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Microcap & Penny Stocks : STRATEGIC SOLUT (Nasdaq:SSGI)
SSGI 0.0250-37.5%Nov 1 5:00 PM EST
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To: ComSolut who wrote (34)8/4/1998 2:23:00 PM
From: ComSolut   of 388
 
GUESSWORK from trevor1960 Yahoo Board -

An attempt at valuation with what is essentially an IPO. I believe this is what Dunonathn would call a reverse merger in which the previous shareholders of SSGI now become the minority shareholder of SSGI which is a combined company of 1/8 SSGI and 7/8 a yet to be named private company (Ratio based approx. on revenues).

The merged company will have revenues of approx. 40 million.

We know that the shares outstanding will grow - "the company" stockholders will receive stock at some ratio that will give those stockholders a majority. Lets assume 2/3rds. Currently approx. 2 million shares are outstanding so 4 million will be issued (hypothetically) giving a total of 6 million shares.

Net Profits are the big question. Lets assume a range (EVEN ASSUMING PROFITS MAY BE RISKY):

5% 2 million
10% 4 million
15% 6 million

EPS at 6 million shares:

2 million equals .33/share
4 million equals .66/share
6 million equals 1.00/share

To extrapolate a share price we need a PE ratio. Researching similar companies in the same industry yielded PE's from 12 to 32.

.33/share .66/share 1.00/share

PE 12 3.96 7.92 12.00
PE 18 5.94 11.88 18.00
PE 24 7.92 15.84 24.00
PE 32 10.56 21.12 32.00

IN SUMMARY:

What assumptions were used -
1) Revenues of 40 million per press release fairly safe
2) That there will be profits purely hypothetical
3) Number of shares issues purely hypothetical
4) PE ratio from like companies

Comments welcome!
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