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Dumpster Diving for CAPS Points

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May 27, 2009 – Comments (2)

The ‘what my favorite players did’ list yesterday showed a lot of red thumbs on Endeavor Power Corp. (EDVP.OB) and, after a quick review, I jumped on the red thumb bandwagon.

Endeavor is an oil and gas exploration and production company with operations in Oklahoma.  At least that’s what they do today.  In the past, they’ve been known as Endeavor Uranium, VB Trade, Inc. (a website developer) and VB Biotech Laboratories.  Changing and totally unrelated business operations over the past four years; a solid indicator that you’ve found a scam stock.  Check.

Next step, scan the latest 10Q.  Nearly right away there’s evidence of a poorly thought out business plan.   The only assets are $150k in a sketchy partnership.  Total liabilities are over $390k, most of that in a note payable to a related party.  Negative net worth and no cash.  Another solid indicator of trouble.  Check.

No revenue.  Check.

And a selected quote from the 10Q:  “The Company has generated no revenues to date and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future.” 

A recent press release indicates they expect to have 14 wells operational by now producing an estimated 20 barrels per day.  After some well injection, they expect to be producing 40 barrels per day.  Lets do some quick math:
40 barrels per day x 365 days per year x $60 barrel = $876,000 per year in revenue.
The company has a market cap of a little over $100 million.  Price to estimated sales >100.  I have no clue what the operating costs are for those wells, so can’t estimate what the profit or loss might be – I’m betting on losses.  Even if there were no costs, the PE would be over 100.  Ridiculous valuations.  Check.

The only missing item on the safe red thumb checklist was some mention of issuing tons of stock and warrants so shareholders can count of substantial dilution in the unlikely event the company becomes successful.

The bad news is the stock went up on a down day so my score on it is negative.  The good news is the stock price and market cap are still above CAPS rating limits so fellow Fools can still jump on it.

I recommend reading the 10Qs for these companies, particularly if you’re not familiar with wading through one.  They’re generally short and simple and occasionally quite funny.

2 Comments – Post Your Own

#1) On May 27, 2009 at 8:41 PM, awallejr (83.99) wrote:

You know if it was in any other industry but energy I would. 

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#2) On May 27, 2009 at 11:12 PM, rd80 (98.45) wrote:

They aren't really in the energy industry.  They're in the 'suck all the money we can from this game before moving on to something else' industry.

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