Dk Sinopharma Inc. (GREY:DKSP)

Item 1.01  Entry Into a Material Definitive Agreement

Item 2.03 Creation of a Direct Financial Obligation

Item 3.02 Unregistered Sales of Equity Securities

Effective June 3, 2016, the Registrant issued a $65,000 Promissory Note ("the Note") to Tangiers Global, LLC ("Tangiers", or “the Lender”). The consideration has been received by the Registrant.

The Note has a maturity date of twelve (12) months from the Effective Date. The Note shall accrue interest at a rate of 8.0% per annum. Unless repaid in cash, the Lender shall have the right to convert all or part of the outstanding and unpaid Principal Sum and accrued interest into shares of fully paid and non-assessable shares of common stock of the Registrant. The Conversion Price shall be $0.13 per share. In addition, 427,777 5-year warrants, for Consideration received shall be issued, at an exercise price of $0.14. There is no penalty for prepayment, with prepayment subject to the consent of the Lender.

The proceeds of this Note shall be used for general working capital.

The Note referred to above (and the shares of common stock underlying them) is exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.

The above described executed Note is attached hereto and incorporated by reference as Exhibit 10.1.

VGambling Inc.

Statement of Expenses

(Unaudited)

		Three Months Ended March 31, 2016		Three Months Ended March 31, 2015		Nine Months Ended March 31, 2016		Nine Months Ended March 31, 2015
Revenue	$	-	$	-	$	-	$	-
Directors Compensation		50,000		-		100,000		-
General and administrative		54,266		61,257		139,987		184,380
Professional fees		4,300		16,243		28,485		43,972
Total Operating Expenses		108,566		77,500		268,472		228,352
Non-operating gain (loss)
Foreign exchange gain (loss)		1,315		-		971		-
Net Loss	$	(109,881)	$	(77,500)	$	(269,443)	$	(228,352)
Net Loss Per Share – Basic and Diluted	$	(0.00)	$	(0.00)	$	(0.00)	$	(0.00)
Weighted Average Shares Outstanding		68,860,739		66,620,057		68,801,368		65,570,991

VGambling Inc.

Consolidated Statement of Operations

(Unaudited)

		Three Months Ended September 30, 2015		Three Months Ended September 30, 2014
Revenue	$	-	$	-
Directors Compensation		25,000		15,000
General and administrative		48,892		54,972
Professional fees		9,193		4,890
Total Operating Expenses		83,085		74,862
Non-operating gain (loss)
Interest expense		-		-
Foreign exchange gain (loss)		(540)		-
Net Loss	$	(83,625)	$	(74,862)
Net Loss Per Share – Basic and Diluted	$	(0.00)	$	(0.00)
Weighted Average Shares Outstanding		68,731,842		63,984,554
See accompanying notes to consolidated financial statements

VGambling Inc. (formerly DK Sinopharma, Inc.) Consolidated Statement of Operations
		Year Ended June 30, 2015		Year Ended June 30, 2014
Revenue	$	-	$	-
Directors Compensation
General and administrative		129,746		66,893
Professional fees		4,716		-
Total Operating Expenses		134,462		66,893
Non-operating gain (loss)
Interest expense		(3,292)		(1,470)
Foreign exchange gain (loss)		5,402		(553)
Net Loss	$	(302,150)	$	(134,462)
Net Loss Per Share – Basic and Diluted	$	(0.00)	$	(0.00)
Weighted Average Shares Outstanding		63,300,001		34,715,891

Management Discussion and Analysis

If VGambling is unsuccessful in raising the additional proceeds through a private placement offering it will then have to seek additional funds through debt financing, which would be highly difficult for a new development stage company to secure. Therefore, the company is highly dependent upon the success of the anticipated private placement offering and failure thereof would result in VGambling having to seek capital from other sources such as debt financing, which may not even be available to the company. However, if such financing were available, because VGambling is a development stage company with no operations to date, it would likely have to pay additional costs associated with high risk loans and be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such debt financing and determine whether the business could sustain operations and growth and manage the debt load. If VGambling cannot raise additional proceeds via a private placement of its common stock or secure debt financing it would be required to cease business operations. As a result, investors in VGambling common stock would lose all of their investment.

