Newsletter

April 3, 2006

Volume VII, Issue 29

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To OTC Journal Members:

Bad Toys (OTC BB: BTYH): 10k Filed: 2005 Numbers Outstanding

The Bad Toys 10k was finally filed today, about one full week after CEO Larry Lunan thought they could get it accomplished. Therefore, he was later than expected. The table is now set for the anxiously awaited S1 filing, which will serve as the first step in completing the Southland spin out and getting it trading on its own.

Since we are running one week to 10 days behind schedule, I now believe the S1 on Southland will probably be filed sometime next week, and I will spend a fair amount of time reviewing the document and reporting on same to readers.

Audited 2005 results suggest the elements are in place to execute the spin out. Audited results also suggest Bad Toys, on a stand alone basis as it exists today, is absurdly undervalued. There is, of course, a little "hair on the dog", but not much.

Here is the 2005 audited financial performance of Bad Toys, the current public company:

Revenues for 2005: $44.6 million
Profits for 2005: $3.856 million
Earnings per share for 2005: $.23 EPS (current PE: 7.6)
Q4 EPS: $.06
Shareholders Equity: $22.8 million

I could also look at the comparisons from '04 results, but they would be absurdly misleading. In '04 the company did not own Southland, and only achieved about $3.7 million in revenues.

It would appear, based on the 2005 audited results, that the Southland stand alone forecast of $48 million and $6 million in profits is very realistic. Once again, based on the proposed structure, this would equate to about $.25 per share in earnings, or a stock trading at $5 with a 20 PE. I am not a big fan of PE ratios, but in this case it makes for a good starting point.

Here are a couple of negatives you could pull out of the 10K filing:

There are several minor law suits pending against the company, most of whom had their origins prior to the acquisition of Southland. The company states it doesn't see any major adverse affect from any of them.
The Mississippi Division of Medicaid's fraud division is investigating one of the company's subsidiaries regarding some billing issues in Leake County. Management assures me there is a fairly insignificant amount of money involved, and they hope to settle any pending matters soon. The incidents being investigate occurred prior to Bad Toys owning the company.
Southland does, in fact, owe $2.8 million in taxes, interest, and penalties to the IRS. Again, this was an inherited problem from previous management.
GE Capital has filed a complaint against Bad Toys and one of the Southland subsidiaries. Bad Toys is keeping the payments current, but the legal issue is still outstanding. Bad Toys is working towards replacing this credit facility with a new, more favorable line of credit.

In my view, all of these legal matters are fairly normal in the course of business, and each one should be manageable. Bad Toys has made no secret of the fact that they are working on a replacement line of credit which would allow them to repay the back taxes and replace the GE Capital line of credit in one fell swoop.

There's not much to say about the chart of BTYH. Clearly, the current slate of shareholders is awaiting developments with the Southland spin off. The stock surged a couple of times earlier this year when it was believed it would trade x dividend. The one big pull back ended up being a great buying opportunity.

A couple of pending potential events which could cause a surge would include a debt restructuring, the filing of the S1 to spin out Southland, or the announcement of an x dividend date. Business should be up from last year, but nothing eye opening. Perhaps 10% to 15% top line growth, matched with equivalent or greater bottom line growth.

I don't believe BYTH will be able to announce when it will trade x dividend until after filing the S1 to spin out Southland.

I still love the risk/reward ratio here. Even if they don't execute the spin off, how much risk are you taking owning the stock with a PE ratio of 7.6 and solid earnings? When they get the spin off done, you will own 1.3 shares of Southland for every share of Bad Toys you own, and it should trade much higher than current levels. Time will tell.

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

Press Release Source: Bad Toys Holdings, Inc.

Bad Toys Holdings, Inc. Releases Year-End Results

Monday April 3, 9:00 am ET

KINGSPORT, TN--(MARKET WIRE)--Apr 3, 2006 -- Bad Toys Holdings, Inc. (OTC BB:BTYH.OB - News) announces the release of its year-end results. The Company reported net revenues of $44. 7 million for the twelve months ended December 31, 2005 as compared to net revenues of $3.7 million for fiscal 2004. The increase in revenues is attributable to a full year of revenue for its Southland division. Southland, year to year, experienced an approximate 13% increase in revenues. The Company also reported profits year to date of $3.9 million, or $.23 per share which is compared to a net loss of ($2.1) million or ($.25) per share for the same period last year. The Company reported net revenues for the 4th quarter of $10.6 million in 2005 compared to net revenues of $3.6 million for the 4th quarter of 2004. The Company's financial statements can be accessed on the Company's website, www.badtoysholdings.net, or www.sec.gov.

