Bad Toys is behaving like a well trained hunting dog- making the moves on my commands as events develop. As I pointed out throughout the month, I believed this stock would trade well up until the day it made its short term high- now likely to be January 31st.
If you own BTYH on January 31st after the market closes you will be entitled to a dividend of one share of Southland Health Services for every share of BTYH you own.
If and when Southland opens for trading on its own, your newly acquired shares will be free trading.
CEO Larry Lunan has publicly stated many times he hopes to see the company attain a NASDAQ SC listing, in which case it would have to trade at a minimum of $4. On paper, one could easily make the argument the value is there. The AMEX would be choice 2- with the $3 minimum.
If you own the stock at the close on January 31, expect the stock to open for trading considerably lower on February 1. After all, on paper, the company will be worth 75% less on February 1 as they are giving out 75% of their value to the shareholders.
If you own this stock, and you were just in it for a trade, you must sell your shares of BTYH before January 31- perhaps on that day. You will forfeit the dividend, but probably make a nice trade.
If you hold for the dividend, you are betting you are going to make your making on Southland Health Services once it opens. The SEC has given the company permission to trade on its own, but they don’t have an exchange or an opening price yet.
To be clear- there are no guarantees it will ever happen, and there are no price guarantees when and if it does. Plan on the process taking at least a couple of months if not more.
Here’s the chart of the behavior of BTYH since investors started to realize they would get through the SEC process. I have been suggesting accumulating the stock up to $1. That level is now eclipsed, so where from here?
If the company can refinance its debt in the next week or two, I believe that would be the catalytic event to catpult them to a senior listing as described above.
You can still buy it at this level, but if you do so, don’t do it just for the pre x-dividend trade. Do it so you can own your shares of Southland, and take your chances there.
Comments and questions are welcome.
What is stopping Southland from being listed on the Nasdaq (pre debt consolidation)? Then once on a major exchange, they will have no problem acquiring the right institution for better debt terms.
After all there are hundreds (maybe thousands) of companies that are on major exchanges (Nasdaq included) that don’t make a penny. Bad Toys has proven to be profitable and at redicuously low PE ratio.
Editor: For one thing, at $4 the market cap will be a little high as compared to their peer group. Perhaps the biggest is who is going to post a bid for the stock at $4?- Someone has to want to buy the stock at $4- there are about 8 million reasons why someone wouldn’t want to buy it at $4- those are the 8 million free trading shares owned by investors between $.50 and $2- When companies go public at a certain price they generally have brokerage firm sponsorship and institutional support. Southland does not have that- but could find it.
Good post. I enjoy reading the OTC blog.
My question is a newbie one. I was lucky enough to get into BTYH at $04.47 and am seriously cotemplating how to get out of this position in a well planned way.
I am not sure about one part though. If i own, say 25000 says of BTYH on EOD Jan 31st. And i decide to sell ALL of BTYH on Fed 2nd (after the X-dividend date), do i still get southland shares when/if that happens? Or do i have to hold BTYH all the way till the Southland NASDAQ/AMEX listing materializes?
Thanks! Keep up the good work.
Jim
Yes- you would get all your Southland shares- However, if you decide to hold until the 1st, you are betting on making your money on the Southland shares because Bad Toys will no doubt open considerably lower on the 1st than where it closed on the 31st. If you want to make your money your 25,000 shares of BTYH, you have to sell it on or before the 31st, and forfeit the Southland. It will be interesting to see how it plays out as I have never seen anything like this in 20 years of trading.
What is your educated guess on which exchange and price Southland would open at with the company’s current debt situation? If the debt was restructured what price could you see it open at? What would the third exchange/ price choice be? Do you think the reward outweighs the risk if BTYH were trading at $1.50? Thanks for all of your great investment ideas, keep them comming!
Editor: I have had numerous discussions with Larry Lunan about this issue. He and I disagree. I believe it is crucial for him to refinance the debt in order to get a senior listing. He does not. With regard to your question- I can’t make an educated guess because in 20 years I have never seen anything like this pulled off. It’s an adventure for all of us. Here’s what I can guess. If you want to make your money short term, sell your shares of BTYH on or before the 31st, and take your profit. If you want to stick it out for the longer term, just hang in there and see what happens. I am quite certain BTYH will be much cheaper when it opens in Feb 1. Perhaps the play is to sell the BTYH, wait for Southland to open at $4- hope it gets crushed by the 8 million shares that could be owned very cheap and could be for sale, and then buy Southland.
when did the ratio on the spin off get changed to 1-3? This is the 2nd. change. are these guys legal or is this a scam?