The development and marketing of our products will begin over the next 12 months.

We did not generate any revenue during the fiscal year ended June 30, 2015. As of the fiscal year ended June 30, 2015 we had $100,865 of cash on hand in the bank. We incurred operating expenses in the amount of $304,260in the fiscal year ended June 30, 2015. These operating expenses were comprised of professional fees and office and general expenses. Since inception we have incurred operating expenses of $598,573.

VGambling has no current plans, preliminary or otherwise, to merge with any other entity.

VGambling Inc. (formerly DK Sinopharma, Inc.) Statement of Expenses (Unaudited)
		Three Months Ended March 31, 2015		Three Months Ended March 31, 2014		Nine Months Ended March 31, 2015		Nine Months Ended March 31, 2014
Revenue	$	-	$	-	$	-	$	-
General and administrative		61,257		24,452		184,380		60,756
Professional fees		16,243		-		43,972		-
Total Operating Expenses		77,500		24,452		228,352		60,756
Net Loss	$	(77,500)	$	(24,452)	$	(228,352)	$	(60,756)
Net Loss Per Share – Basic and Diluted	$	(0.00)	$	(0.00)	$	(0.00)	$	(0.00)
Weighted Average Shares Outstanding		66,620,057		63,300,001		65,570,991		63,300,001

Management Discussion and Analysis

Operating Revenues

From July 22, 2008 (date of inception) to March 31, 2015, the Company did not record any revenues.

Operating Expenses and Net Loss

Operating expenses for the nine months ended March 31, 2015 was $228,352 compared to $60,756 for the nine months ended March 31, 2014.   The Company incurred general and administrative expenses of $184,380, an increase of $123,624 primarily in salaries and consulting fees, and an increase of $43,972 in professional fees relating to increased legal and audit costs.

Net loss for the nine months ended March 31, 2015 was $228,352 compared with a net loss of $60,756 for the nine months ended March 31, 2014. 

VGambling Inc. (formerly DK Sinopharma, Inc.) Statement of Expenses (Unaudited)
		Three Months Ended December 31, 2014		Three Months Ended December 31, 2013		Six Months Ended December 31, 2014		Six Months Ended December 31, 2013
Revenue	$	-	$	-	$	-	$	-
General and administrative		53,151		18,627		123,123		36,304
Professional fees		22,839		-		27,729		-
Total Operating Expenses		75,990		18,627		150,852		36,304
Net Loss	$	(75,990)	$	(18,627)	$	(150,852)	$	(36,304)
Net Loss Per Share – Basic and Diluted	$	(0.00)	$	(0.00)	$	(0.00)	$	(0.00)
Weighted Average Shares Outstanding		66,134,429		63,300,001		65,074,878		63,300,001

Management Discussion and Analysis

Plan of Operation

The Company has not yet generated any revenue from its operations. As of December 31, 2014 we had $18,901 of cash on hand. We incurred operating expenses in the amount of $139,352 in the six months ended December 31, 2014. These operating expenses were comprised of professional fees and office and general expenses. From the inception date to December 31, 2014, we incurred operation expense in amount of $435,775.

Our current cash holdings will not satisfy our liquidity requirements and we will require additional financing to pursue our planned business activities. We are in the process of seeking equity financing to fund our operations over the next 12 months. As of December 31, 2014 we have raised $435,150 from the sales of our common stock.

Management believes that if subsequent private placements are successful, we will generate sales revenue within the following twelve months thereof. However, additional equity financing may not be available to us on acceptable terms or at all, and thus we could fail to satisfy our future cash requirements.

If VGambling is unsuccessful in raising the additional proceeds through a private placement offering it will then have to seek additional funds through debt financing, which would be very difficult for a new development stage company to secure. Therefore, the company is highly dependent upon the success of a private placement offering. However, if debt financing were available, because VGambling is a development stage company with no operations to date, it would likely have to pay additional costs associated with high risk loans and be subject to an above market interest rate. If VGambling cannot raise additional proceeds via a private placement

of its common stock or secure debt financing it would be required to cease business operations. As a result, investors in VGambling’s common stock would lose all of their investment.

