Markland Technologies has broken below the $.60 level today for the first time since the OTC Journal featured the company in early January.
There have been some moderately negative developments in the MRKL picture since it was first featured. The most negative is probably the number of shares issued and outstanding. When I interviewed CEO Bob Tarini, he told me the fully diluted total number of shares was about 78 million. As of Dec 31, the company already had 90 million I&O, up from 51.5 million the previous quarter. Clearly, the market has been wrestling with the additional 40 million shares of stock, most of which have probably been already sold into the market. In short, if the company does not stop the proverbial printing press of stock certificates, this stock is destined to go nowhere.
Secondly, there is a temporary industry wide problem. In checking with other companies in the Defense/Homeland Security arena, I have learned that the Pentagon is virtually broke at this time. Until President Bush’s $92 billion supplemental budget passes, new funding for programs from the DOD are in danger.
On the plus side, the company did deliver $17 million in revs in the December quarter, putting them on an annual run rate of nearly $70 million in annual sales. Taken against the current market valuation of $52.2 million, the stock still seems fairly cheap.
A quick look at the chart shows a company who’s shares could break to a multi month low. The stock is in a downtrend, wherein the highs continue getting lower. On the plus side, the last two times the stock has retreated to these levels, it has bounced quite nicely.
For those who own this stock in the $.70 to $.80 range, it might be time to look at taking your loss and moving on if the stock doesn’t bounce soon, especially if you were in it just for a trade.
If you are a long term investor, the increase in the number of shares is much more troubling. Since none of us control management, we cannot stop them from issuing inordinate amounts of stock. The only way to vote is to sell and move on. Keep a close eye on this stock for further downside pressure over the next several days. If there is no bounce, it might be time to move on.
Correct me if am wrong, but the story with those pennies stocks seem to be the same for most of them, except for the rare occasion, dilution is what i find the problem, we read the story it seem very impresive we buy the stock and then down the hill it goes, it happen to me with most of my purchase, NTDL, FMLY, AMW, and i could go on, now i am very careful, we buy a stock with 50 millions shares outstanding and 3 months late they got zillion on the market, a lot of money is been lost that way, and we are as usuel the suckers who pay for it. it was a beautiful story at first for all of my stock mention above, now its nightmare. No more for me thanks.
Editor: My only comment would be that the scenario you paint is not uncommon in the microcap market. You are going to have losers. That’s the nature of speculation. If you don’t recognize that going in, this is not the end of the market for you. Also, if you are going to focus on three losers, it is also approriate to mention three winners over the last several years. How about NWAV which is making a huge run right now, BPTR which has done very well over a few months, and CADA- $4.40 to $20- or low priced VTSI introduced at $.10 which has seen $.47- . Microcap investing is not for everyone. People love it because they like being part of a developing story and they know stocks can go up infinitely, but only go down to zero. The difference between the OTC Journal and all the others is that I follow up and tell you when things are not working out.
Several questions about results: why S/G/A expenses have grown more than the sum of EOIR and MRKL´s S/G/A? Is there any relationship with stock issuances to pay managament? Why cashflow this quarter is quite below last quarter if revenue is similar? Have you noticed that current liabilities are more than current assets? Any risk on this side? What do you think about management buying stocks of Technest at the same time MRKL? Specially taking into account shareprice growth of Technest. Has MRKL paid a fair value for Technest? I hope you can help us on some on these questions. On the other side, I know the story of EUOT.PK. It was quite expeculative but good for Markland Manangement and shareholders, not so good for EUOT.PK shareholders. EUOT launched a great information the day before the agreement to increase shareholder value of EUOT.PK and then they sold licenses to Markland (without entering on the managament of Markland as they have tried). It was good for MRKL. After this story MRKL has changed a lot with the adquisition of EOIR. To me it seems an attractive investment, although there is a risk with management. The same risk you have with every smallcap. Any case, thanks a lot for your great help!!.
Editor: I do not fully understand all the details of the EUOT deal. IF you say the deal was not so great for EUOT shareholders, then I will accept that until shown otherwise. I know they dropped the conversion price of 4 million warrants from $.90 to $.60 to finance the deal, which killed the stock. On the cash flow side, one of the huge negatives I see is the enormous salaries the CEO and President are collecting- $7 million a year between the two, which is 10% of the sales. That is outrageous- that might help explain some to the issues regarding negative cash flow. I have noticed the company has negative shareholders equity when you extract the non-tangible assets, which is probably why the company keeps raising money out of the market. I don’t think I’ll get much cooperation from management in the future as I have a negative bias towards this stock at this point in time.
I have noticed that Jason Gheng, CEO, Funder and President of Genex has done a statement of ownership of around 10 MM shares of Markland (direct and indirect ownership). I guess Markland is paying with paper the acquisition. If Jason thinks paper from Markland is good, I do so. I think this is a clear long-term buy, althought doubts about compensation of management. On the other hand, Management have bought also stocks on Jan. I am not sure the free-float has increased as much as the number of shares, so I do not think this should affect the stock as much as you have said in the short-run.
Editor: I am not sure I agree with you on your point that management “bought” shares in January. While insider buying is always considered good, it does not appear these were insider buys in the open market. Tarini’s were non-open market buys, which could mean they were awarded to him at some sort of deep discount to the market or for free as part of his compensation package. In the meantime, CEO Tarini went and sold 300,000 shares in the open market in February. As far as Jason Gheng is concerned, I have never heard the name so I have no idea if he has credibility.
I jumped in when MRKL was at $.80. I broke my own rules by not selling it when it went to $.72 (10% loss). Now it’s down to $.58 which is a 28% loss at the moment. Tomorrow I will dump all and take my losses, for the moment. I will watch MRKL to see how much lower it goes and to see if it starts back up. Then, I’ll jump back in again. The gain I will make if I dump at $.58 and jump back in say at $.50 or lower, and then if it rises back to $.80 or higher, I will have made back more than double what I’ve lost so far. Only this time I will stick to my rules and not sit idly watching the stock drop, wringing my hands, hoping the stock price rises. Learned my lesson. philz
Editor: I have learned some lessons also. In my year end commentary I promised all the readers I would be quicker to identify a questionable situation than I have in the past. I am trying to avoid the NTDLs and the AMWs that we had last year. Hopefully, I have done that with MRKL.
as my background is fully technical as to trading i would fully agree with u on the chart and trading itself….. as to the fundamentals and the company i hold my commments in reserve since i only know about the company from what i have read in your research and my knowledge of the over all picture in this area………
Editor: It doesn’t take a skilled technician to figure out this one is in a downtrend. It is headed lower until proven otherwise. Looks cheap, but there’s no telling how many shares the company is going to issue, so you can’t get a handle on the market cap.
You are becoming partial to the comments you receive on MRKL. You have not posted my last two comments on this big looser. Thanks a lot!!!!!!!!!!
Editor: I generally post all the comments unless someone is trying to use this forum to promote some other stock. You might be looking in the wrong place. Each posting has its own set of comments. You might be looking at the wrong posting. This comments section is designed to allow everyone to state their differing points of view.
ok..now what…50 cents..any chance of this thing recovering anytime in the future?
Editor: Based on my last BLOG entry you can assume I have turned negative on the stock. The valuation is very reasonable, but there is no way to identify what you are buying if the company just keeps issuing shares at this alarming rate. Sure, it could pop back. In the long term this stock is going nowhere if the company does not stop issuing paper.
I was tempted to take MRKL when it was recommended around $0.80 but hesitated when I saw the huge reverse split in the past and the outstanding shares being again over 50 mio. Now they’re unfortunately much higher. What this management is doing is in the long run good for the company but devestating to the devestating to the early shareholders. Namely, issuing stock to pay for people, compensation, acquisitions and whatever, then reverse splitting. In this case management did that earlier and is at it all over again. And I would bet they will reverse split again, losing all those shareholders up to that point much money because the price will drop after the reverse split, it almost always does and all of this results in transfer of money from individual shareholders into the company value. There will come a point where they knock this practice off because they’ve created good solid value plus have low outstanding through a reverse split so there’s finally real upside value. And that’s the time to buy it. Additionally, this stock is just perfect for marketmaker shorting, adding to the down pressure. OTC marketmakers love this scenario. Today it’s at $0.50. So what has the management said in the past about future dilution, have they kept their word or not and what are they saying now about their plans of future dilution?
