To OTC Journal Members:
 

Bad Toys (OTC BB: BTYH) Inks New Deal and Updates Shareholders on Spin Off

My inbox and the BLOG have been overrun with questions on Bad Toys since the stock sold off yesterday for no apparent reason. Today, the company was out with news on a new contract for Southland, and in my view, more importantly an update on the S1 filing for the Southland Health Services spin off.

I know this situation is confusing. People don't understand if they still have the stock dividend, and when it will trade without the dividend. The answer is- as long as you own the stock, you will still get the dividend. BTYH is struggling with conflicting regulations between the SEC and the NASD regarding how the dividend should be done. Hence the confusion.

Nevertheless, in addition to announcing a very nice new contract for Southland today, BTYH let us know its timetable for starting the process to complete the spin off.

Here's the important message in today's press release, "Mr. Lunan also stated that the company is in the final stages of completing its 10-K filing for Bad Toys Holdings, Inc. and the S-1 for Southland Health Services, Inc. to affect its spin-off. Both documents will be filed in the month of March."

If you are new to the OTC Journal, and not familiar with the Bad Toys special situation, here you go in a nutshell. Bad Toys is in the process of spinning out wholly owned Southland Health Services as a separate public company. Southland should achieve roughly $6 million in profits on $48 million in sales in 2006. For every share of BTYH you own, you will eventually own 1.3 shares of Southland. BTYH hopes Southland will open on either the NASDAQ small cap or Amex at their respective minimums of either $4 or $3. Click here to read past editions for the whole story.

In addition to announcing the timing for filing the S1, the first step towards getting Southland trading on its own, BTYH also announced Southland has been awarded the contract to provide emergency response vehicles in three additional counties in Alabama. Estimated revenues in 2006 are $3.2 million. 

The stock sold off this week for no apparent reason. Investors were looking for more definitive information about the spin off earlier in the year, and I believe they are simply losing patience with the process. Since it is a regulatory process, patience is required. Nothing happens quickly when government reviews are in the mix.

If you read the past edition on letting volume be your guide, you should be identifying an opportunity to accumulate this stock. Two characteristics jump off this chart: 

1. The volume was considerably higher on the way up than the way down, suggesting most investors still believe, and 
2. The stock has come back down to a perfect 61.8% retracement level. The ideal level to own it.

Next week we will have a look at the BTYH annual 10K financial filing, followed shortly thereafter by the S-1 filing to convert Southland into its own publicly traded entity. Put your comments or questions on the most current BLOG entry for Bad Toys.

Here is the complete text of today's news for your review:
 

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