Within 12 months after we are able to raise the necessary funds (approximately $500,000), we intend to complete the design, development and testing of our online wagering systems. Our planned operations during this period involve two phases:

·In the first phase, we intend to complete the development, testing and launching of our real money wagering website. We intend to develop and launch our online wagering systems within 6 months after we are able to raise the necessary funds.

·The second phase, contingent upon a favourable outcome of the first phase, will be devoted to our Marketing and Sales efforts. We intend to develop and implement our affiliate marketing program and to commence our online marketing campaign. We expect our marketing efforts to commence within 3 months after the first phase is completed.

We currently have one full time and three part time employees and management does not plan to hire additional employees at this time. We do not expect the purchase or sale of any significant equipment and has no current material commitments.

VGambling Inc. (formerly DK Sinopharma, Inc.) Statement of Expenses (Unaudited)
		Three Months Ended September 30, 2014		Three Months Ended September 30, 2013
Revenue	$	-	$	-
General and administrative		69,972		17,677
Professional fees		4,890		-
Total Operating Expenses		74,862		17,677
Net Loss	$	(74,862)	$	(17,677)
Net Loss Per Share – Basic and Diluted	$	(0.00)	$	(0.00)
Weighted Average Shares Outstanding		63,984,554		63,300,001

Management Discussion and Analysis

Plan of Operation

The Company has not yet generated any revenue from its operations. As of September 30, 2014 we had $54,057 of cash on hand. We incurred operating expenses in the amount of $74,862 in the three months ended September 30, 2014. These operating expenses were comprised of professional fees and office and general expenses. From the inception date to September 30, 2014, we incurred operation expense in amount of $371,285.

Our current cash holdings will not satisfy our liquidity requirements and we will require additional financing to pursue our planned business activities. We are in the process of seeking equity financing to fund our operations over the next 12 months. As of September 30, 2014 we have raised $435,150 from the sales of our common stock.

Management believes that if subsequent private placements are successful, we will generate sales revenue by September 2015. However, additional equity financing may not be available to us on acceptable terms or at all, and thus we could fail to satisfy our future cash requirements.

If VGambling is unsuccessful in raising the additional proceeds through a private placement offering it will then have to seek additional funds through debt financing, which would be very difficult for a new development stage company to secure. Therefore, the company is highly dependent upon the success of a private placement offering. However, if debt financing were available, because VGambling is a development stage company with no operations to date, it would likely have to pay additional costs associated with high risk loans and be subject to an above market interest rate. If VGambling cannot raise additional proceeds via a private placement of its common

stock or secure debt financing it would be required to cease business operations. As a result, investors in VGambling’s common stock would lose all of their investment.

Within 12 months after we are able to raise the necessary funds (approximately $500,000), we intend to complete the design, development and testing of our online wagering systems. Our planned operations during this period involve two phases:

·In the first phase, we intend to complete the development, testing and launching of our real money wagering website. We intend to develop and launch our online wagering systems within 6 (paragraph above says 12 months) months after we are able to raise the necessary funds.

·The second phase, contingent upon a favourable outcome of the first phase, will be devoted to our Marketing and Sales efforts. We intend to develop and implement our affiliate marketing program and to commence our online marketing campaign. We expect our marketing efforts to commence within 3 months after the first phase is completed.

We currently have one full time and two part time employees and management does not plan to hire additional employees at this time. We do not expect the purchase or sale of any significant equipment and we have no current material capital commitments.

VGambling Inc. (formerly DK Sinopharma, Inc.) Consolidated Statement of Operations
		Year Ended June 30, 2014		Year Ended June 30, 2013
Revenue	$	-	$	-
General and administrative		129,746		66,893
Professional fees		4,716		-
Total Operating Expenses		134,462		66,893
Net Loss	$	(134,462)	$	(66,893)
Net Loss Per Share – Basic and Diluted	$	(0.00)	$	(0.00)
Weighted Average Shares Outstanding		63,300,001		34,715,891

Management Discussion and Analysis

We did not generate any revenue during the fiscal year ended June 30, 2014. As of the fiscal year ended June 30, 2014 we had $8,449 of cash on hand in the bank. We incurred operating expenses in the amount of $134,462 in the fiscal year ended June 30, 2014. These operating expenses were comprised of professional fees and office and general expenses. Since inception we have incurred operating expenses of $296,432.