Editor: You have nailed the problem down perfectly. I am a big believer in following what management says, and then what they do. In the first week of January I interviewed Bob Tarini about the company. He stated that, fully dilluted, there were about 78 million shares fully dilluted. Then they file the December 10Q and there are already 90 million already issued. This is up from 58 million the previous quarter- that’s a 55% increase in three months. Unbelievable. In addition, the CEO didn’t even give me a reasonably accurate number. Until this practice stops, I believe this is a good one to avoid. You are right- market makers will continue to short to buyers, safe in the knowledge there will be continuing new supplies of stock coming in to cover their short position.
About a year ago the float of Markland was under 15 million, in fact it might have been even less. I would try to avoid it, unless it goes under .35 and even then I would be skeptical. Check the realtime filings on nasdaq.com to see their dilution problems in black and white. Here it is for you lazy folks: http://tinyurl.com/7x2nj
Editor: This comment has been edited. The author attempted to use this forum to promote two other stocks. This BLOG is for commentary on MRKL only. Any attempt to use it as a forum to promote other ideas will be deleted. Nevertheless, I have posted his commentary on MRKL.
Ok, well I was not aware of the rules. My point was you can look up those dilution and insider selling filings on nasdaq.com. You edited my previous post that links to markland promoting their stock by giving shares away.
Editor: In my view, this is a small part of the problem. I am informed the company repriced 4 million warrants, which were to convert at $.90, down to $.60 in order to raise more capital. It is clear the company has little or no concern over the dillutive effect of toxic financings.
I see positive thing in this stock. 1. 90mil shares, 500000 mln.authoresed. BUT trading only around 1 mln every day. 2. Year ago they had 5 mln. shares and a price around $2. Now 90mln shares, but price did not go down to 10-20 cents. 3. they are in US-VISIT and it could be great… Am I wrong? t.
Editor: So you are thinking it’s a positive because the price isn’t lower that it already. I don’t agree. It the company trades over 1 million shares a day, does $75 million in annual revs, and only has a market cap of $45 million, somone is issuing a lot of stock. In addition, the I&O goes from 58 million to 90 million in 1 quarter. They need to stop issuing shares until the stock stabilizes and behaves better.
In response to comments by Marc Mitchell, finally someone is agreeing on the issue of reverse split that I have been trying to get across for the past two months. Even, you were a bit argumentative on this issue. You did not think they would do it. Reverse splits are totally controled by company board of directors and governed by corporation by-laws. Shareholders cannot vote to stop it! The vote slip the shareholders receive to vote for or against reverse split is just a joke to fool shareholders and just another additional bill at the expense of shareholders. The decesion has already been made. I think this practice must be outlawed. The reverse split is an outright robbery the companies commit in a legal way. And, unless shareholders petition the SEC to put an end to this atrocity the companies like Markland will attempt to take advantage of it like they did it once before. And, they think of this plot long before they pump the stock price with a series of good news followed by toxic financing and issuing of additional shares. And, that is what makes it illegal and vicious. The fact that they do not advise their shareholders of possible dilution the same way they air the good news to pump the stock price in order for big investors and promoters to dump their shares into the open market.
Editor: I agree that the company is issuing way too much stock for current shareholders to make any money. I don’t know if a reverse split is inevitable- if they stop now they don’t need to reverse split. In the past I have seen a few companies do very well after reverse splits. If they simply want to get the price higher to attract institutional sponsorship, it can be good. I traded one that reverse split from $1 to $5, then went to $13. Nevertheless, if you are convinced a reverse split would be bad, and convinced the stock will go lower, just sell it and move on. Instead of focusing a lot of energy on this one, go find one you like.
Reviewing SEC-filings I do not see so many shares. Are you sure? I see around 10MM of convertible stocks on Feb at exercise price of 0,6. Taking into account trade volume is around 1,4MM it is normal share price has fallen. However, there should be a bottom around 0,6; today at 0,5. I think this is a clear buy and I will do so. I do not see more SEC-filings of Equity sale for next one or two months. Do you expect them?
Editor: I have no idea what to expect since the numbers I was given in my first interview turned out to be wrong within just a week of providing them. When a company simply lowers warrant conversion prices without disclosing, it is tough to get an accurate number. You might not be able to fully figure it out from the SEC filings. However, it does seem as if the stock is getting down to interesting price.
