Prescience Point Research

INNERWORKINGS, INC. | INWK | APRIL 30, 2013

admin — Tue, 30 Apr 2013 14:59:38 +0000

We believe shares of InnerWorkings, Inc. (Nasdaq: INWK or “IW”) are grossly overvalued and poised to collapse by as much as 55%. We believe the company is inflating its revenues in violation of GAAP principles by misapplying gross revenue accounting, placing it in violation of its credit agreement. The SEC has inquired about IW’s gross revenue treatment, and we believe management’s response was incomplete and/or misleading. We note that Groupon (Nasdaq: GRPN) – which has many connections with IW, including a common cofounder, former board members, and the same auditor in Ernst & Young, Chicago – violated GAAP principles in the same way and was forced to restate its revenues. Similarly, we believe IW will be forced to restate its historical financial results. Furthermore, IW shares many of the same bad qualities we profiled in our previous reports on The Active Network (Nasdaq: ACTV or “Active”) and Boulder Brands (Nasdaq: BDBD or “Boulder”). Similar to Active, we note IW was also formed through dozens of questionable acquisitions – but IW structures them with opaque contingent payment terms that artificially boost EBITDA and EPS, even when its deals fail! To be clear, we believe IW has been able to inflate its EBITDA and EPS by converting acquisition earn-out payables to earnings. Similar to Boulder, where we spotted prior failures of management and trouble at the Board level with numerous departures, we note that IW had 4 out of its 7 board members either resign or decide not to run for reelection in 2012. IW also appears to be overstating its revenue opportunity: our research shows that IW has penetrated 25% of its North American market opportunity (80% of revenue), while having claimed a penetration rate <1% – a harbinger of waning organic growth. Follow the $$: IW’s gross margins and free cash flow have been declining for several years and its CEO is selling stock!

Given our concerns that IW’s financial statements fail to represent the company’s true financial condition, that it will be forced to restate its historical financials, that its true prospects are obscured by management over-promotion, and that it should be valued closer to its commercial printing/diversified business products and services peers, we believe IW’s stock has an intrinsic value today of $5.00 per share, ~55% below current levels.

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Disclaimer: This research report expresses Prescience Point LLC’s opinions. Use of the research produced by Prescience Point LLC is at your own risk. This is a short-biased report and you should assume the author of this report and its clients and/or investors hold a short position and derivatives tied to the security of Boulder Brands, Inc. that will benefit from a decline in the price of the common stock. Following publication of the report, the author (including members, partners, affiliates, employees, and/or consultants) along with its clients and/or investors intend to continue transacting in the securities covered therein, and may be long, short, or neutral at any time hereafter regardless of the initial recommendation. The author of this report has obtained all information contained herein from sources believed to be accurate and reliable and has included references where available and practical. However, such information is presented “as is,” without warranty of any kind– whether express or implied. The author of this report makes no representation, express or implied, as to the accuracy, timeliness, or completeness of any such information or with regard to the results to be obtained from its use. Forward looking statement and projections are inherently susceptible to uncertainty and involve many risks (known and unknown) that could cause actual results to differ materially from expected results. All expressions of opinion are subject to change without notice, and the author does not undertake to update or supplement this report or any of the information contained herein. Prescience Point LLC is not a broker/dealer or financial advisor and nothing contained herein should be construed as an offer or solicitation to buy or sell any investment or security mentioned in this report. You should do your own research and due diligence before making any investment decision with respect to securities covered herein, including, but not limited to, the suitability of any transaction to your risk tolerance and investment objectives and consult your own tax, financial and legal experts as warranted. READ THE COMPLETE LEGAL DISCLAIMER CONTAINED IN OUR REPORT.

BOULDER BRANDS INC. Follow-up | BDBD | March 5, 2013

eiadasbahi — Tue, 05 Mar 2013 16:59:30 +0000

Prescience Point has published a follow-up report on Boulder Brands’ (Nasdaq: BDBD), consisting of a deep-dive look at the company’s Q4’2012 results and management’s 2013 guidance. In short, the story does not add up and we expose the red flag components of its missing pieces.

With the stock having fallen 28% since we initiated the company at Strong Sell on February 26th — despite the company reporting that it, “Delivers 35% Net Sales Growth & 15% Organic Net Sales Growth in the (4th) Quarter,” and “Increases 2013 Outlook” — we suspect that the market has already seen through most of the charades. Still, many fresh, value-added insights are hidden deep below the surface and we have pulled the puzzle together with our own observations. We are downgrading our price target from $4.00 to $3.00 on the risks of a convent breach and likelihood of an imminent, highly dilutive equity capital raise.

