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Posted by: shawnobe Date: Wednesday, August 20, 2008 8:42:36 PM
In reply to: None Post # of 10989
this was posted on yahoo, has some (banker clarifications of the 10Q in it. worth reading IMO
I have reviewed the most recent quarterly financial statement of HTOG and render my opinion, which several posters have asked for. I am by no means the end all, and you should always make your own decisions regarding a stock.
The current assets of HTOG between 12/31/07 and 6/30/08 have grown by $169,603.00 to $664,140.00. The increase is concentrated in a/c's receivable due to increasing sales. Total assets on a whole declined soley due to the depre/depletion allowances, which get reflected on the P&L as a non cash expense.Total Assets of of 6/08 was $9,257,396.and 9,407,535 as of 12/07. The improvement is in their growing liquidity. This item of importance will continue to grow with increasing sales which are on the upswing.
Gross revenues for the entire year of 07 was only $689,000.00. As of 6/08 they ballooned to $1,229,159.00. If we project that amount to the end of 12/08, gross revenues would double to $2,458,318.00. I believe they will exceed $3,000,000. because not all of the producing wells are reflected in the 6/08 statement. The eight new wells, the 4 to be added, are not included, as well as any other wells that may have come on line within 30 to 45 days of the 6/30/08 closing date. The 12 new wells alone should add about another $640,000.
over the next 6 mos. The company has approximately a total of 90 wells and others in some stage of completion. I would expect another 10 by years end. If they achieve that number and each well produces about $10,000.00 per month,($1,200,000 over 10 year period) total monthly revenues by 1/09 should reach $1,000,000. per month or $12,000,000. gross by year end 2009, and that is without adding another well over that same period. It is my assumption that they will complete the announced additional pipeline and 100 wells by then. Of course, this is still to be proven, but if they do accomplish these things, 2010 will see them exceed $24,000,0000. and growung in gross revenues annually.
The liabilities consist of accounts payable, $935,718., loans payable, to Aztec,Inc, $702,031. Geer Truck, $100,538.,UPDV $3,771,313 and $443,805. with $106,728 due to other related parties. A/C's payable increased by $200,310 since 12/07. This debt, I assume is to Aztec, Inc, their captured affiliate. Based upon the rapidily increasing sales, the A/R's should outpace the payables and servicing this debt should be no problem. As far as the loans payable ( due to UPDV and Aztec and Geer) are being serviced at about $34,161. per month. This debt is also managable, so long as Sales continue to rise as indicted. Evidence of servicing these accounts timely is evidenced by the fact, that they have only increased by $200,000. considering the amount of expenses incurred in constructing the pipeline and the 12 new wells.
At this point, it is my opinion that HTOG is doing well and moving in the right direction. In addition, because the debt is within the same family of companies, there should be no immediate undue pressure placed upon HTOG. UPDV could give a moratorium on payment until HTOG's revenues warranted repayment. They could also, agree to erase the debt, and classify it as Paid in capital. I do not see these events happening as HTOG, appears to be holding it's own.
The Net Worth, section needs to be looked at. The two main items are Paid in Capital $87,208,359. and (negative) Retained Earnings of $88,921,317.00. Basically the positive offsets against the negative. It is understanding what comprises these figures that we get a better understanding of the company's performance. The Paid in Capital comes from some sort of cash injection, mainly derived from the sale of Stock. The negative retained Earnings comprise of the amount of expenses that exceed profits. In the case of HTOG, it is the nature of expenses that needs to be known. They consist mainly of one time non recurring write-offs such as impairment expenses, Depreciation and Depletion allowances, and other losses due from non profitable operations. The recent $27,888,377 stock compensation to Five Star is also reflected this quarter. But it is also reflected in Paid in Capital as a wash. If we were to remove, or add back these " No Cash Outlay" items the company would in fact have a poitive Net Worth. Whenever a company issues stock as in the case of Five Star, it is giving up a valued asset, and must reflect on the P&L. In the case of Five Star it should be noted that they recived Restricted shares and fall under rule 144. Therefore they cannot be sold until at least one year after issue date. In addition, the current market price, I believe would be a dterent, to them attempting to sell it anyway. I remain positive about HTOG and believe that the stock price is one only of manipulated value.
good post and sheds some light on the 88 million deficit and a/s
happy trading -----------
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