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Gold/Mining/Energy : National Challenge Systems (TSE:NLC) -- Ignore unavailable to you. Want to Upgrade?

To: LEEP8888 who wrote (425)	9/23/1999 12:36:00 AM
From: Cal Gary	Read Replies (1) \| Respond to of 453

I'll go out on a limb and suggest NLC will be in a 1.90 to 2.25 trading range for quite some time. Perhaps until the "3rd" news release regarding the organics is released spelling out how financing eventually pans out. Remeber folks, they are executing plan "B", the organics deals. Plan "A" is the 5000 to 12000 compactors using GE debt. It appears that some people in the market is confused by this and selling. I'm speculating people were anticipating "the long awaited news" being plan "A" and it didn't materialize. Plans "A" and "B" were communicated some time ago, i.e. previous analyst report. I'll repeat myself that the company needs to educate the market about the organics, especially with proforma revenue and costs. From the last two days of trading (short period) the market is telling the owners of A&A and ORMI to take the cash. By using cash and paper or combination of the two, NLC has set a ceiling on NLC's share price for up to 120 days. On the flip side, it has also placed a buyer's price on the shares as well, deemed at 2.27 (why not higher?). So now there's a bottom, therefore I'm using the prior resistance level at 1.90 as a support for the bottom. But what do I know, it may even trade and test lower. Simplistically, it the market way of saying, taking the shares has risks. Don't dilute. So no surprises for the new trading range. If I were the private owners, I'd take a chunk of cash (20-30%) and the rest in shares for the ride. This latest release answers many questions I had about the organics deal, or "1st" news release. (1) It clarifies that at a minimum it'll cost $12.2 million (plus finders fee) jumpstart for infrastructure to make the organics business work. (2) It also explains perhaps why only 40 units (probably the same 40 units in the pilot) installed to date. (3) NLC is generous to give a 12% commission/finders fee, if all three transactions complete, to Cambridge Capital Corp. Who are these guys anyways? Arms length I hope. $2.27 * 225,000 shares = $NLC 510,750 guarenteed $2.27 * 725000 total shares = $NLC 1.65 million. If A&A and ORMI takes 100% in shares then ($8.2 mill + $4 mill ) / 2.27 = 5.375 million shares If all three transactions close the max addition shares 5.375m + .725m = 6.1 million additional shares 6.1m / 19.5m outstanding 100 = 31%; represents roughly 1/3 of outstanding shares (I wonder if there are any trading restrictions on any of these shares?) 6.1m / (6.1m + 19.5m) 100 = 23.8%; if completed, then infrastructure for supporting the organics is about 1/4 of capital. Sounds reasonable. Any other opinions? Please? Addition of about 5500 customers (3000 ORMI + 2500 A&A) is great. I'd like to know revenue these contribute and margins. At $12mill and $1.65m commission these got to be profitable operations. There's still parts of this puzzle yet to be told. What's it going to cost for the ORTI and patents. Final financing. $ for patenst, etc. It appears too many rumours pressuring management to come out quick with the release. Wouldn't want the TSE calling again. Awaiting the next release. Until then I'll be bottom picking ;o). PS Next time we hit new higher price ranges, don't sell! In hind sight, perhaps NLC could-da/ should-da set a deem price of $3.00 + .