Post by
ChaseYourDream on May 27, 2016 11:32am
Q1 Financials Posted: Risk and Reward
Numbers are a little worse than hoped, but with justifiable reasons provided. SP has dropped to .105 at open, and is likely to oscillate in this range for a while. If the market has already factored in this news, we may already be at or near the floor in SP.
The FS itself is only 4 pages, but read the MD&A before placing your sell order in a panic. The MD&A provides considerably more detail with clarity. My yellow flags have been raised, but there are a few positives as well:
Through most of 2014-2015 the SP was .30-.55, and the financial numbers were much as they are now: relatively modest losses; a rising deficit not yet too great to survive; What has changed is that then there was hope profitability might come sooner; now we know better. But compared with other Microcaps now trading at .10-20 LMD's current numbers and trends are above average; In other words, undervalued! The company has managed to maintain a decent Cash-on-Hand balance without any new financing this quarter; The costs of current product development are behind us, and the commitment to higher marketing expenses is a necessary investment in higher revenues, which are likely to increase from here while net expenses will not, so net gain/loss will improve.
ROI, the Bottom Line: Revenues should increase from present levels, but will they increase enough to get into the black? Typically Q4 is the peak of the revenue cycle. Q1 had some adverse conditions resulting in the current -.02 EPS instead of the projected -.01. Q2 and Q3 should look a little better by default; if revenue growth is kicking in as implied, they may even surprise us, but we need to know if they can continue to grow beyond the current cycle. Our long-term read on the potential for profitability will come with the Q4 numbers at the earliest.
My call: Downgraded overall, but as a LONG I am now a HOLD. In the SP range likely to prevail for the next months, this company will continue to offer excellent value for those willing to take on higher risk in return for a relatively large potential reward. As the year progresses there will be spikes in SP on encouraging news. Revenue growth will increase, but the real breakout will begin only when we have a FS showing break-even or a positive Net Gain. I consider the analyst target SP of $1.25 now very unlikely in 2016 (and may be downgraded soon) but a significant gain on current SP is not only possible but very probable into early 2017. If the net is positive for two consecutive quarters, SP appreciation is likely to become exponential. A 10x return on shares bought today (below .13) is within reason in 2017.
I am not a financial professional. Please do your own DD. This is all IMHO. In a year we will see if my crystal ball works as well as Umpatan's!
Comment by
Umpatan on May 30, 2016 12:03am
We still have another leg down from here or two.
Comment by
bullmetal on May 30, 2016 8:33am
THUMPA - PERHAPS THE PLACE FOR YOU IS UTAH.
Comment by
Umpatan on May 30, 2016 10:55am
Did you also graduate from Brigham Young University?
Comment by
Umpatan on May 30, 2016 4:59pm
Stock options included. Lmd was above .18 at that time and it had value then. This is no longer the case. 18 cents cannot be met before their warrants expire out of money.
Comment by
Umpatan on May 30, 2016 5:13pm
This means that Bristol is working for $7000 only and the .18 cents stock option is worthless out of the money acquisition that adds no value. This also means the company managed to sell this empty dream in exchange for a service. To this this is a smart move for the company.