We do not have any plans to merge with any other entity.

Item 4.01  Change in Registrant’s Certifying Accountant.

As previously announced in our Current Report on Form 8-K dated April 8, 2011. On April 8, 2011, our company was notified that its principal independent accountant, MaloneBailey LLP (“MaloneBailey”), had resigned its engagement with our company, effective immediately.

The board of directors engaged MaloneBailey on December 20, 2010 and MaloneBailey did not report on our company’s financial statements during our company’s fiscal years ended December 31, 2009 and 2008. On April 1, 2011, MaloneBailey provided an electronic communication to our company, advising that it had encountered issues and concerns during the audit, specifically irregularities in the books and records of our company, that, in MaloneBailey’s view, required additional information and procedures, including the initiation of an independent investigation, in order to verify the accuracy of the books and records recorded on our company’s financial statements and records for the year ended December 31, 2010. On April 8, 2011, our company received a notice of resignation from MaloneBailey indicating that it had resigned its engagement with our company, effective immediately. In its letter of resignation, MaloneBailey based its resignation on what it believed are accounting irregularities noted during the audit of our company’s financial statements for the fiscal year ended December 31, 2010. The issues encountered during the audit of our company’s financial statements for the fiscal year ended December 31, 2010, in MaloneBailey’s view, included the following: (1) issues related to the authenticity of a set of bank statements and a loss of confidence in bank confirmation procedures; (2) issues concerning the validity and existence of a material revenue transaction with a certain customer and (3) issues concerning that management tampered with the process of auditors’ independent confirmation of bank statements and revenue. Our company believes that it was taking appropriate steps to respond to MaloneBailey’s recommendations for further investigation prior to the resignation of MaloneBailey, but MaloneBailey did not agree with our company’s assertion in this regard.

Other than as set forth above, from December 20, 2010 when Malone Bailey was engaged, through MaloneBailey’s resignation on April 8, 2011, there were (1) no disagreements with MaloneBailey on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of MaloneBailey would have caused MaloneBailey to make reference to the subject matter of the disagreements in connection with its reports, and (2) no events of the type listed in paragraphs (A) through (D) of Item 304(a)(1)(v) of Regulation S-K.

Our company furnished MaloneBailey with a copy of this disclosure on April 8, 2011, providing it with the opportunity to furnish our company with a letter addressed to the SEC stating whether it agrees with the statements made by our company herein in response to Item 304(a) of Regulation S-K and, if not, stating the respect in which it does not agree. A letter from Malone Bailey, dated April 8, 2011 incorporated by reference, is filed as Exhibit 16.1 to our Current Report on Form 8-K filed on April 12, 2011.

On October 8, 2014, our board of directors approved and authorized the engagement of PLS CPA, A Professional Corporation (“PLS CPA”) as our independent public accountants.

Prior to engaging PLS CPA on October 8, 2014, PLS CPA did not provide our company with either written or oral advice that was an important factor considered by our company in reaching a decision to change our independent registered public accounting firm from MaloneBailey, to PLS CPA.

 

Item 1.01 Entry Into A Material Definitive Agreement.

On May 20, 2013 we consummated a reverse acquisition pursuant to a Share Exchange Agreement (the “Share Exchange Agreement”) entered into by and among DK Sinopharma, Shawn Erickson (the “Company Controlling Shareholder”), H&H Arizona, Inc., an Antigua corporation (“H&H Arizona”), Next Generation Holdings Trust, a Nevis trust and the Shareholder of H&H Arizona, Inc. (the “H&H Arizona Shareholder”).

The close of the reverse acquisition (the "Closing") took place on May 20, 2013 (the “Closing Date”). On the Closing Date, pursuant to the terms of the Share Exchange Agreement, we acquired all of the outstanding capital stock and ownership interests of H&H Arizona (the “Interests”) from the H&H Arizona Shareholder. In exchange for the Interests, we issued to the H&H Arizona Shareholder 50,000,000 shares of our common stock.

As described further below, H&H Arizona is a next-generation Internet gambling company.