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BOULDER BRANDS INC. | BDBD | FEB 26, 2013

eiadasbahi — Tue, 26 Feb 2013 16:59:11 +0000

We believe shares of Boulder Brands (Nasdaq: BDBD or “Boulder”) are grossly overvalued, perilously levered and poised to collapse by as much as 70%. Boulder, formerly known as Smart Balance, has had a troubled history since coming public through a reverse takeover in 2007. It has failed to extract any value from the languishing Smart Balance brand, whose key patents are due to expire in 2015 (likely to result in a steep deterioration in Boulder’s revenue and ability to service debt, and not being anticipated by the analyst community). Boulder has levered the company’s future on two acquisitions (Glutino and Udi’s) in the gluten-free product category. Boulder drastically overpaid for these low growth brands, and sold the Street on deserving a valuation closer to that of higher growth organic peers. Having shamefully misled investors, we believe the company may be orchestrating a cover-up of its financial problems by manipulating its revenue recognition through repeated changes in accounting method and disclosure language. Other red flags include 3 directors resigning in Sept 2011 following the Glutino acquisition, the abrupt resignation of its CFO shortly afterward, and the inclusion of a “clawback” provision in the event of a financial restatement. With few options remaining, management doubled down on another bad deal (Udi’s) in 2012, recently reduced its segment reporting transparency, changed its corporate name, and filed a universal shelf giving it flexibility to dilute shareholders. We believe Boulder’s stock has an intrinsic value today of $4.00 per share, ~70% below current trading levels.

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Active Network Inc. | ACTV | Feb 12, 2013

admin — Tue, 12 Feb 2013 15:58:06 +0000

Since initiating The Active Network (NYSE: ACTV or “Active”) at Strong Sell in October 2012, we have uncovered further evidence in support of our conclusion that the company is structurally insolvent and resorting to measures of desperation to save its failing business. We now believe ACTV’s balance sheet and revenue problems are even worse than initially suspected, and believe the company is resorting to Lehman Brothers-like reporting tactics to hide debt and Groupon-like accounting to inflate revenues. As a result of our continued concern over the integrity of its financial reporting, we believe Active is at high risk of having to restate its historical financial results, and that shareholders are at great risk of substantial losses. We believe the growth story management is still spinning to investors is a bill of goods and, again, point to a senior management team that has liquidated substantially their entire stake in the company in the year and a half following ACTV’s IPO. Based on our research, the company will be hard-pressed to demonstrate any revenue growth in 2013. We are lowering our price target and believe Active’s stock has an intrinsic value today of $1.50 per share, 75% below current trading levels.

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Disclaimer: This research report expresses Prescience Point LLC’s opinions. Use of the research produced by Prescience Point LLC is at your own risk. This is a short-biased report and you should assume the author of this report and its clients and/or investors hold a short position and derivatives tied to the security of The Active Network, Inc. that will benefit from a decline in the price of the common stock. Following publication of the report, the author (including members, partners, affiliates, employees, and/or consultants) along with its clients and/or investors intend to continue transacting in the securities covered therein, and may be long, short, or neutral at any time hereafter regardless of the initial recommendation. The author of this report has obtained all information contained herein from sources believed to be accurate and reliable and has included references where available and practical. However, such information is presented “as is,” without warranty of any kind– whether express or implied. The author of this report makes no representation, express or implied, as to the accuracy, timeliness, or completeness of any such information or with regard to the results to be obtained from its use. Forward looking statement and projections are inherently susceptible to uncertainty and involve many risks (known and unknown) that could cause actual results to differ materially from expected results. All expressions of opinion are subject to change without notice, and the author does not undertake to update or supplement this report or any of the information contained herein. Prescience Point LLC is not a broker/dealer or financial advisor and nothing contained herein should be construed as an offer or solicitation to buy or sell any investment or security mentioned in this report. You should do your own research and due diligence before making any investment decision with respect to securities covered herein, including, but not limited to, the suitability of any transaction to your risk tolerance and investment objectives and consult your own tax, financial and legal experts as warranted. READ THE COMPLETE LEGAL DISCLAIMER CONTAINED IN OUR REPORT.

