OK, I decided to try to do a worst case scenario for 1998 and see what
happens. How about worst case of only 25 bingo halls added. How
about worst case that half way through this year the VGM's in SC are
outlawed. Can it be any worse than that? I suppose, but I cannot
imagine it. If that all were to happen, here are the results.
Assumptions are noted.
Bingo Halls Only and SC VGM's for half year.
Assumptions:
Bingo hall average pre tax profit of 42% based on SC and AL
numbers. MS and other halls $325 gross and $140 pre tax
based on average of other halls. Presumed hall cost of
$200,000 cost for a bingo hall and set-up. (my guess as I cannot
find any hard data on this).
Annual 1998
Revenue Profit
SC 11 - $360,000 Gross, $150,000 Pre tax profit 3,960,000.00 433,125.00
TX 3 - $210,000 Gross, $50,000 Pre tax profit 630,000.00 78,750.00
AL 4 - $400,000 Gross, $175,000 Pre tax profit 1,600,000.00 183,750.00
MS 3 - $325,000 Gross, $140,000 Pre tax profit 975,000.00 420,000.00
Other 25 - $325,000 Gross, $140,000 Pre tax profit 8,125,000.00 3,500,000.00
(opened 1/2 year, in other words, added evenly)
700 VGM's for 1/2 year
Net per machine $19,300, Pre tax profit $7,000 6,755,000.00 2,450,000.00
Sub-Totals 22,045,000.00 7,065,625.00
Coporate Overhead $2.5 million (2,500,000.00)
Interest Income 6%
Based on $13 million, less $200,000 every two weeks 650,000.00
Total income 5,215,625.00
Taxes at 35% (1,825,468.75)
Net Income 3,390,156.25
Number of Shares 9.5 million 0.36
Well, .36 is not bad for a $4 stock. I would say downside risk at
this level from a pure fundamental standpoint is minimal. It would
cost something to liquidate the VGM business, however, the cost I
believe would be paid for itself by any machine sales.
Thoughts?
-Scott
PS - Sorry about the formatting, but it is getting better.... |