H&H Arizona, our operating entity, was incorporated in Antigua and Barbuda on February 8, 2011 and is a development stage company that has not generated any revenues since inception.

As of the Closing Date we had 63,300,001 shares issued and outstanding.

Item 2.01 Completion of Acquisition or Disposition of Assets.

CLOSING OF EXCHANGE AGREEMENT

As described in Item 1.01 above, on May 20, 2013, pursuant to the Share Exchange Agreement, we acquired all of the outstanding capital stock and ownership interests of H&H Arizona from the H&H Arizona Shareholder, and in exchange, we issued to the H&H Shareholder 50,000,000 shares, or approximately 79%, of our common stock. As a result of the consummation of the Exchange Agreement, on the Closing Date, H&H Arizona became our wholly-owned subsidiary and our operating entity.

Pursuant to the Share Exchange Agreement, the Company is also obligated to use its best commercially reasonable efforts to effect a corporate name change after Closing.

In connection with the closing of the Share Exchange Agreement, Shawn Erickson resigned as director, President Secretary and Treasurer and Grant Johnson was appointed as director, President Secretary and Treasurer of our company.

On April 8, 2011, DK Sinopharma, Inc. was notified that its principal independent accountant, MaloneBailey LLP (“MaloneBailey”), had resigned its engagement with the Company, effective immediately.

The board of directors engaged MaloneBailey on December 20, 2010 and MaloneBailey did not report on the Company’s financial statements during the Company’s two most recent fiscal years ended December 31, 2009 and 2008. On April 1, 2011, MaloneBailey provided an electronic communication to the Company, advising that it had encountered issues and concerns during the audit, specifically irregularities in the books and records of the Company, that, in MaloneBailey’s view, required additional information and procedures, including the initiation of an independent investigation, in order to verify the accuracy of the books and records recorded on the Company’s financial statements and records for the year ended December 31, 2010.

On April 8, 2011, the Company received a notice of resignation from MaloneBailey indicating that it had resigned its engagement with the Company, effective immediately. In its letter of resignation, MaloneBailey based its resignation on what it believes are accounting irregularities noted during the audit of the Company’s financial statements for the fiscal year ended December 31, 2010. The issues encountered during the audit of the Company’s financial statements for the fiscal year ended December 31, 2010, in MaloneBailey’s view, included the following:

(1) issues related to the authenticity of a set of bank statements and a loss of confidence in bank confirmation procedures;

(2) issues concerning the validity and existence of a material revenue transaction with a certain customer and

(3) issues concerning that management tampered with the process of auditors’ independent confirmation of bank statements and revenue.

The Company believes that it was taking appropriate steps to respond to MaloneBailey’s recommendations for further investigation prior to the resignation of MaloneBailey, but MaloneBailey does not agree with the Company’s assertion in this regard.

On September 15, 2010, DK Sinopharma, Inc. made a presentation to investors at the Rodman & Renshaw Annual Global Investment Conference.

As of December 31, 2009, we had cash and cash equivalents of approximately $1,058,157. We believe our existing cash and cash equivalents will be sufficient to maintain our operations at present level for at least the next twelve months. We plan to review acquisition opportunities as a strategy for further growth.

Dong Ke Pharmaceutical, Inc. became a public company on May 10, 2010 via a reverse merger.

Company Snapshot:

Dong Ke Pharmaceutical is in the business of manufacturing, marketing and sales of pharmaceuticals in China.

Industry Snapshot:

• The pharmaceutical industry within China is intensely competitive and is characterized by rapid and significant technological progress, and our operating environment is increasingly competitive. Our competitors include large pharmaceutical companies, including Xi’an Jingxi Shuanghe Pharmaceuticals Co., Ltd., that currently engage in or may engage in efforts related to the discovery and development of new pharmaceuticals.
  
• Western pharmaceutical products have more than half of the market share of medications used in China to treat similar medical conditions that our pharmaceutical products treat, with Chinese pharmaceutical products making up the next largest part of the market. Western medicine is all made from chemosynthesis products, while Chinese medicine is made from botanical, animal and mineral components.
  
• With approximately one-fifth of the world’s population and a fast-growing gross domestic product, China represents a significant potential market for the pharmaceutical industry.

