Since were posting some current theories, here's Sterlings:REVISION-1: CMKX/USCA-Seeking True Valuation...
Here’s what I see, but try not to fall asleep while reading this because you got to really read the whole thing for a complete understanding to see how CMKX is currently worth .03069 cents per share, in my opinion! I made a few revisions along the way to add more clarity.
Heck, since the USCA filings have already been out for a while, somebody might have already brought out these points. So my apologies if this is a repeat of topics that were already discussed. I’m pressed for time and will not be able to read the boards to get caught up again, but I felt it important to create this post to make sure I am seeing the same thing you all are seeing.
So, we now have a little more facts to go with than what we had before. The information I’m pulling from the recent USCA 10QSB filed with the SEC are considered facts substantiated from the SEC and not by me. In my opinion, the SEC knew what USCA was about to release for their filings and if they had any problems with them, they would not have allowed them to return to trading. This moves us even more slightly away from spec-o-lation and more towards substance derived from doing reverse math to determine an anticipated CMKX valuation at a discounted price and not at a premium price.
Let’s first list the USCA facts from the filing and some other facts we know of:
The USCA Filing as of 16 Nov 04: http://knobias.10kwizard.com/filing.php?repo=tenk&ipage=3096088&doc=1&total=&back=1&g=&attach=on
Fact: USCA Outstanding Shares (OS) is 63,603,066 Shares
Fact: The Consolidated Statement of Operations used 16,656,760 Shares for the OS
Fact: CMKX OS ≤800,000,000,000 Shares
Fact: USCA Total Assets went from $6,430 to $73,834,515 in less than 1 Year
Fact: USCA went from a Total Stockholder’s Deficit of ($1,206,646) to Equity of $72,219,018
Fact: USCA went from a Total Liabilities and Stockholder’s Equity of $6,430 to Equity of $73,834,515 (Same as Total Assets above.)
Fact: Net Loss went from ($210,199) to ($1,225,741) with the bulk coming from “Consulting and Professional Fees” and “General and Administrative Expenses”
Fact: Currently Cash Flow Positive from negative ($28,110) to now $950,524 in less than a year
Discussion about the above Facts:
Taking your company from Total Liabilities and Stockholder’s Equity/Total Assets of $6,430 to $73,834,515 in less than a year is a huge sign of growth that should not be overlooked in my opinion. This phenomenal! This is very apparent that the forward split was done to increase more liquidity in their stock for anticipated growth in my opinion.
There was an increase in the Net Loss by ($1,015,542), but would you spend $1,015,542 to get $73,834,515 in Equity? No doubt! The question should be: Who wouldn’t? Let’s talk about why, but let me first put this into a better perspective for an understanding. Know too that Equity is important because Equity is used to help you capture Revenues.
Assets - Liabilities = Equity
Equity ÷ Outstanding Shares = Book Value (BV)
I have seen where many stocks trade at prices much lower than their BV. I have seen where a stock had a BV of $8.00+ and was trading below .01 cent with no intentions of ever going up in price. At one time ago, I thought that such meant that the stock was undervalued. Not necessarily so. Those were some tough lessons learned for those who knew me way back then. All it just meant was that the stock was not making money with their Assets.
The Fundamental Valuation that is used to determine where a stock should be trading at is predicated upon the Earnings Per Share (EPS) and not the Book Value (BV). So all the stuff we just talked about in having a BV as good as we have in USCA is good, but all it shows is growth. It does not justify share price.
It’s not significant as to show support as to why a stock should or should not be trading at a certain level. This growth in Equity is good in the sense because you can position yourself for Equity Financing to use as collateral to position the company towards generating Revenue (amongst other things too). Currently, we have no Revenues.
Why is all this important? Well…
Revenue - Expenses = Net Income
Net Income ÷ OS = EPS
Since USCA has a Net Loss instead of Net Income, this is not a positive considering the goals they are trying to achieve of becoming a profitable company, but this 10QSB shows huge promise in my opinion of where we are heading. The goal is to have a positive EPS to reflect Net Income. Still, significant growth was revealed in my opinion to show that USCA is positioning itself to becoming a profitable force to be reckoned with in the market in my opinion.
