SPHE (.04)

Folks,

Here is my first play on my new blog. The stock Symbol is SPHE.PK and it closed at .04 on friday. There has been no updates from the company since the start of the year, but there is compelling Due Diligence gathered over the past two months showing this company is severely undervalued at it's current PPS. As always, do your own DD and verify the info. I am not an investment advisor!



There is nothing more exciting then digging up info on a Pink Sheets company, and continuing to find Gold Nuggets. And SPHE surely fits the bill.





In February 2009, SPHE began updating PinkSheets… this is how it was brought to my attention. I have never seen a pinksheets company with the amount of disclosure SPHE has. Just take a look for yourself.
http://pinksheets.com/pink/quote/quote.jsp?symbol=sphe#getFilings










Upon looking at the filings you will see that SPHE was trading on the London Stock Exchange under the Symbol SPHE.l at $10!( http://finance.yahoo.com/q?s=sphe.l ) I am not a great currency conversion guy, but that isn’t .08! Heck that’s 125 bagger from the current SPHE.PK level!
As of Feb 2009, it decided to move from London to the Pinksheets, where I am sure it is trying to get more exposure: http://pinksheets.com/pink/quote/quote.jsp?symbol=sphe#getNews





The company continued to update it’s filings and achieved a fully-reporting status from Pinksheets in March. The process of getting it’s current audited filings up-to-date caused it to lose it’s status temporarily as we are awaiting updated financials for 2008: http://pinksheets.com/otciq/ajax/showFinancialReportById.pdf?id=20186





I am sure any updated of it’s financials will send this orbital(from wherever it may be)
Now for the Meat.





As of Year end 2007, the company has over $15 million in revenues. Pretty huge. If you look at the companies investor page you will see something that blows your mind:

Now one would normally be pretty skeptical when a PINKSHEET company claims to be aiming for 1 billion in revenues. And I was pretty skeptical myself, but thought $15 million in revenues is very good for any company trading under $1, and at .08 it’s a steal. I still though SPHE was a great buy here. Then I started digging.




The Economy is tough, and our country is headed towards 10%+ in unemployment. Yet SPHE has Job openings for 55 Positions posted as of Jun 2nd and June 15 2009????!!! You got to be kidding me! This is no upstart company and has been around since 2004(to include some acquisitions). But 55 positions, and not the blue collar type. HR positions, IT Positions…ect. Below is the link to the job openings and the images:


http://www.spearheadlimited.ca/Careers/all_positions.asp







HUGE IMHO!!!!
So why is SPHE hiring on top of it’s staff that is already bringing in over $15 million in revenues a year. Well here is why… they have landed MILLIONS in contracts from the Canadian Govt for IT work and consulting. Now how many times have you seen a PR from a PinkSheet company saying they have landed a contract/govt contract for millions of dollars? I have seen it a few times. Well the difference here is we have FACT. Right on the Canadian Govt Website! HUGE IMHO!! And it’s 5 pages long!!!!


Link: http://www.disclosed.ca/?keyword=SPEARHEAD+MANAGEMENT+CANADA%3C%2Fb%3E



Over 5 million dollars in contracts! And this is one of the companies clients…one!

There are many different ways to get a companies valuation and a value on the PPS. With SPHE, until they release the updated financials for 2008, I use the Market Cap.

As of todays close SPHE has a market cap of 1.4 million. Based on the revenues from 2007, SPHE should be at least at a $15 million market cap, which would give us a PPS of .40. If you use some trends from Big Boards like Google it is MUCH HIGHER. Google did 16 billion in revenues for 2008, yet has a market cap of $128 Billion! That’s almost 8 times its revenues… Using the same formula one could give an estimate PPS of SPHE of $3.20!!!. And with these new contracts and SPHE’s goal of being a Billion Dollar company, one could only guess what the True PPS valuation should be… you can be sure it’s not anywhere near today’s close of .08…

SPHE trades very thin. It has 23 million shares in the float with a 41 million O/S. The Share structure has remained the same for at least 5 years, and there is zero dilution. PinkSheets Lists 140 shareholders, which leads me to believe there may be many stakeholders holding here. The true float may be much much smaller.

Insiders and institutions hold 28 million shares of the O/S! That’s more than Half!

Tight Share structure!
So SPHE was at .80 in 2005. I added all the trading volume since that time to get us to .01 and there has been only 2,421,382 shares traded.

Based on the Monthly chart, there is really little resistance for .50-.80 test.

http://www.stockcharts.com/c-sc/sc?s=SPHE&p=M&b=4&g=0&i=t01058786639&r=7154


That is all for now. Company has continued posting job Openings as of August 21st.

Good luck to all and as always, do your own Due Diligence!

- Jimmy