The following re-posted from pqlresearch re SMKT:
From: "minorkey_foundation"
Date: Thu Jul 21, 2005 12:25 am
Subject: Merger Pre-Play SMKT (OTCBB)
Good morning. Many of you that listen to IBCRadio have heard me talk about SMKT and their impending merger with Texas Prototypes (TXP). For those that have not, I'd like to share what I believe is a ground-floor opportunity with a company that may be a major technology player on the nasdaq in a year or two.
About Texas Prototypes
www.texasprototypes.com
35 Full-Time Employees
'Pre-Manufacturing' Sector (Provides service to EMS sector)
Founded in 1998 - Originally a department of Flextronics, Inc.
2002 Revenue: $900K
2003 Revenue: $1.8M
2004 Revenue: $3.6M
2005 Est Revenue $7-10M
Est Outstanding 08/05: 90,000,000
Est Float 08/05: 10,000,000
Clients: HP, Dell, Intel, Raytheon, Ericcson.. 40+ Major Name OEMs.
<SNIP>
The Merger
The merger was announced June 20th and should close somewhere very early August. On the news of the announcement, SMKT stock exploded from .008 to hitting nearly .05, which shows me just how much the market was excited that TXP is coming public. From the research I've done on TXP, they are very well respected and well-known in the technology community, primarily because they have so many 'household names' that they provide services to. In the TV coverage above, the CEO of TXP cites that they produce anything from wrist watch PDAs to supercomputers for HP. Chances are that you have a technology product in your home that TXP was involved in the manufacturing of.
The Chart
Since the merger has been announced, SMKT has found plenty of
interest around the .02 level. As I've been watching L2, I've been noticing growing interest in the .017-.019 range on the bid side, and very thin offers on the ask. The stock doesn't trade much dollar volume lately, but keep in mind that it has held firmly since the major move from subpenny land. Not many OTC:BB issues can sustain 100%+ moves on declining volume - this shows me that there is quite an intention to hang on to eventual TXP stock right from the beginning.
The Split, The Current, and Future OS
SMKT filed the terms of the merger which include a 10:1 reverse split. Do not confuse this split with typical OTC:BB/pink reverse splits - it is significantly different and is essential to this merger being consummated. TXP negotiated (touché for them) a resounding 94.5% completed interest in SMKT, which means that existing SMKT shareholders will hold only a 5% interest in the new company.
Currently, there are 50M shares outstanding of SMKT, valuing
the 'shell' a meager $1M pre-merger. Since TXP somehow has to gain control of 94.5% of the stock, SMKT will issue them several hundred million shares immediately prior to the merger, which TPX will then reverse immediately post-merger. There will then be approximately 90M outstanding and according to informal discussions with both the SMKT and TXP CEOs there will be circa 10M in the public float.
Status of the Merger
SMKT filed a proxy form soliciting a vote on the merger. This is basically the last stage of any given merger. SMKT management just needs to vote their majority stock, and we're good. I do not foresee any complications whatsoever. SMKT was essentially a shell and the SMKT CEO stands to probably make well on his interest in the new $18,000,000 company as opposed to his pre-merger $500,000 shell.
The 'Play'
TXP will begin trading sometime early August at around .20/share based on today's closing price. I believe there will be substantial demand for the stock from all sides -- the investing public, institutions, and employees/associates of TXP clients/partners that
work with them. Keep in mind that most people will see 'Texas
Prototypes' and then see 'Twenty Cents' and not think very long before picking up stock. Keep in mind TXP's so-called competitors (they will be grouped with the EMC's of the world even though they do not have the same market segment) trade in the tens of dollars and have billion dollar market caps. Coupled with the fact that this is the OTCBB world, I expect a nice MM push and would not be surprised to see an initial cap on TXP of anywhere between $50M-75M. This would be around .45-.80 post split, providing someone investing
in SMKT at the .02 level more than 100% return.
I believe as next week approaches, the stock will try to rally as the excitement builds. I believe this has begun to happen already this week, with at one point 6 MMs bidding .019 before NITE and PERT raised their bids to .02. I also noticed GNET (anonymous trading) bidding shares late last week.
Texas Prototypes may very well be a future NASDAQ bellwether with humble beginnings on the OTCBB. I urge all members to thoroughly research their business. The CEO was nominated by EARNEST AND YOUNG as a candidate for Entrepeneur of the Year, and I have every reason to believe that there will be significant interest to invest in the newly public entity once it emerges.
My position: I currently hold 100,000 shares of SMKT and am bidding an additional 50,000 shares @ .019. I have purchased all my shares in the open market at market prices.
Conflicts of Interest: I have not been compensated by SMKT, TXP, or any third/affiliated party for coverage of SMKT.
Regards and Best of Luck,
Tim / PQL Research
Very interesting read. I'll be loading on Monday.
rrm |
