rrufff - lets see where we are regarding the valuation of the combined Sulja lumberyard and SAM.
1. You state that they are worth $48 million, or $0.08/share based on a 4 times revenue multiple.
2. I say that they are worth closer to $1.2 million, or $0.002/share based on a 0.10 revenue multiple from the most comparable transaction, the recent acquisition of SAM by SLJB.
I have provided you with the details of a comparable transaction. Please provide us with the comparable transactions that allowed you to conclude that a 4 times revenue multiple would apply here.
Here is another "reality" test.
Take a look at the period where you think the merger of the Sulja Bros. lumberyard with LFWK was completed. I believe that the stock price of LFWK was between $0.02 and $0.03/share at the time.
Now multiply the stock price by the number of shares of LFWK that were issued to Consultech for the full ownership of Sulja Bros., 200 million LFWK shares.
The result in the reality test above would be that LFWk paid about $4-$6 million for all of the Sulja Bros. lumberyard.
add in the $0.6 million value for SAM and you end up with a valuation of $4.6 to $6.6 million for the combined entity.
As you can see, this "reality" test is a long way from your $48 million valuation for the combined Sulja + SAM entity.
You continue to say that their is a substantial difference in the valuation fo a private versus public company.
In general there is a premium of 30%-40% for an individual who owns part of a private company versus part of a public company. This premium is attributed to the liquidity that a public company stockholder has in his ability to sell the stock. However, an individual that sells his company to a public company for restricted stock loses this "liquidity" premium,
and IN THIS CASE THE PREVIOUS SAM'S OWNERS RECEIVED ALL CASH THEREFORE BECAME 100% LIQUID,
therefore this premium in valuations between a private company and a public company is reduced significantly, and probably eliminated - and certainly not the 4,000% premium that you are applying in your 4 times revenues valuation.
now
lets talk about this statement by you:
Again, it's all speculation but, assuming they file AF's, and get away from being priced as a scam, then the argument is, as I suggested, that the revenue levels that YOU posted in your immediate prior post, would support a per share price of .08 a share.
If SLJB ever files the audited financials for the period ending May 31, 2006, they will show a substantial reduction in revenue from $65 million to less than $10 million and a very significant reduction in pre-tax income from $26 million to what may very well be a loss, compared to the unaudited financials that have been previously released by the company.
When the investment public reviews the audited financials and sees that SLJB had previously issued completely false and misleading financial statements do you really think that this stock will climb from the current levels to the $0.08/share stock price that you are predicting? ---- ABSOLUTELY NOT...in fact it will result in a more significant drop (percentage wise) than what occurred on November 16th - it will probably drop to about $0.001/share.
Again, and this is important - It must be understood that all of the above assumes that the Sulja Bros. Building Supplies, Ltd. operating company was formally merged into LFWK. However there doesn't appear to be any public written statements by the company that state that the merger was completed and what date it was completed. If you can find this information, please supply it as I am sure most readers of this message board would be interested in reviewing the data. |
