SGD HOLDINGS LTD (PINK:SGDH) Received the Promotional Letter Once Again
We all love the Earth’s rainforests. Well, we should, anyway. We’re not going to bore you with clichéd metaphors such as “the lungs of the planet” etc. but the fact remains that we can’t go on without them. For all the technology that surrounds us right now, we also need paper. As you know, paper is made of wood, which, in turn, presents a huge problem to our beloved rainforests. This is where SGD HOLDINGS LTD (PINK:SGDH) should come in.
First, though, some history. SGDH started off back in 1996 under the name Transun International Airways, Inc. As you’d have probably guessed, they were dealing with air transportation, however, it all ended in tears when in 2005 they were forced to file a bankruptcy proceeding. They somehow managed to remain on their feet although between 2005 and 2010 they were a shell company. Determination and maybe a bit of luck managed to get them out of the mess and in 2010, they started from scratch acquiring a company called EcoPaper.
What EcoPaper does is very interesting indeed. They say that they have developed a revolutionary way of producing paper without needing to cut down trees. The process itself, they claim, is also optimized to use a fraction of the energy of normal paper-making plants which, of course, makes them all green and trendy. Things are not all good though.
For a start, EcoPaper’s (respectively SGDH‘s) products are a bit on the expensive side. A normal school-grade notebook, for example, costs as much as $8. Nevertheless, SGDH do receive some orders for the eco-friendly writing paraphernalia, and we even managed to dig out a press-release from way back in 2010 stating that they have received an order for a total of $1.3 million. The thing is, SGDH just can’t manage to produce the paper at a reasonable enough cost. The quarter the enormous order took place, for example, ended with a net loss of $58 thousand.
As for right now, the enormous sales seem to be gone and they are still working at a loss. The latest report that they have published covers the third quarter of 2012 and in order to get an understanding of what their state is right now, here are the most crucial financials:
- cash: $11 thousand
- current assets: $137 thousand
- current liabilities: $796 thousand
- revenue: $30 thousand
- net loss: $85 thousand
Having these figures in mind, it’s safe to assume that they have some trouble funding their operations, and the financial report confirms these fears. According to it, their financing comes mainly from debts, the most recent one dating September 2012. The thing is, they are unable to pay them off on time, which means that they are forced to negotiate extensions of their maturity dates. We fear that this won’t go on forever. They have problems with other expenses as well: SGDH‘s CEO, for example, has received a total of 38.5 million shares of common stock as a compensation for his services since the company has no other means of paying his salary. He is absolutely free to sell them whenever he deems it necessary.
The thing that puts us off the most, however (we’re sure that some experienced investors agree), is the fact that SGDH are constantly promoted by all sorts of pumpers with shady history. We all know the risks of trading in Pennyland, and when the stock in question is being pumped, they are even higher. Especially when one of the newsletter trying to create the hype is Jet-Life Penny Stocks. One of their most recent flops was Wiki Group Inc (PINK:TWGI). The promotion started on January 15, and as a result, TWGI have since wiped out a total of 55% of their price.
Judging from the facts we managed to find about SGDH, they do indeed have some idea of what they are doing, which in itself is a feat when speaking about penny stocks. It’s absolutely crucial for them, however, to stick to that idea and let performance and sales raise the price of their shares, rather than artificially excited newsletters.
