another update...
MGTK - Update
As of 4/26/99 11:45pm Eastern Time
Magnesium Technologies Inc. - (OTC:BB:MGTK)
We have further information from Mr. Bailey which we want to present to our subscribers. The total number of outstanding shares is being worked out now, but they will be somewhere around 9,300,000 with a float of around 900,000 shares. Please note that this is the number after the reversals, resignations, and new shares issued in the merger. Some of the paperwork may show a little higher float due to
delays in reversing some of the previously issued shares, but this will not likely be a serious issue. The unaudited value of the inventory and other assets previously valued at 4.5-5.1M, will be more like 7.1M due to the inclusion of materials currently being manufactured which were not previously included in estimates. This should bring the audited value of all assets once the foreign assets have been fully audited (probably about 2 months) to 25M. That puts the book value just under $3! A Press Release will be issued Tuesday which should have firm numbers. Mr. Bailey also expects to have forward looking earnings estimates soon (probably late this week)
based on sales before the restructuring with Lodestar and others.
We also have found more information on the Magnesium Bicycle frames. They were distributed by Lodestar (a wholly owned subsidiary of YBM Magnex) and were very popular from about July 1998 until Lodestar went under along with the rest of YBM Magnex a few months later. YBM Magnex was a Canadian company which was shutdown by US and Canadian authorities late last year amid allegations of money laundering by the Russian Mafia. Canadian Government releases appear to show that Lodestar was legitimate, but either way, they had nothing to do with the manufacture of the Magnesium products; they were simply a distributor. Lodestar had generated quite a bit of excitement regarding their Magnesium frames and apparently sold quite a few bicycles with MGTK's frames. Lodestar may even owe Magnesium Technology money from accounts receivable, (frames both delivered and non-delivered that were never paid for) but given the current state of YBM Magnex it is unlikely that this money will ever be recovered. The marketing by Lodestar appears to have been well received as can be seen in this article. Mr. Bailey has told us that he is actively working to find a new US and European Distributor for the bicycle frames. Mr. Bailey agrees that MGTK must quickly find a new distributor before the marketing efforts of Lodestar begin to wear off.
This evening's conversation with Mr. Bailey has made us much more confident in the future of MGTK; we believe that with good management and swift execution into the wheelchair market, MGTK could have extraordinary earnings potential. The following is an estimate of value of MGTK by the Staff of PennyStocks4U.Com to show the potential of MGTK:
Consider that the bicycle frames cost from $95-400 to manufacture are sold for $400-1200 wholesale depending on the model. Most frames will likely be from the high end, so an average profit might be $600. Assume very high O&M costs and marketing costs of $100 per frame with 1000 frames per month average. The comes to $500,000 profit per month. For most of the world, the bicycle industry is reasonable stable year round, so assume that this number carries out for a whole year to $6 Million per year. That is without considering capacity expansion. With a P/E of 5 and a current book of $3,MGTK could be easily worth $7/share in the next couple of months. High-end custom-made wheelchairs like those which might be manufactured by MGTK sell for $2000-3000 retail (not motorized) for which we guess the cost to manufacture could be as high as $1000 including O&M costs. The market for a 5 pound (including wheels and everything) collapsible wheelchair could be huge and result in volumes and profits many times that of the bicycle frames.
For those of you who have read this far, we thank you. Mr. Bailey expects a new Press Release sometime Tuesday and we expect further major news by the end of the week. We know many of you have had trouble placing orders online; this is a common problem the first few days after a reverse split or ticker symbol change. Sometimes the only way to get it fixed is to call your broker. Most brokers (all that we are aware of) charge the normal internet commission in this case, as it is their computer system at fault. We hope to have information about an 'online chat' with Mr. Bailey regarding the future of MGTK later this week... more to come.
-The Staff of PennyStocks4u.com
pennystocks4u.com
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