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Microcap & Penny Stocks : USA Technologies

USAT 10.56

0.0%

Oct 31 5:00 PM EST

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To: ccportfolio who wrote (222)	8/19/1998 6:54:00 PM
From: slvfx	Read Replies (2) of 359

Lynndal, I appreciate your thoughts and discussion on the idea of a reverse split. Please consider the following and let me know how you feel and also if I am making the proper considerations as to my facts. Keep in mind I want the company to be extremely successful and as a result the shareholders. I am Looking at the longer term with a short time payoff. If what I understand is true about the valuation of stock, you multiply earnings per share times 20. Is that correct? Taking out consideration for growth. If our earnings on the stock are .10 that should give a price of $2.00 per share.(Remember now that's a 6.5 million profit. George said at the meeting he felt he needed 12 million in sales to break even. So at the very minimum assuming a 30% gross profit on sales, They would have to generate an additional 21 million in sales for a total of 36 million - using the same manpower which is exciting because it could be done with the I.B.M. tie in). Your 25,000 share lot would have a value of $50,000. If we had had a reverse split of 25 for one with the same profit you would have a 20x value of $52.00. Your 1000 shares would be equal to $52,000. Now presently we have 3000 shareholders. Divide that into the 65 million and you have 21,666 available per person for demand. Now at the 2.6 million stock level there would only be 867 shares available for sale. That's going to drive the price through the roof which will allow for future splits. Plus its going to happen faster than trying to grow into it. George made the remark at the stockholders meeting that he wanted to grow into it. Its my understanding that supply and demand is what drives the market. After I leave this I will try and look at a few companies and see where their stock levels are. We also are not fat with cash. The reason being is the depressed price. You have to float a lot of stock for a little cash. Right now they are pushing hard in the hospitality field to make the move into profitability. With a higher level of capitalization they would be able to open up more markets with more people.Also because of the low price in stock they have had to issue preferred stock which has a cumulative 15% interest every 12 months. This dilutes the earnings. I really believe this company is going to explode however the ducks have got to be in order for it to work. I really think their at a critical point in the success of the company. We need the multiple arms working to attain the 36 million in sales needed. Do you agree? Boy I really got into it! Sentence structure is bad but who gives a s_ _t .

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