Active Network Inc. | ACTV | Oct, 2012

admin — Wed, 31 Oct 2012 14:28:55 +0000

We believe shares of The Active Network, Inc. (NYSE:ACTV) are grossly overvalued, reflecting few, if any, of the serious risks that could threaten the
company’s existence. We believe the company is functionally insolvent and that management has taken to masking the company’s weakening financial
condition by gaming the accounting. As a result of our concern over the integrity of its financial reporting, we believe Active is at high risk of having to restate its historical financial results. We believe the growth story management has spun to investors is a bill of goods; the real story is between the lines of management share liquidations. We believe Active’s stock has an intrinsic value today of $2.00 per share, ~75% below current trading levels.

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Disclaimer: This research report expresses Prescience Point LLC’s opinions. Use of the research produced by Prescience Point LLC is at your own risk. This is a short-biased report and you should assume the author of this report and its clients and/or investors hold a short position and derivatives tied to the security of The Active Network, Inc. that will benefit from a decline in the price of the common stock. Following publication of the report, the author (including members, partners, affiliates, employees, and/or consultants) along with its clients and/or investors intend to continue transacting in the securities covered therein, and may be long, short, or neutral at any time hereafter regardless of the initial recommendation. The author of this report has obtained all information contained herein from sources believed to be accurate and reliable and has included references where available and practical. However, such information is presented “as is,” without warranty of any kind– whether express or implied. The author of this report makes no representation, express or implied, as to the accuracy, timeliness, or completeness of any such information or with regard to the results to be obtained from its use. Forward looking statement and projections are inherently susceptible to uncertainty and involve many risks (known and unknown) that could cause actual results to differ materially from expected results. All expressions of opinion are subject to change without notice, and the author does not undertake to update or supplement this report or any of the information contained herein. Prescience Point LLC is not a broker/dealer or financial advisor and nothing contained herein should be construed as an offer or solicitation to buy or sell any investment or security mentioned in this report. You should do your own research and due diligence before making any investment decision with respect to securities covered herein, including, but not limited to, the suitability of any transaction to your risk tolerance and investment objectives and consult your own tax, financial and legal experts as warranted. READ THE COMPLETE LEGAL DISCLAIMER CONTAINED IN OUR REPORT.

US Antimony Corporation | UAMY | Sept, 2012

admin — Wed, 19 Sep 2012 06:44:20 +0000

In this report, we present a number of reasons why investors in United States Antimony Corp. (“UAMY” or the “company”) should be especially cautious. We believe the company is currently violating both Regulation S-K disclosure requirements and AMEX listing requirements. Our evidence suggests the company’s board does not consist of a “majority” of independent directors, and that UAMY may be trading on the AMEX in violation of that exchange’s rules. We also believe the company is pumping its stock price and in doing so may be violating Regulation FD by providing potentially material, non-public information on a selective disclosure basis. We believe these potential violations and the benefits of its AMEX listing have enabled a successful effort to inflate the company’s market valuation beyond reasonable measure.

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Disclaimer: This research report expresses Prescience Point LLC’s opinions. Use of the research produced by Prescience Point LLC is at your own risk. This is a short-biased report and you should assume the author of this report and its clients and/or investors hold a short position and derivatives tied to the security of United States Antimony Corp. that will benefit from a decline in the price of the common stock. Following publication of the report, the author (including members, partners, affiliates, employees, and/or consultants) along with its clients and/or investors intend to continue transacting in the securities covered therein, and may be long, short, or neutral at any time hereafter regardless of the initial recommendation. The author of this report has obtained all information contained herein from sources believed to be accurate and reliable and has included references where available and practical. However, such information is presented “as is,” without warranty of any kind– whether express or implied. The author of this report makes no representation, express or implied, as to the accuracy, timeliness, or completeness of any such information or with regard to the results to be obtained from its use. Forward looking statement and projections are inherently susceptible to uncertainty and involve many risks (known and unknown) that could cause actual results to differ materially from expected results. All expressions of opinion are subject to change without notice, and the author does not undertake to update or supplement this report or any of the information contained herein. Prescience Point LLC is not a broker/dealer or financial advisor and nothing contained herein should be construed as an offer or solicitation to buy or sell any investment or security mentioned in this report. You should do your own research and due diligence before making any investment decision with respect to securities covered herein, including, but not limited to, the suitability of any transaction to your risk tolerance and investment objectives and consult your own tax, financial and legal experts as warranted. READ THE COMPLETE LEGAL DISCLAIMER CONTAINED IN OUR REPORT.