You are right about number of shares, around 90 MM. Considering 70MM revenues at the end of fiscal, stock value should be around 0,75. At current stock value we only value sales FYT. I don´t think stock valuation should fall to pass levels of 0,5 for 31MM shares… which would mean around 0,25 at current number of shares.
Editor: I have computed the recent financing will result in an additional 40 million shares of stock if the price remains where it is today over the next five years. If the price goes higher, the dillution will be far less. If it goes lower, the opposite is true.
What about warrants issued at 60 cents. What happens now that the stock is at 42 cents? Do you think another reverse split is possible and if so at what ratio? Can you talk to Tarini the Great to find out what is in the picture for the future?
Editor: I suppose another reverse split is possible- I can’t talk to the company any longer as I have turned negative on the stock.
I e-mailed the company and suggested that they issue some more stock certificates, that should help them reach the .10 cent level a little sooner. Hope their technology is better than their buisness tactics!
Editor: Based on everything I’ve read, there is no doubt their technology is better than their business tactics.
I have read last comments of Tarini where he said Technest has a capitalization of $50Millions. If this is right and revenue for FY is around $60-$70 millions this company is clearly undervalued, even with 90million shares. I think is time to start buying.
Editor: My personal view is I would not buy until I see evidence the company is going to stop printing stock certificates like it was the Sunday NY Times.
What are the corporation laws regarding issuing stocks. Can a company issue unlimited number of stock certificates at their sole discretion?
Editor: At their discretion, they can issue up to the number of shares that are authorized. If they want to exceed that number, they have to get shareholder approval.
When you first talked to Tarini he informed you that the total number of shares were about 70 million. Later you found out that it was not true. Was he dishonest about his comment? In the mean time company has some contact e-mails posted on their website. I have tried contacting them four times already and there is no response. it is interesting that in their last news release Tarini is talking about enhancing shareholder values. I am holding him obligated to his public comment, especially if they announce a reverse split.
Editor: I think we are beating a dead horse hear. It’s not going to get up and start running. Look for another stock to worry about. Let me know when the company stops issuing paper.
Are you a buyer or a salesman with this price?
Editor: I thought it was pretty clear I was abandoning this idea in the $.60 range. Once the company misled me on the number of shares I&O, and changed the conversion price on warrants arbitrarily, I knew this was not the kind of company I wanted to be in. It is pretty clear management has little regard for shareholders at this time. That could change in the future. The answer to your question- I already would have sold, and I’m not prepared to go back in.
Fully diluted at this price they have about a $40M market cap. With $75M in revs (including Genex acquisition) and cash flow positive. This would be an accretive acquisition for an L3. It looks like they do not issue paper except in the case of a catalyst such as the aquisition of EOIR. The stock trades betw $500K and $2M a day so all of the pipes added up only equal a week’s worth of trading. My guess is the overhang is gone and this is a buy at these levels. Good luck.
Editor: If you can assure me the company will stop doubling their I&O every quarter, I would agree with you completely. You can’t come up with a fully diluted number until they stop issuing new shares.
Actually, if you go back and look at this mgmt’s history, besides the fact that they pay themselves $3m/yr…they have absolutely diluted the bejeezus out of this stock and then reversed split it majorly…as you can see here: Splits:21-Oct-98 [1:10], 21-Jun-01 [1:40], 27-Oct-03 [1:60] (that btw, works out to 1:24,000!!! r/s)…and now once again…they have authorized more toxic dilution with their latest sale of equity. These are conscienceless scumbags IMO who don’t give the tiniest piece of fecal material about their shareholders!! Burned me once…shame on them…burned me twice now…shame on me. But…I do also think that OTC Journal should have seen this and commented prior to touting it here…I decided to give it a second shot based on your rec. Yes, I take responsibility for it…and the loss, of course… but just for future thought. jt
Editor: I think I have already explained a number of times that I interviewed Tarini. He gave me the capital structure. Then, when their next 10Q was filed, the numbers did not jive. At that time, I decided to abandon the coverage. If the capital structure was as advertised, I would have stuck with it.
A form 8-K was filed March 21 for Markland. I am not sure I understand it all, but I was shocked with the statement “The exercise price of the warrants will be reduced from $1.50 to $.334 per share.” Can we expect the price to sit at this level until all the warrants are filled? I have no idea what the rest of the message says.
Editor: As I have already turned negative on this company and am no longer covering it, I am not familiar with this reduction and really don’t care. If you are still in this stock, you are on your own.