So now everyone has got to be wondering: How does all this plays in with CMKX and the price of apples? As far as with the price of apples, I’m not sure, but with CMKX we might have some things that are being subliminally revealed. Keep in mind that this is not me talking. This is USCA talking from being approved by the SEC to speak since they were previously silenced, but now allowed to resume trading. So don’t start any of this; Sterling is trying to hype stuff, or start rumors! LOL
Here is the key piece from the filing that we must first observe:
”On July 18, 2004, the Company acquired 5% of all mineral holdings of CMKM Diamonds, Inc. ("CMKM") for 22,000,000 shares of common stock of the Company.”
This shows me that a deal was cut that had USCA feeling that they were paying a certain amount for the 5% claims of CMKX at a discounted price. At that time, USCA was UCAD and was trading at around $4.50 per share. That is the amount that has been confirmed as a discounted amount in the eyes of USCA and apparently the SEC at such time.
The SEC is dealing with “the now” or with “what is” with the current valuation in my opinion with USCA since the halt/suspension was now and not done back then. I will use the price of USCA at the time of the halt/suspension and the total shares of 22,000,000 shares (post split 3-1 split adjusted) given at the time of the halt/suspension because that is what I believe the SEC was using for consideration. The price was $4.65 per share at such time. This is how I will base my figures on the “the now” or the “what is” for determination. If I was to revert back to the pre-split adjusted price I would have to use ($4.65 x 3) x 7,500,000 shares. Instead, I will use the post split price at the time of the halt/suspension of $4.65 per share and the post split adjusted amount of shares of 22,000,000 which is the amount listed in the filings. I’m not sure what happened to the other 500,000 shares for the difference.
This means that currently, USCA’s 5% that was screened by the SEC is equivalent to below:
$4.65 x 22,000,000 = $102,300,000 USCA’s 5% Worth of CMKX Claims
In my opinion, this is also the belief of the SEC from USCA proving such to them. Again, or they would not have allowed them to resume trading.
So, this $102,300,000 as a discounted price is what I think the SEC had under scrutiny for consideration to being worth 5% of all CMKX claims at least at a discount as confirmed by USCA and the SEC. It looks like all was proven that was in need of being proven in my opinion.
To get the value of CMKX let’s do this with some quick math. Just double the 5% amount to equal 10% then multiply by 10 to get the total piece of CMKX valuation at a minimum.
So,
$102,300,000 x 2 = $204,600,000 as the 10% Portion of CMKX Claims
Then,
$204,600,000 x 10 = $2,046,000,000 as the 100% Portion of CMKX Claims
(Or just slide the commas to the right one position.)
Now with using this $2,046,000,000 as our Intrinsic Valuation to determine valuation as Income, let’s determine our EPS. Let’s also assume that our Gold, Uranium, and other ventures will at least pay the bills to cover the Expenses that we are leaving out for this calculation. I think this is a fair assumption to say the least as it probably would contribute to a much higher share price. Let’s also max out the OS for CMKX to being 800,000,000,000 Shares. Please observe below:
Net Income ÷ OS = EPS
$2,046,000,000 ÷ 800,000,000,000 = .0025575 EPS
The .0025575 is the EPS and is not the BV. It is not Equity. In the mining field, Revenues are represented as the company’s resources in the ground. In the mining field, our resources that we pull out of the ground is our valuation that is reflected as our Revenue. Please go to the link below to see the major market mining stocks listed to read how they do this to file as their Revenues. You will then see why it is safe to consider such as I did Revenues. Earlier you read what I did with the expenses. http://biz.yahoo.com/p/metalsconameu.html
Equity/Assets are used to help you generate Revenue. Example: Your machines used for drilling can be worth $2 Billion, but would not show up as Revenues. They would be considered your Assets/Equity used to help you generate Revenues/Income. Now, the Revenues would be what those Assets will be either going to pull out of the ground or what they have already pulled out of the ground.
