Just some very quick back-of-napkin style notes on a micro-cap (Leading Brands Inc.) with a potential catalyst for value realization.
Leading Brands Inc. (Nasdaq: LBIX) Cash: $692.2K AR: $322.7K (discounted by 30%) Inv: $474.8K (discounted by 50%) Total current assets: $1.48 Mil.
Total liabilities: $1.63 Mil. (accounts payable/accrued liabilities, co. is completely debt free).
PP&E: $8.27 Mil. ($16.27 Mil. of plant and buildings at cost, not including $433K of land). Book value: $11.68 Mil. Market cap: $5.5 Mil. (Nov. 22, 2016) - Net income consistently under-reported due to aggressive depreciation charges on PP&E. - Number of shares outstanding lower year over year due to company buyback. - Cash flow from operating activities $345K for first six months of FY 2016. - Bob Gaglardi (Chairman Northland Properties Corp. and one of wealthiest people in Canada) on co. board of directors. Also largest owner with approx. 14.66% of outstanding shares as of last management information circular - May 11, 2016. - Co. announced that it has entered into a binding agreement to sell its 50,000 sq. ft. (10 mil. case per annum capacity) Edmonton bottling plant land and building on Oct. 31st. The transaction is for all cash on closing and is scheduled to complete on February 1, 2017. No other terms were disclosed. - Loopnet comps as of Nov. 2016 show a 6,780 sq. ft. Edmonton warehouse for sale for approx. $2.55 Mil. and another industrial warehouse of 15,400 sq. ft. available for $3.9 Mil. If one multiplies these, median price for a 50,000 sq. ft. industrial facility in city of Edmonton should fall between $11-13 Mil. (or around the co.'s current book value). I would estimate a 30% probability of the property transaction falling through with a 25% downside in the market price of the shares if this does occur. On the other hand, as my notes show if it is successful the upside could be as high as 80-90% with a 70% of the aforementioned transaction going through and this value being realized in the next quarter.