I think with the history of reverse splits commented by John Taylor on MRKL and their pattern of burning shareholders equity repeadtedly in the past shareholders need to seek legal advice. The stock is behaving in an extremely corrupted way! I suspect naked short selling to set the stage for another reverse split. And, even though you have turned negative on this stock I agree with JT. You must not have believed Tarini in the first place and must have investigated more about this company before touting it.
Editor: If you are saying I should have expected the CEO to be a liar, then I guess I can’t argue with your observation. I think I will pull this BLOG down- I turned negative on the stock in the $.60 range when I was shown the error of my ways, and there is really nothing more to discuss. It was a mistake. End of story.
Everyone blaming the editor on this site are being very unfair. Personally regardless of what advice I follow or who I listen to, I do my own due delligence before making any kind of a decision. I think the ones that cry the loudest are the ones that should be investing in CDs or, hey, stick your money in a .75% savings account, but take your negative 2 cents and shove it where we don’t have to see or hear it. With that said, what do you think about ducey being out and Makin in? Just curious, @ .25 cents a person might make money even if its an accident!!
Editor: I don’t know why this is such a big deal. I covered the company in the $.75 range. Fundamentally, it looked like it was worth a lot more. Once I saw the dilution factor, I published an edition telling everyone I was dropping it and had turned negative on the company. If you stayed in it, it’s your fault. Thanks for the positive comment.
Oh and for those of you who like to write nasty e-mails, do what i’ve been doing almost on a daily dasis, I write to Mark Tech. calling them just about everything crooked to cons and threaten them with the sec etc. Will it do any good, well they just replaced their Pres so who knows. It is very obvious something devious is going on inside those four walls and someone knows, so someone has something to fear. So write them, calling our editor names will get you NO PLACE.
Editor: Agreed.
I KNOW you are negative and have stopped covering this issue. But am I going Alzheimers or does anyone remember that there is supposed to be an Confrence or Expo sometime around April 4 -6th. It was announced some time ago I think mid Feb or early March. Not to misunderstand, I am not a supporter as I took a big (40%) beating and am finally out. But trying to analyze the “now” ……. maybe the major decrease before the end of the quarter sets up a bounce at or by the confrence??? I may be crazy, we may have a careful oppertunity. Any thoughts.
Editor: Sure, there could be a bounce. The market is 100% supply and demand. If the company keeps pumping out the supply, the demand will not overcome it no matter how well they do. Tell me when they are going to turn off the printing press, and I will tell you when the stock is going to go up.
…well…hmmm…you’re right…I don’t know why it’s such a big deal. All I said was that I decided to trust mgmt once again based on OTC Journal’s having talked with Markland mgmt and feeling it was good enough to tout. I wasn’t particularly talking about their “present” share structure, which has of course changed again, I was talking about their past history. If it’s no big deal, then one only needed to agree…”yeah, you’re right…should have seen that”…or some such thing. Anyway…what’s done is done…and as I said…”for the future.” And BTW darrol…I think Mr Editor is a big enough and well paid enough boy to be able to take care of himself without your kissi…well, you know what we call it…this needs to be an open board if it’s going to be worth anything. jt…BTW…I appreciate the good calls that I’ve found here…like HYPD (we hope…and expect)
Editor: Ultimately, I am just a source of ideas. If I don’t really like them in the beginning, I won’t expose them to the audience no matter how much they are willing to pay for access to our audience. As part of my New Year’s resolution, I decided to turn negative quicker when it started to “smell bad” for any company I cover. Hopefully, I was far enough out in front of MRKL to prevent excessive losses. Sorry this cannot be a true open forum, but if it was you would read hundreds of posts for online drugs and poker.
hmm…well, I wasn’t kissing the butt JT, however well the editor is paid is irrelevant and you did apply accusations however you want it to sound now, etc., etc….what I was trying to accomplish was for you to apply your ill feelings where it belonged. Markland!!!Geez man you wrote a documentary on the stock so you had to do your hm wk so you had an edge a lot of people didn’t, I’m sure, but you lost money because you held too long. I personally lost money on 3000 shares but when the editor said move on if no bounce i was out there like there was no tomorrow. The whole scenario painted a blaming picture and now you owe two of us an apology!!! And for future reference if I stick up for the editor its because its just not because I kiss butt and if you knew me you would know I needn’t kiss anyones butt.