Since we are still in infant stages in our growth as a mining company with CMKX, it is fair to use the valuation that is made prevalent as the Intrinsic Value that is to be what is in the ground to be taken out to be as Revenues. This I considered as Intrinsic Valuation just to eliminate the debate about valuation of what is revealed, but still in the ground even if it is not pulled out yet, but proven that it is there. This is the 5% value of CMKX Claims purchased by USCA.
To better know how to view the 5% value, imagine there being 10 pieces to a pie and each piece costs .10 cents. Now, if you only had 1 piece of that pie, are you telling me you could not figure out the total value of that pie from only having 1 piece of that pie and knowing that .10 cents was the cost of that 1 piece of pie you have? I think you would see that it is at least safe to think that the pie could be valued at the minimum price of $1.00 for total valuation.
Let’s now determine the fundamental share price of CMKX from the information verified. To do this, we must look at the PE Ratio logic of determination. Some of this I posted before so a refresher shouldn’t hurt for a repeat since it has been a long while ago.
Normally in the market, somewhere between 10 and 15 seems to be a conservative PE Ratio to use as a multiple for today's normal growth expectancy. So that is why I will use 12 in the below example. Keep in mind that the PE Ratio is generally within the 25 to 30 PE Ratio range for mining stocks.
Many use the PE Ratio with stocks that either possess or have the potential to posses Earnings Per Share (EPS). The PE Ratio is often considered the minimum price investors are fundamentally willing to pay for a stock when multiplied by the EPS. The PE Ratio is used to examine the relationship between a company's price per share and EPS determined by:
Share Price ÷ EPS = PE Ratio
Using the PE Ratio as a multiple to determine stock prices conveys that the PE Ratio is a general growth expectancy rate determined from an average from the top 20 to 30 companies in that particular exchange/industry.
It is assumed that each company within that exchange/industry will grow with the same expectancy rate under certain Fundamental Principles in relation with a company's Revenue, Expenses, and Outstanding Share structure.
Those supporting a low PE ratio believe that the lower a PE ratio, the more undervalued that stock is within the market as compared to normal growth expectancy rates from companies trading within their market. (The OTCBB is considered being within the realm of the NASDAQ.) The low PE Ratio is considered an indicator that the stock is overlooked within the market. The denominator is the variable we need to consider for determining what price levels a stock should be fundamentally trading. This is why many are concerned about the OS here with CMKX.
Those supporting a high PE ratio believe that the higher a PE ratio, the more growth potential it has within the market because it's showing growth higher than the average conservative market PE ratio. It is assumed that the company would continue its normal expectant growth rate. The numerator is the variable we need to consider for determining what levels a stock should be fundamentally trading.
Here is a link to add about PE Ratio info: http://www.investopedia.com/terms/p/price-earningsratio.asp
The Earnings Per Share (EPS) is the amount of money that a company will give you, as a shareholder, the per share amount if the company was to distribute all net earnings to its shareholders multiplied by the normal growth expectancy ratio of price to earnings (PE Ratio) for that market.
Let's use the conservative PE Ratio of 12 for our calculations below. Let’s use basic algebra to convert the above results to find the share price that CMKX should be trading at as of now from what’s subliminally revealed:
CMKX Share Price = PE Ratio x EPS
CMKX Share Price = 12 x .0025575
CMKX Share Price = .03069 cents per share
So in my opinion, according to what was derived from the recent USCA 10QSB filed with the SEC and approved by the SEC to be legitimate, CMKX is still a discount to buy even if it was trading at .03069 cents per share.
We say at a minimum because the thought is that USCA is getting a deal at bargain basement prices for what they paid for the 5% of CMKX claims for becoming part of the CMKX foundation. So actually, the valuation is considered to being much higher.
This means that CMKX is significantly undervalued at its current share price in my opinion up until it reaches at least the .03069 cents per share area. With the valuation that I have shown above, this USCA filing is as good as a CMKX filing to show a total valuation $2,046,000,000 for the minimum valuation of the CMKX claims at a discounted price. Again, this is not Sterling’s opinion alone, but the SEC’s too as fact the way I see it!
All is well! http://www.sterlingsclass.com/
;-)
Sterling