward publication articles. I'm assuming, based on the date, that the numbers quoted came from McMillan. That makes them more credible IMHO. I too ran the numbers. Pretty impressive at a P/E of 20 aren't they. Basically they are saying that starting this May they will have 16 million in sales 25% profit margin. Yearly revenues will double each year, with the fifth year producing 250 Million in Sales. If McMillian produce these results the stock will trade at a P/E much greater than 20. I'm not sure that any company/individual can accuratly look 5 years into the future, but they might be close on year 1 or 2 year estimate.
I talked to ICC on the recent correction. According to ICC there have been no fundemental changes within the last few weeks. ICC is very impressed with McMillian. They told me that they usually represent much larger companies, but made an exception, because of how impressed they were with him. I also requested an investors packet from them. This should provide answers to some of our questions.
There seems to be concern over the production of Novacrete, but I'm equally concerned about the distribution. Does anyone know if a distribution network is in place. Maybe the investor packet will tell.
I went back and read the history of this thread the other night. I noticed that Doug Friedenberg was one individual that was making inquiries similar to ours. (Great potential, but not quite sure about the product, sales, etc) I also noticed in a 13D Edgar filing showed that he had purchased 580,000 shares for approximately $174,000. Now he's on the board of directors. He must have got some good answers.
I'm sure that Doug can no longer participate in this discussion group, but it makes me feel better to know that someone has made such a major commitment to this company.
Doug if can you participate, please do. I'm sure your view of the company, and its prospects, would be greatly appreciated.
Mark S |
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| To: Samuel Bolles who wrote (63) | 5/10/1997 1:09:00 AM | | From: David Wideman | | | |
Hi Samuel,
Thanks for the kind words <<You are the eyes and ears of Z-G-H.>>
Maybe more fitting to say "Have you ever thought about investing in a
company that actually had any REVENUES?"
Answer: Been there, done that. This is much more fun. Honestly (& I
realize I'm crazy), but I feel more comfortable with G, H & Z than I
would with Coca-Cola or Microsoft, considering (IMHO) there strataspheric
P/E's relative to growth, and my perceived over-valuation of the market
in general (& a guy named Greenspan, etc.)
Of course, a company with NO revenue has no EPS, but what the heck.
My "portfolio" is by no means large, less than one year's salary.
That's the best reason I know not to take anything I say as "gospel",
but cyberspace has become a big hobby of mine. Fun, challanging &
rewarding to search & find info on these companies, their principals,
and industries. I enjoy talking with the folks at ICC - a lot more than
they enjoy talking with me, I'm sure.
I have 4 holdings (G, H, Z & an even bigger gamble, if you can believe
that - IMMM, a little company with "supposedly" a breakthrough
technology in locating the best place to drill a hole & find "black
gold").
Current holdings:
45% GOAE, 45% ZMAX, 5% HARD, 5% IMMM
Re: ZMAX NASDAQ listing. I'm not sure at all, but it is my "best guess"
ZMAX will be listed on NASDAQ sometime in June. "Rumor" has it that the
filing process is well underway.
Please note that my "best guess" does not mean "Put it in the bank".
I feel pretty good about it, but I've felt that way since February.
Good luck,
David |
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| To: mark s who wrote (64) | 5/10/1997 1:35:00 AM | | From: David Wideman | | | |
Mark,
Great "find" re Doug Friedenberg. I'll bet you're right when you say
<<He must have got some good answers.>>
Not too many folks would drop $174K if they got bad answers, would
they? <g>
I also agree with you that the 5-year, $250M projection is difficult/
impossible to project (& I don't see how any company can achieve and
maintain a 25% net margin for very long), but I feel pretty comfortable
with their 1-2 year outlook.
Even though I was told by Greg @ ICC to "throw all the old press releases
in the trash can", these acquaintances are evidently in place, at least to
some degree.
Also, and even more importantly, the actual test results are not
fraudulent. The product is real (IMHO).
This publication did mention that these projections are "conservative".
I don't know about that, but I do know that I'll be pleased if they
come anywhere near these #'s. Glad you picked up on the PE of 20; I was
trying to be conservative (is that possible when I'm saying in the same
breath that this stock could make me rich?), but for HARD to reach $250M
in 5 years, revenues would have to double every year (16, 32, 64, 128, 256)
I was too embarrassed to mention a PE of 80-100, but it's OK to dream,
ain't it?
BTW, I'm ignorant, but trying to learn. How did you pull up the 13D
Edgar info? The links I've found just tell me "No ZMAX info available."
Thanks & good luck,
David |
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