Editor: I hardly see how you could question whether or not this is some sort of scam considering that Southland just went through an exhaustive nine month full SEC review, and they have completed it successfully. With regard to the spin off- I believe you get a little under one share for every share of Bad Toys. They made one minor adjustment months ago, and nothing has changed since. Where do you get this 1-3 number?
Why not buy several thousand shares and sell half on first decent spike before ex-dividend date. Hold half as gamble on Southland not getting crushed. If this happens loss has been limited. –p.s. I made typo error in e-mail address on previous comment.
Editor: Sound strategy- hedge your bet and be ahead of the game before the game even starts.
I am not an accountant however I do know that dividends are taxed at a 15% rate (i.e.qualified dividends). With regards to this “dividend”, could you please find out whether these new shares will qualify for 15% tax status without holding them for one year
Editor: Excellent question. I will see if I can get you an answer. When I do, you will find it right here.
Bad Toys does not seem to listening to you any more.
The price keeps dropping instead of going up.
I wonder why this is?
Editor: Perhaps because it has more than doubled already this year, and when stocks double people take a profit. Is that possible?
BTYH seems to have lost its steam. Do you think it will creep back up to around $1.50 range? I am hoping there will be some news on their re-financing of old debt. That should give this stock a much needed lift fore the ex-dividend date.
Your comments please.
Jim
Editor: If there is news on the refinancing of the debt I agree with you- there will be another charge in this stock. For now, the initial surge relative to the effective registration statement is over, but more could come before it goes x-dividend. As far as the refinance goes, I can tell you they are working with one lender that looks favorable. No one knows if it will work out or not. Lunan doesn’t have to do anything, and he will walk away from the table if he doesn’t get the right deal for the shareholders.
When and how will the Southland certs be issued? My stock is in street name. thanks
Editor: Your brokerage firm will provide the company with your name and address, and it will be sent to you in the mail.
Why would the Southland certificates be sent to out home addresses? Shouldn’t they be sent to the brokerage? Also what do you think is going on with this stock? I expected a huge spike in share price on the days leading up to the ex-dividend but in actuality there has been a significant decline in share price.
Editor: They will be sent to the address on your account. You are the owner, not the brokerage firm. You can send it to any brokerage firm you want. I believe there are two reasons it traded much more poorly- 1. The market lost a lot of enthusiasm for the idea due to the sheer amount of time it took to do it, and 2. Investors don’t have as much faith since they haven’t refinanced the debt. In either case, what difference does it make? If you decided to hold and take your chances, it will either open at a good price or it won’t- someday. Now, all we can do is wait.
any idea what the symbol will be for Southland or when the certs will be mailed?
Editor: No idea on the symbol. Certs will be mailed over the next month.
the southland stock is showing up in accounts today!
Editor: I’m pretty sure it will be backed out and you will receive a certificate.
If it is in an IRA [mine is] I think it has to go into the account directly.
Editor: No, it doesn’t. It will be mailed to the Trustee as the name on the account.
have they started the listing process yet. If so–what exchange are they trying for?
Editor: They are talking to one major brokerage firm about sponsorship and hoping for a NASDAQ small cap listing.
Could you buy southland from some one that owns it?
Editor: Yes, I guess you could. Your shares will be completely unrestricted, so there is no reason you couldn’t do a private transaction at an agreed on price. You would probably have to send a notarized letter to the transfer agent with instructions what changes were to be made.
it is being reported on a message board that the company owes back federal taxes. The message says that they have missed two IRS deadlines and owe over 4 million in back taxes. Is any or all of this true?
Editor: Of course it is true and I have been covering this issue along with the GE Capital issue for months. Now you are beginning to understand how important the debt refinance is. That is the key to a senior listing. Believe me on this- I know what I am talking about.
U need to look very deep into this company and what they did to previous ownership of Southland
Editor: I have. The past owners of Southland were basically crooks. If you look at Southland prior to Lunan taking over, they had run up about $4 million in IRS debt- here’s big coincidence- the former CEO borrowed almost exactly $4 million from the company. Imagine the coincidence. Southland is very lucky the former management is gone.