Post Merger Share Calculation:

• 10,255,000: Pre reverse merger outstanding shares  
• 10,015,000: Shares cancelled as part of the Share Exchange
• 1,941,818: Newly issued shares of Common Stock
• 145,454: Shares from warrants associated with consulting agreements at a $13.75 exercise price adjusted for any forward or reverse splits.

GeoTeam® best effort calculation of total post reverse merger shares assuming full conversions:  2,327,272

Note: Pursuant to the Share Exchange Agreement, the Company is also obligated to use its best commercially reasonable efforts to effect a 1 for 13.75 forward share split within 90 days after Closing.

Financial Snapshot:

• Revenue for the year ended December 31, 2009 was $18,943,917, an increase of 6,884,480 or approximately 57% as compared to revenue of $12,059,437 for year ended December 31, 2008.
  
• For the year ended December 31, 2009 as compared to the year ended December 31, 2008 net income increased approximately 98% from $2,437,927 to $4,827,608.

In line with the GeoTeam's constant search for clues related to significant company events, we have uncovered a development that is boosting MRM's stock  shares.  Yesterday, the company released an 8-K insinuating that the Merrimac is on the sell block.  We will monitor this story as it develops.

GeoNuggets® - Quick Check List Highlighting Undiscovered Opportunities

Merrimac Industries Inc. (NYSE Amex:MRM)
Added to Geo Bargain list on June 30, 2009. ($9.00)

Company Description: Merrimac Industries, Inc. is a leader in the design and manufacture of RF Microwave signal processing components, subsystem assemblies, and Multi-Mix(R) micro-multifunction modules (MMFM(R)), for the worldwide Defense, Satellite Communications (Satcom), Commercial Wireless and Homeland Security market segments.

Data Ended 8/27/09 ^a,b,c

• Price = $8.05
• Trailing GAAP EPS = $0.89
• Geo Calculated Fully-Taxed Trailing Non-GAAP EPS = $0.68
• Fully-Taxed EPS Estimate = $1.08
• P/E based on Fully-Taxed Trailing Non-GAAP EPS = 11.83
• Geo Calculated PEG Ratio: $0.59
  
  Reasons for Optimism

1. MRM meets 8 out of 10 GeoBargain® Requirements.
   
   

   	Requirement	Comments
   	Recent 52-week High(generally within 3 months)	Must Reach $13.38
   	30% EPS Growth Rate	2nd Qtr. 2009 EPS increased 425.0% Full year 2009 Geo estimates implies a Non-GAAP EPS growth rate of 391.0%
   	10% Revenue Growth	2nd Qtr. 2009 revenue increased 8.0%. Full year 2009 Geo estimate implies a revenue growth rate of 20.7%
   	Strong Balance Sheet	As of 2nd Qtr 2009
   yes	Positive Operating Cash Flow	$612 K as of 6 Mo.. 2009
   yes	L-T Debt to Equity Ratio less than 20%	14.37%
   yes	Current Ratio is at least 2:1	4.48:1
   	Tax-Adjusted Return on Equity is at least 15%	11.3%
   	Minimum Pre-tax Non-GAAP Operating Margins of 8%	11.9% as of 2nd Qtr. 2009
   	Preferably Under 50 Million Shares	3.0 Million shares as of 2nd Qtr. 2009
   	High Insider Ownership (generally greater than 15%)	23.9%
   	Limited Institutional Ownership (generally less than 20%)	>20%
   	P/E Divided by Growth Rate (PEG Ratio) is Less Than 1.	0.59

   
   
2. Restructuring efforts are paying off; In 1997 under new management direction, MRM embarked on an ongoing mission to refocus the company's efforts.
   
   
   • Reduced target customer count from 1000 to approximately 100. This made it easier for Merrimac to track and focus on its strongest customers, while giving them added attention.
   • Visibility - Working closely with a more defined list of companies allows Merrimac to better assess the future project pipelines of its customers and efficiently deploy resources.
   • Made a strategic decision to reduce its reliance on speculative commercial projects.
   • Focus on military and Satellite customers who are increasingly seeing the benefits that multi mix technology offers.
     