Editor: I love a lively debate.
I am not familiar enough with any legalities that may be involved. I do know that I have been burned and the comments being made seem to indicate that something fishy may be going on. Has anyone considered legal action or pursuing with the SEC? What would be the first step?
Editor: Commenting on this is a waste of all of our time. Forget about it an move on.
Ok, Darrol…you’re right…I owe two of us an apology. I apologize to myself for responding to you in the first place. And I apologize to you for not realizing that English is not your first language. And I promise in all sincerity not to respond to you here again. There, I feel better now…thanx, man.
Editor: A little more lively interaction. Just makes my day.
I am a LONG looser and am taking my medicine. I am a novice, obviously, but naked sale? Exactly what is this? And if there has been laws broken how does one go about taking legal action and would it be a class action suit?
Editor: There are no naked sales issues with MRKL- the company is simply creating a massive excessive supply of stock, and until they stop there is nothing you can do but sell and move on.
I told in comment 14th of your list that I would not think the company would reach levels of 0,25 which mean return to valuation of the company before buying EOIR. Dilution is there and problems with management of EOIR were also true. Although you do not covert it I think that better than going to casino is trying with this one. I keep buying. 0,25, It is too low for this one. Also I support you on your comments, you told us about the dilution on time. I realize also the company was clearly undervalued and your comments on dilution where really helpful otherwise I would have bought more stocks. I still think this is a risky buy, but I asume the risk and keep buying more now.
Editor: Any messages on this BLOG are simply a waste of energy. It’s all about management, and this management doesn’t care about the stock price. Might be a good specualtion at $.25, but who knows. Lots of better companies.
Have you noticed the volume on Markland? In went from 1-3 M/day to 6.5 M on April 12 and has been trading over 9M/day ever since. On April 18 it hit 21.5 M shares traded. The price has gone down to $0.135. Any guesses as to what is happening?
Editor: It’s over- it’s dead- forget it.
MRKL was .13 back on 9/7/04 and came back to $4.40 ! Why don’t you think I’ll do it again? I have alot to lose! Interested to see year-end results coming in June.
Editor: I believe it came back to $4.40 after a massive reverse split. Sorry you have a lot to lose. I abandoned this idea in the $.60 range when I saw it was management’s agenda to dilute the sharedholders into oblivion.
It is possible that the company (MRKL) is creating a massive supply of stock to set the stage for yet another reverse split. And, it might have been their startegy from the very first day they started touting the stock and releasing consecutive good news about their navy contract awards. I consider this a malicious and illegal strategy to dupe investors out of their money. I think a class action law suit may be initiated if another reverse split takes place. I mean enough is enough. How many times they should actually get away with these revese splits. And, when Mr. Tarini publically anounces enhancing shareholders values he should not be allowed to get away with another reverse split after collecting his annual salaries. I will call this destroying shareholders values and not enhancing! And, please Mr. Editor. You have not just turned negative on the stock. You have turned impartial on the stock. if you have turned negative on the stock, please do exactly opposite to what you would have done if you were positive on the stock. Do not take this issue lightly. I was the only one who was giving warnings about possible reverse split before even anyone mentioning it. And, if I remember correctly you were not in agreement with me in the begining about another reverse split. I hope the management will have some level of shame not to announce another reverse split. And, if they do, shame on all of us for not doing anything about it.
Editor: As I said a long time ago- the only vote you have is the selling of your shares. Clearly, many are choosing to do that.
Did you hear any recent developments in this company that could indicate a potential breakout. What is your position on this stock, would you recommend it? Its hard to say when a stock could break out, take a look at VTSI, its been on a downtrend and all of a sudden it takes off. Please let me know your thoughts and any technical data you may have. Thanks, Delano
Editor: I have abandoned this stock and will not comment on it unless they eject the current management.
I know you are not covering Markland, but what do you think of the news: MARKLAND ANNOUNCES CORPORATE REORGANIZATION AND DECLARES $10M STOCK DIVIDEND OF ITS TECHNEST HOLDINGS INC. STOCK. I read the news, but I don’t really understand it.
Editor: Since I don’t follow it anymore, I don’t care and can’t share any thoughts with you on the matter.
thanks to google I found you