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Gold/Mining/Energy : Games Trader

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To: mr. ed who wrote (13)	1/15/1999 9:37:00 PM
From: Skipper	Read Replies (3) of 1239

Hi Mr. Ed It is no secret that the company is looking to acquire another company; hence the funds in escrow from the last share offering. The company has until Feb. 99 to make a significant acquisition in order to avail themselves of these funds. It is likely that the timeframe could be extended if a deal does not get done however (as was the case with the Dec.98 deadline). The type of acquisition that the company is ideally looking for would allow them to diversify their existing product line risk. There is a company in Dallas (which is second in the used video games market share) that the company remains interested in but is unlikely to act upon at this time since the Dallas company would allow sales to grow but would not mitigate product line risk. It should be noted that GTI has developed a MIS that would enable them to realize significant synergies with just about any related product line. That is the real upside in this company. They have become profitable now that they have no debt - and they have been able to make a good profit despite allocating much of their time and resources to the development of the MIS (management information system). Now that they are shifting their focus to the acquisition mode and growing the business, I believe that there is some really exciting prospects for this company. Remember also that the company will not be paying any income taxes in the short term (unless sales go crazy) thanks to the losses inherited from Tecmar (I feel like I have just rubbed salt into old wounds). As mentioned in a previous post, I believe there is little downside for this company in the short term at these price levels. The key to putting a true value on this company will be the determination of a realistic P/E ratio. That is why I see their next step as being so crucial. Based on the industry, an aggressive acquisition could possibly justify a P/E of 20 to 25 (comments anyone?) which would catapult the stock significantly above these levels. I hope that someone will have access to the analyst's reports when released to enable us to make our own assessments. Jean has repeatedly stated between $3-$5. I have no arguments there and feel that these numbers would be conservative in the next six months depending on what P/E is used. Regards, Skipper

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