     
3. Customer Loyalty.
   
   
   • Merrimac works closely with its customers to meet product goals. This can happen at several steps in the development process including RD and manufacturing.
   • Once a company has found a reliable "partner" such as Merrimac, it would rather stay with the Company than have to restart the development process.
   • Once Merrimac has successfully worked with a division of a particular client, attracting other inter-company divisions becomes a natural occurrence.
     
     
4. The Company is the pioneer of Multi-Mix(R) technology allowing for a reduction in size and weight of subassemblies while maintaining reliability and performance.
   
   
   • Offers greater flexibility than old technology.
   • Performance efficiencies.
   • Lighter weight .
   • Ultimately saves companies money.
   
   Note: The GeoTeam encourages investors to familiarize themselves with Merrimac 's multi-mix technology in order to fully understand its numerous growth opportunities.
   
   
5. Positive outlook
   
   
   • Positive comments in 2nd quarter 2009 conference call.
     
     "We are in pricing negotiations on large pieces of business that we expect to be booking in Q3 and Q4 respectively. If this timing holds up in the third quarter it will set a new quarterly booking record."
     
     "For the year 2009 we expect that the book to bill ratio will exceed 1-to-1. We are pleased with our six months 2009 operating results. We are clearly executing our new strategy well, as reflected in our financial highlights. As mentioned earlier, we anticipate our Q3 bookings will be a record and we also anticipate a strong Q3 operating performance."
     
     
   • Multi-Mix technology is still in its infancy and just beginning to gain industry wide awareness.

Potential Valuation Scenarios if the company can achieve its EPS growth goals

Short-Term Potential value based on fully taxed adjusted trailing EPS

P/E 25 * $0.68 = $17.00
P/E 20 * $0.68 = $13.60

Short-term Potential Value based on GeoTeam Fully-Taxed EPS Estimate

P/E 15 * $1.08 = $16.20

^a MRM is not paying a full U.S. tax rate. Therefore, all EPS numbers have been adjusted by the GeoTeam to reflect a U.S. tax rate of 36%
^b Non-GAAP EPS Figures exclude certain non-operating gains and losses as well as certain non-cash items. Non-GAAP information should not be viewed in isolation or as a substitute for reported, or GAAP information. The GeoTeam® Non-GAAP figures may, from time to time, differ from company supplied figures.
^c Based on GeoTeam® implied 2009 revenue growth rate of 20%, as previously stated.

These scenarios are not intended to be investment advice, but are scenarios based on some commonly used investment guidelines. They are provided to aid investors in making their own investment decisions.

Source: GeoInvesting.com

The GeoTeam® is delving further into items in Merrimac 's filings.  The net result may result in an $0.08 increase in our trailing non-GAAP earnings per share assumption highlighted in our potential valuation scenarios.  For the meantime we will remain conservative in our assumptions.

The GeoTeam® participated in Merrimac's 2009 second quarter conference call.   The Company reported solid financial results.

Sales increased 8.0% to $8.1 million
GAAP EPS from continuing operations increased to$0.23 from $0.01
Geo calculated Fully-taxed adjusted non-GAAP EPS increased to $0.21 from $0.04

The GeoTeam® had two minor concerns going into the call

1.  Why the slight sequential decease in 2009 GAAP EPS from the first quarter?

Answer Per Conference Call:  "We had certain non-recurring charges in the second quarter that will probably bring us down to a running rate on SG&A about $180,000 (close to $0.06 a share)." 

2.  Although commentary in the press release was positive, the following comment leaves the door open to a wide degree of interpretation:

First half of fiscal year 2009 was very strong and with new orders meeting or exceeding our internal targets.  We are well positioned to finish the second half of 2009 with profitable results."

A more specific outlook would have been ideal

Answer Per Conference Call:  We are in pricing negotiations on large pieces of business that we expect to be booking in Q3 and Q4 respectively. If this timing holds up in the third quarter it will set a new quarterly booking record.  For the year 2009 we expect that the book to bill ratio will exceed 1-to-1.

We are pleased with our six months 2009 operating results. We are clearly executing our new strategy well, as reflected in our financial highlights. As mentioned earlier, we anticipate our Q3 bookings will be a record and we also anticipate a strong Q3 operating performance.

Investors may start to take notice of Merimac's stock once this commentary filters through to the masses.