The stock of Enablence Technologies Inc. (CVE:ENA) began losing ground on the Canadian market. At least, it is what the last session indicated. This occurs soon after the corporation presented to the public its audited annual financial statements.

Ebablence_Chart_-_25_Oct_2011.pngObviously, they did not impress traders in a very favorable way. The shares made a rather feeble and far from impressive start of the week. This Monday, ENA dropped 17.65% down on above the average trading volume. The stock closed at $0.07, which is not far from the 52-week low of $0.045 set only six weeks ago.

We might define $0.07 as an important psychological price-level. The previous time when ENA slipped below $0.07 the shares continued their decline and fell to the fore-mentioned yearly-low.

This means, it is of great significance how the stock will behave in the next several days. Looking at the recently filed financials, we may see that Enablence seems overvalued with its present market value of about $33M. At the same time, the net tangible worth of the business is roughly $3.5M, or almost ten times lower.

Ebablence_Logo.pngThis overvaluation suggests the shares find no support for a significant climb in the future. However, the financial statements also show several favorable trends; this, perhaps, might assist the company’s stock as well.

The positive figures in the financial reports were already outlined by the company in a press release from last Thursday. Here, we shall name a few of these once again for those who are not acquainted:

  • A solid cash position of $10M in the end of this June ;
  • Enablence completed successfully the integration of its polymer-based production operations, which is expected to generate $1M “in cost savings per year”, as the company claims in the announcement.

We shall end the article with the negative facts related to Enablence fundamentals. There are quite a few of them too, and they should not be neglected:

  • Despite the rising revenue, the corporation recorded a net loss of $102M for the 14 months ended June 30, 2011. A large part of it derives from discontinued operations. You can compare this figure with the net loss for the twelve months ended April 30, 2010, which is $32.5M;
  • The operating loss for the 14 months ended June 30, 2011 amounts to $10.5M;
  • The weighted average number of outstanding shares has risen significantly which, in turn, increases the risk of stock dilution.
  • Enablence has huge debts. As at the end of this June, the company had liabilities in the form of notes payable to the amount of $20.5M. The current portion of these notes payable was more than $12.3M. All in all, the corporation had total liabilities surpassing $53.4M.