Student Transportation Inc. | STB | July, 2012

admin — Thu, 26 Jul 2012 06:44:03 +0000

Shares of Student Transportation (NASDAQ:STB) are trading near an all-time high, propped up by retail investors attracted by the feel-good story of investing in a company that provides school bus services to children. As a return on their investments, the company pays a monthly dividend with an optically attractive dividend yield of 8%. In reality, STB’s business and financial strategy benefits its bankers and management, and is not accretive to shareholders. STB’s financing scheme relies on raising increasing sums of capital from new shareholders and creditors to maintain its irrationally high dividend, which is akin to “taking money from Peter to pay Paul.” As a result, in the absence of new capital, we believe STB’s dividend would ultimately be cut, and its stock price would fall closer to our fair value target of $2.00 per share, or 70% below the current stock price.

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Disclaimer: This research report expresses Prescience Point LLC’s opinions. Use of the research produced by Prescience Point LLC is at your own risk. This is a short-biased report and you should assume the author of this report and its clients and/or investors hold a short position and derivatives tied to the security of Student Transportation, Inc. that will benefit from a decline in the price of the common stock. Following publication of the report, the author (including members, partners, affiliates, employees, and/or consultants) along with its clients and/or investors intend to continue transacting in the securities covered therein, and may be long, short, or neutral at any time hereafter regardless of the initial recommendation. The author of this report has obtained all information contained herein from sources believed to be accurate and reliable and has included references where available and practical. However, such information is presented “as is,” without warranty of any kind– whether express or implied. The author of this report makes no representation, express or implied, as to the accuracy, timeliness, or completeness of any such information or with regard to the results to be obtained from its use. Forward looking statement and projections are inherently susceptible to uncertainty and involve many risks (known and unknown) that could cause actual results to differ materially from expected results. All expressions of opinion are subject to change without notice, and the author does not undertake to update or supplement this report or any of the information contained herein. Prescience Point LLC is not a broker/dealer or financial advisor and nothing contained herein should be construed as an offer or solicitation to buy or sell any investment or security mentioned in this report. You should do your own research and due diligence before making any investment decision with respect to securities covered herein, including, but not limited to, the suitability of any transaction to your risk tolerance and investment objectives and consult your own tax, financial and legal experts as warranted. READ THE COMPLETE LEGAL DISCLAIMER CONTAINED IN OUR REPORT.

Bazaarvoice Inc. | BV | June, 2012

admin — Thu, 14 Jun 2012 06:43:53 +0000

On February 23rd, Bazaarvoice (NASDAQ: BV) raised $114 million at its initial public offering by selling 9.5 million shares at $12 per share. The expected pricing range was $8.00 – $10.00 per share, and the shares ultimately closed at $16.50 on the first day of trading. At today’s price of $17.00, the company’s fully diluted enterprise value is approximately $1.1 billion.

So what does this billion dollar company do? Bazaarvoice is a provider of social commerce solutions that help clients capture, display and analyze online word-of-mouth, including consumer-generated ratings and reviews, questions and answers, stories, recommendations, photographs, videos and other content about their clients’ brands, products or services. The company’s solutions are provided via a SaaS platform to clients in a range of industries including retail, consumer products, travel and leisure, technology, financial services, healthcare and automotive industries.

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Disclaimer: This research report expresses Prescience Point LLC’s opinions. Use of the research produced by Prescience Point LLC is at your own risk. This is a short-biased report and you should assume the author of this report and its clients and/or investors hold a short position and derivatives tied to the security of Bazaarvoice, Inc. that will benefit from a decline in the price of the common stock. Following publication of the report, the author (including members, partners, affiliates, employees, and/or consultants) along with its clients and/or investors intend to continue transacting in the securities covered therein, and may be long, short, or neutral at any time hereafter regardless of the initial recommendation. The author of this report has obtained all information contained herein from sources believed to be accurate and reliable and has included references where available and practical. However, such information is presented “as is,” without warranty of any kind– whether express or implied. The author of this report makes no representation, express or implied, as to the accuracy, timeliness, or completeness of any such information or with regard to the results to be obtained from its use. Forward looking statement and projections are inherently susceptible to uncertainty and involve many risks (known and unknown) that could cause actual results to differ materially from expected results. All expressions of opinion are subject to change without notice, and the author does not undertake to update or supplement this report or any of the information contained herein. Prescience Point LLC is not a broker/dealer or financial advisor and nothing contained herein should be construed as an offer or solicitation to buy or sell any investment or security mentioned in this report. You should do your own research and due diligence before making any investment decision with respect to securities covered herein, including, but not limited to, the suitability of any transaction to your risk tolerance and investment objectives and consult your own tax, financial and legal experts as warranted. READ THE COMPLETE LEGAL DISCLAIMER CONTAINED IN OUR REPORT.

