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To contact Paul or Brandon on editorial issues, email them at:  paul @ smallcapdiscoveries (dot com) or brandon @ smallcapdiscoveries (dot com).  Due to volume of email, we cannot guarantee reply to all email.

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8 Comments on “Contact

david erenberg
November 15, 2014 at 7:17 pm

I just subscribed to your newsletter. I do not however see the analysis on HTL.V

Might you know if there is any opportunity remaining to participate in HTL’s most recent private placement at 10 cents/share.

Thank you.

editors
November 27, 2014 at 4:49 am

Hi David, it is posted in the member’s center. Are you still having difficulty finding it?

jeff.burleigh@gmail.com
November 16, 2014 at 8:35 pm

Hi,

I just recently subscribed (I’m a subscriber to Keith’s O&GIB) and I saw the 3 stocks in the members area and I wanted to confirm whether that is the only 3 you are currently in or are there others….and if so-where would i able be to see their reports.

Thanks, Jeff

Fred J
November 19, 2014 at 5:28 pm

Could you pls broaden the scope of what you $1000 annual fee entails.

eg.

Will their be a list of your current positions and preferred entry points.

Will you be providing an ongoing list of trades. etc

Cheers,

Gary Buckaloo
November 20, 2014 at 10:06 pm

Small company that just landed a major oil and gas equipment supplier and a drone company.
I am looking for advice and working capitol. We are ready to expand with a forecast of 2.5 million in sales next year. Not sure who to reach out to, as conventional lending is bound by federal regulation. Looking for investors and or buyers.

Trevor John Wilkinson
November 26, 2014 at 7:03 pm

Hi Paul and Brandon,

Thanks for all you do. (I am Manucastle from MicroCapClub).

I read your piece on Pulse Seismic with interest.

I am a member of a Google group and I mentioned this company and these are the reactions. I would appreciate your comments :-

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“How many business do you know of that are capable of converting 75% of their revenues into free cash flow? ………. Today we will present the only business we have ever come across capable of achieving this extraordinary measure of profitability”

This is a false statement, cash flow is not profit. I examined their $10 million new exploration example where the client puts up $7 million and Pulse puts up $3 million. In the first year pulse earns $2 million in the form of new assets, not cash. Cash flow is 3 million out the door. For the next seven years, provided no one buys this very data, amortization costs Pulse $714 thousand each year with no cash flow. At the end of seven years Pulse has an accumulated loss of $3 million, the money they put up.

After the seven years, once the data has been amortized, any sales are net profit. Net cash flow in only comes from the resale of the data.

Not quite the risk free cornucopia they paint.
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It is always a bit off-putting for me to go to the company web site and click on their annual filing link only to find no real financial statements.

Having said that, then going to SEDAR the first Statement I run across, the Balance Sheet shows a massive YOY drop (from 96.5 to 66) in shareholder equity (S/E)…..that is not usually the sign of cashflow flowing to the bottom line for owners of equity.

In reviewing the Statement of cash flows the indeterminable (for me) element is the reality of the amortization of their seismic library. I usually view Depreciation as a proxy for wear and tear and, thus view it as a real expense. Amortization is much, much thornier of an issue. On the one hand, as drilling is done on a site they have seismic records on, the drilling may update the seismic information enough to make the previous library (or a portion of it) in some manner obsolete and, thus, the amortization of that portion may well be a record of real loss of value. In addition, the purchased seismic records may contain data that will never be sold and, again, the amortization of that portion would be an overpayment and thus a real expense.

Taking the other side, as seismic recordings are made on contract for specific locales, they get paid for services performed and thus the earnings and cashflow from those endeavors may be valid.

Finally, in the fast-paced world of technology change, I don’t know whether the software used to record the older seismic readings will need to be updated (i.e going from VHS to CD to Cloud, etc) and what the cost of that might be, it doesn’t seem to be addressed. Also, I don’t know whether the seismic recording techniques will themselves be innovated so quickly as to make their library obsolete more quickly than anticipated.

Too much I don’t know to give an opinion of their cash flow.

I’d focus on the change in S/E and resolving why that occurred to my satisfaction if I were to consider owning this company…..which, for right now, I’m not, as I’m pretty fully invested as it is.

Do you have any insight on the change in S/E that you’d like to share?
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editors
December 11, 2014 at 7:30 pm

Hi Trevor,

Thanks for your comment and interest in Smallcap Discoveries. I’ll preface by saying PSD was one those ideas we were wrong on and sold out long ago. That said, here are my responses to the questions:

1) Its true cash flow is not profit. But you can’t pay the bills with profits and free cash flow will be the ultimate driver of the value of any business. Earnings are convenient only in the sense they are meant to smooth out results that would look lumpy on a cash basis. In PSD’s case, I think the amortization expense gives an inaccurate portrayal of the business, because 1) They amortize half of the total even though their cash outlays are only ~30% and 2) The 7 year schedule is far shorter than the 20-40 years their data has shown to hold economic value

I’m also unclear about the assumption of no sales in the first 7 years. Given the costs involved, I doubt they would would take on a project they didn’t expect sales to occur immediately on.

2) This gets back to the first point with amortization. The economic reality of amortization is something each investor must make a determination on. My opinion is the charge overstates the decline in value of the library. But if you believe the amortization is an accurate reflection, than it follows their maintenance CAPEX will be high to keep revenues constant, FCF will be low, and the business may have little value after all.

Either way, we determined PSD was too leveraged to the E&P exploration cycle and commodity prices which doesn’t fit our strategy. It is also a difficult business to project cash flows and thus value.

Graham Jervis
December 23, 2014 at 2:25 pm

Hello Paul and Mackie,

I would like to know what your policy would be with regards to future companies you research in smallcapdiscoveries.com. meaning, when you isuue the next company, would you be long the company before releasing it to the members? will you release it to members then not trade the company until 3 days after? or will you notify members when you are selling and buying companies? i know you will be owning each company in this, its just when will you be doing it, before or after releasing to smallcap members. thanks in advance.