It has been 2 and 1/2 months since Southland was spun off. How about an update on the listing process? thanks
Editor: It’s about time for an update. Will call the company next week.
when you find out about the listing progress please post it here. Also,what was the final decision about the certs. Are they staying in the accts. or being issued to the holders. As I mentioned before it would seem to me that if you have the stock in your IRA it would be a taxable event if the shares went directly to the holder. thanks
Editor: I don’t know about the certs yet- however, I do know the dividend is not a taxable event. It is something you already owned, just delivered in a different form.
I may own it, but, if I take delivery outside of my IRA it is a taxable event. It is the same as taking money out or taking the money or stock out and transfering from one acct to another. check it out and see if I am not right.
Editor: That’s an issue related to withdrawing funds out of your IRA and creating a taxable event- not the receipt of the shares. However, if it was owned by your IRA, the cert will come in the name of your IRA. If if the dividend were a taxable event, that would not be.
when is the stock holders meeting. Also, how about an update on the listing of Southland. What was ever decided about the certs–do they stay in the accts. or will they be mailed to the stockholders? thanks
Editor: Would love an update. Don’t know when the shareholders meeting is, but will try to get some clarity next week.
questions I ask you on 5/11 are still unanswered by you AND the COMPANY. When is the stock holders meeting? Are the certs staying in the accts or being mailed to the stockholders? [and] when will southland be listed and priced? The chaos around this stock has eroded a lot of stockholders confidence in the company! thanks
Editor: That is simply a crock. BS. I have answered every question ever posted in this BLOG- I don’t control the company. Here’s what you can do- you can either read today’s press release, or simply call CEO Larry Lunan and talk to him yourself. Then you can report what you find on the BLOG. (423) 247-9560. Share it with all of us. I have continuously said this deal is going nowhere until they refinance their debt- have they done it yet?
my questions about stockholders meeting and other concerns were answered my you in the following manner.”would love an update. Don’t know when the stockholders meeting is, but will try to get some clarity next week” That was the last you posted, which is not an answer . By the way “crock and BS” are not professional terms
Editor: I am not an analyst, so you are going to get plain English. If you want to know when the AGM is, just contact the company. The AGM is a meaningless event, so I won’t use valuable time trying to find out when it is. Call the CEO. He will be happy to fill you in.
Is the company recalling the stock so that it can be sent directly to the share holders or what is going on? richard shaffer
Editor: Haven’t spoken with them in a while. Should give them a call today and find out what’s going on.
in regards to my question of 6/27–did you call the company and what did you find out? thanks
Editor: Certs are going out now. The company has a proposal in front of the IRS which isn’t even an offer and compromise. They are trying to get the IRS to take a look at the amount that was owed by former ownership, and how much they took out of the company. They are hopeful they will get a number that pays the obligation in the next few weeks. If it works, they will refinance, pay off the debt, and get to the stock. The CEO is hopeful they will trade Southland later this year at $4, but there is a lot of frustration with the slow response time of the IRS, which is the key to the whole thing.
any news on when Southland will be listed or when the debt and IRS issues will be settled? thanks
Editor: I was away for 10 days, and haven’t spoken with the company in about one month. Will try to get an update later this week.
I ask a question last week about the listing and the debt. Did you get back to the company? thanks
Editor: Sorry, not this week. I am preoccupied with what I believe could be the single best idea I ever had- working on it. You will learn about it later in September. Will get with them next week. However, there is really nothing to do but wait and hope they get the IRS issue resolved. If and when it happens, Southland will have a real shot at getting a good listing and trading very well.
how about an update on PLHI. Concerning the listing on an exchange for Southland, the whereabouts of Southland stock, and the debt situation
Editor: I just haven’t had time to call Lunan of late, but you are right- it is long overdue. I’ll try to get to it.
I would like to ask you all to excersise extreem caution as a formor employee of Gambler I can say without a doubt in my mind that Badtoys (or whatever they decide to call themselves today) is on a downward spiral to bankruptcy if he continues on his current path. He bounced multiple employee paychecks on a few occasions (hence why I no longer work for the company) and pays with personnal checks to “get around the IRS and GE finance”. The motorcycle side of the business is in an enormous finacial situation according to them, in that we couldnt even order material to manufacture bikes. I wish the best of luck to you all but felt the need to state how I viewed the finacial state of things, as a former employee. But as always, do your own research and make your own decisions.
Editor: Thank you for your contribution. However, I have not suggested owning shares of PLHI (the former Bad Toys) and there is nothing to be done on the Southland side. We all have our share certs, and there is nothing you can do with them. It’s either wall paper or worth something down the road.
could we get an update on Southland? thanks
Editor: It’s in the blog from last weekend. Just look.