Liquidmetal Technologies Inc. | LQMT | May, 2012

admin — Wed, 02 May 2012 06:43:40 +0000

Liquidmetal (LQMT.OB) is a materials technology company that develops and commercializes products made from amorphous alloys. Their Liquidmetal® family of alloys consists of a variety of proprietary bulk alloys and composites that utilize the advantages offered by amorphous alloy technology. They design, develop and sell products and components from bulk amorphous alloys to customers in various industries. They also partner with third-party manufacturers and licensees to develop and commercialize Liquidmetal alloy products.

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Disclaimer: This research report expresses Prescience Point LLC’s opinions. Use of the research produced by Prescience Point LLC is at your own risk. This is a short-biased report and you should assume the author of this report and its clients and/or investors hold a short position and derivatives tied to the security of Liquidmetal Technologies Inc. that will benefit from a decline in the price of the common stock. Following publication of the report, the author (including members, partners, affiliates, employees, and/or consultants) along with its clients and/or investors intend to continue transacting in the securities covered therein, and may be long, short, or neutral at any time hereafter regardless of the initial recommendation. The author of this report has obtained all information contained herein from sources believed to be accurate and reliable and has included references where available and practical. However, such information is presented “as is,” without warranty of any kind– whether express or implied. The author of this report makes no representation, express or implied, as to the accuracy, timeliness, or completeness of any such information or with regard to the results to be obtained from its use. Forward looking statement and projections are inherently susceptible to uncertainty and involve many risks (known and unknown) that could cause actual results to differ materially from expected results. All expressions of opinion are subject to change without notice, and the author does not undertake to update or supplement this report or any of the information contained herein. Prescience Point LLC is not a broker/dealer or financial advisor and nothing contained herein should be construed as an offer or solicitation to buy or sell any investment or security mentioned in this report. You should do your own research and due diligence before making any investment decision with respect to securities covered herein, including, but not limited to, the suitability of any transaction to your risk tolerance and investment objectives and consult your own tax, financial and legal experts as warranted. READ THE COMPLETE LEGAL DISCLAIMER CONTAINED IN OUR REPORT.

Yongye International, Inc. | YONG | Dec, 2011

admin — Tue, 13 Dec 2011 20:26:57 +0000

In this report, we present a number of reasons why investors in Yongye International, Inc. (“YONG” or the “company”) should be especially cautious. We believe that YONG’s business activities are riddled with undisclosed related party transactions and that its revenue and profit may be overstated in its filings with the SEC. Further, we urge the NASDAQ and the SEC to look into Yongye’s largest sources of revenue in an effort to protect public shareholders and defend the integrity of US financial markets.

As a research firm rooted in the deepest soils of investigative diligence, we go to great lengths and commit substantial resources to verifying the claims companies make in their filings with the United States Securities and Exchange Commission (the “SEC”). To date, two of four of the companies we have exposed as engaging in fraudulent behavior have been halted from trading (ABAT and APWR). In addition, the SEC is pursuing a detailed investigation into APWR to determine whether it or any of its personnel violated the federal securities laws.

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Disclaimer: This research report expresses Prescience Point LLC’s opinions. Use of the research produced by Prescience Point LLC is at your own risk. This is a short-biased report and you should assume the author of this report and its clients and/or investors hold a short position and derivatives tied to the security of Yongye International, Inc. that will benefit from a decline in the price of the common stock. Following publication of the report, the author (including members, partners, affiliates, employees, and/or consultants) along with its clients and/or investors intend to continue transacting in the securities covered therein, and may be long, short, or neutral at any time hereafter regardless of the initial recommendation. The author of this report has obtained all information contained herein from sources believed to be accurate and reliable and has included references where available and practical. However, such information is presented “as is,” without warranty of any kind– whether express or implied. The author of this report makes no representation, express or implied, as to the accuracy, timeliness, or completeness of any such information or with regard to the results to be obtained from its use. Forward looking statement and projections are inherently susceptible to uncertainty and involve many risks (known and unknown) that could cause actual results to differ materially from expected results. All expressions of opinion are subject to change without notice, and the author does not undertake to update or supplement this report or any of the information contained herein. Prescience Point LLC is not a broker/dealer or financial advisor and nothing contained herein should be construed as an offer or solicitation to buy or sell any investment or security mentioned in this report. You should do your own research and due diligence before making any investment decision with respect to securities covered herein, including, but not limited to, the suitability of any transaction to your risk tolerance and investment objectives and consult your own tax, financial and legal experts as warranted. READ THE COMPLETE LEGAL DISCLAIMER CONTAINED IN OUR REPORT.