Larry N. Lunan, President and Chief Executive Officer, stated, "The Company anticipates continued growth in both divisions in fiscal 2006 through internal expansion and additional acquisitions." Furthering his comments, Mr. Lunan went on to say, "We are extremely proud of what we were able to accomplish in 2005, particularly in the 4th quarter. The Company was able to overcome the negative impact of Katrina on our Southland division and still achieve positive earnings. Our focus remains two-fold as we continue to progress in 2006; as stated in our 10K filing, the Company is continuing its emphasis on obtaining the correct debt or equity structure to eliminate certain balance sheet deficiencies, and the continued growth of shareholder value through increases in the Company's revenues and earnings."

Bad Toys Holdings, Inc. (BTYH) participates in two distinct business segments.

Southland Health Services, Inc.

This division provides medical transportation services, including emergency and non-emergency ambulance services. Our Southland Division operates in over 200 communities within the following seven states: Mississippi, Alabama, Florida, Louisiana, Kansas, Tennessee, and Virginia. We operate more than 207 ambulances and wheelchair vans and employ over 940 full and part-time employees. At our current run rate, we anticipate transporting more than 130,000 patients this calendar year.

Bad Toys, Inc.

This division, Bad Toys, Inc., American Eagle Manufacturing Company and Gambler Motorcycle Company, continues to design, manufacture, distribute, service and sell custom-made, Harley-Davidson-type, V-twin motorcycles from component parts. We also offer premium accessories, parts, customizing items and apparel related to Harley-Davidson motorcycles on-line and directly from our retail and factory outlets. This division participates in Sprint Car Racing products and custom car construction & restoration. The Company also offers brokerage services for custom cars & motorcycles.

For further information, contact Bad Toys Holdings, Inc., Larry N. Lunan, President and Chief Executive Officer, (423) 247-9560, or Al Kau, Investor Relations in California at (888) 795-3166. Further information about the Company may be obtained on its website at www.badtoysholdings.net.

Certain statements in this release and other written or oral statements made by or on behalf of the Company are "forward-looking statements" within the meaning of the federal securities laws. Statements regarding future events and developments and our future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future are forward-looking statements within the meaning of these laws. The forward-looking statements are subject to a number of risks and uncertainties including market acceptance of the Company's services and projects and the Company's continued access to capital and other risks and uncertainties outlined in its filings with the Securities and Exchange Commission, which are incorporated herein by reference. The actual results the Company achieves may differ materially from any forward-looking statements due to such risks and uncertainties. These statements are based on our current expectations and speak only as of the date of such statements. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of future events, new information or otherwise.

Contact:

     Contact:
     For further information, contact:
     Bad Toys Holdings, Inc.
     Larry N. Lunan
     President and Chief Executive Officer
     (423) 247-9560
     Al Kau
     Investor Relations in California
     (888) 795-3166
     http://www.badtoysholdings.net

Source: Bad Toys Holdings, Inc.

Comments in the BLOG

There were two new BLOGS early last week. Nothing later in the week as I was traveling. I hope you all caught them if you owned either DexCom (NASDAQ: DXCM) or HyperDynamics (AMEX: HDY). Both BLOGS were suggestions to take profits: DXCM announced their FDA Approval on Monday, and I sold my position in the $23 range for an outstanding 3 month profit. HDY announced they signed a "letter of Protocol" with an official in the Guinea Gov't- they still haven't signed a final deal, nor have they been issued drilling permits. I thought it might be prudent to sell 1/2 your position in light of the stock not making new highs on this news. I am very anxious to see where the market is going to price this stock once they officially announce they have drilling permits. If it's not trading at new highs, it won't be promising. However, I suspect it will.

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