]> SA Advisory : Research Report

Fundamental Analysis I

Upon review of Chart A (page 2), investors should conclude that AMGC on an estimated fundamental basis appears cheap and undervalued based upon PE, P/CF and PSR. From Chart AA, our average PE value for our group of employment services firms equalled 21.8x and 17.7, respectively, from the current and next fiscal year. AMGC sports a PE estimate of 6.2x and 4.6x (we assume that a 15 PE was a suitable valuation for AMGC in consideration of its income and balance sheet). Based upon a PE value, AMGC could trade at $1.50 when averaging fiscal 96 and 97 together.

If we consider P/CF, most staffing companies are trading at least at 10 - 11x and AMGC sports a value of 5.6 and 4.3, respectively. If AMGC were to trade with respect to P/CF, then the share price of AMGC would equal $1.12 and $1.46, respectively.

With respect to PSR, AMGC is somewhat in line with its staffing industry peers. If you average the PSR of the larger staffing companies, a PSR value of .50 surfaces. Upon review of our estimated PSR values for fiscal 96 and 97 for AMGC of .30 and .23, respectively, one could assume if AMGC was to sport a PSR of .50, then its share price would equal an average (fiscal 96 and 97) of $1.00.

Statement of Operations
Year End June 30

		1995A		1996E		1997E		1996E
Revenues	10.3 mil		13.5 mil		17.5 mil		2.4
Net Income	450 K		674 K		876 K		150 K
  Operations)	.06A		.09		.12		.02E
Shares outstanding						7,410,271
Book Value	-.32		-.22		-.11		NA
Price/cash flow	NM		5.6x		4.3x		NA
Price to sales	.40B		.30		.23		NA
PE ratio	9.3xB		6.2x		4.6x		NM
NA = not available	NM = not meaningful
	A. This value is based upon a fully diluted shares outstanding - on a weighted average of 6.5 mil earnings from continuing operations net income/sh equalled .07. During fiscal 95 AMGC discontinued all other operations and took an extraordinary loss of an additional $1.56/sh.
	B. Price to Sale and PE values are based upon a share price of 9/16.
	C. Revenue and earnings may accelerate dramatically above and beyond management estimates due to acquisitions that are being sought after.
	D. AMGC will not pay any taxes for quite some time due to $4 mil in tax carry forward.
	E. According to management, the first quarter will also show additional losses from discontinuing operations. At this time that number is not available. Net income of estimated .02/share is from continuing operations. According to management, first quarter is always their weakest with respect to revenue and earnings.		

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