PipeHawk, hidden but no champion

PipeHawk claims to be:

...the global market leader in ground probing radar technology

Which as phrases go, is the investment equivalent of waving a freshly baked treacle tart under a hungry boy's nose.

But it's tiny, turnover last year was just over £3m, only marginally profitable, and less than half of its business uses Ground Probing Radar to survey for utility and construction companies. The other half, QM, supplies automated production lines.

Currently PipeHawk is reliant on loans from directors, and the offer of working capital support for a year from 19 October from chairman Gordon Watt. The directors have deferred a total of over half a million pounds in fees to ease its finances.

Global market leaders are supposed to dominate their niches from which they can earn high levels of profitability. PipeHawk's niche must be truly diminutive, and unusually difficult to mine, if its claim to market leadership is not hyperbole. 

Management is optimistic, particularly about QM where it expects turnover to double because of new projects. Chairman Gordon Watt says:

In the last six months of the period under review it appears that the results for the business are beginning to reflect the efforts put in by management and staff...

But PipeHawk and QM are well established businesses, and if PipeHawk is truly a global market leader in a market worth leading in, it oughtn't to be such a small company, in what looks like a recovery situation. 

It's directors might know better, and believe it has the potential to be a leader, but that's not the same as being one. Bearing in mind PipeHawk's patchy record of profitability does not provide much of a benchmark for value, do its assets?

Most of them are intangible in decreasing order of balance sheet value, the costs of developing its radar technology, goodwill from the purchase of QM in 2006, and a small joint venture. The tangible assets are swamped by liabilities: