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Microcap & Penny Stocks : Liteglow (LTGL) -- Ignore unavailable to you. Want to Upgrade?

To: Nescom who wrote (1313)	4/9/1998 9:25:00 AM
From: Mr. Jens Tingleff	Read Replies (2) \| Respond to of 4715

I am bullish too - Little to much Chest thumbing may be the better word ;-) Kr jens

To: Nescom who wrote (1313)	4/9/1998 11:20:00 PM
From: Eric G. Erpenbeck	Respond to of 4715

Nescom, I have been doing alot of thinking about LTGL and where its going... I have been long term and very frustrated by the price and having two suffer through two massive dilution periods and probably a third still to come (or ongoing up to 100M outstanding). While I have no short term intentions I do intend to make a good return with reasonable patience on my investment. LTGL would be trading at 40 cents right now if it were not for the dilution since last year created by the CEO. Anyway, I took a step back for a minute to try and figure out what is going on with this little company. This is one scenario I can figure out that may make some sense... Let me know what you think of this ficticious scenario.. Remember this is only my thoughts and does not represent any thing more that that. The scenario below includes many assumptions, which become obvious as you read through it. (1) LTGL goes from a mom and pop backyard garage business to a mass marketing firm. (2) Large inventory is required to fill large orders, LTGL was not quite prepared for this and had to make quick adjustments... (3) LTGL current Net Income for 1997 is probably around $300,000 (4) LTGL first quarter 1998, is unknown but I would guess optimistically about 1.2 M revenues and 150 K NI. This is very optimistic, but I know December had 300 K sales in that month alone. (5) LTGL has no debt an only a small amount of cash on hand and only a small credit line with a local bank. So the CEO dilutes the stock shares to acquire quick significant cash. I believe we have seen an increase of approximately 45M-50M shares in the last 6 months at about 8 cents average or $3.6M. The dilution has occurred during periods of large investor accumulation, right after good news IMO. (6) The cash is needed immediately for company expansion, needed increase production capability (ie China), increased warehouse space, upgraded computer systems to deal with larger firms, increased product diversity, increase marketing and sales staff and an increase in advertisement. (7) Loans were considered but either they didn't qualify for the amount of cash needed or they would not be able to obtain the financing in short enough time frame to keep the big boys interested and on the hook. (8) CEO realizes that dilution is killing the stock in the short term but needs the cash to go for the Homerun and from what I can see LTGL is going for it. With the increase in the float, LTGL will no longer control the majority of the stock and it will require a fair vote by individual stockholders which will be able to decline further dilution (above 100M). In the past I think LTGL internally held the majority shares so the vote was their own and that was all it took to increase shares. (9) CEO realizes the dilution will impact Earning per Share and hence the PE ratio. This will also impact the stock price and prevent LTGL from meeting the minimum stock price requirement of $3 for more than 20 days to become small board NASDAQ listed (I think the large NASDAQ listing requirement is $5 a share). They can still file audited earnings with the SEC but I am sure will strive to be NASDAQ listed. (10) CEO then clinches deals with the big boys (pure speculation as many have rumored) Wallmart, Pep boys, Radio Shack, Circuit City, Other distribution agreements in Foreign Countries. Revenues soar for LTGL for remainder of 1998. LTGL product supply CAN meet demand due to the cash on hand created by dilution and anticipated loans planned by LTGL in 2nd or 3rd quarter this year. (11) To be optimistic lets say LTGL makes $7M-8M M in revenue and $1,000,000 in Net Income. EPS would be .01 cent (assuming 100M shares outstanding and the PE ratio at current price would be 7 (undervalued). (12) CEO decides to do a reverse split of 10 to 1, which reduced the outstanding shares to 10M shares and would increase stock price to 70 cents (assuming we remain at 7 cents a share currently), basically a no change scenario to the individual investor. However, EPS would now be .10 cents and the PE ratio would remain at 7 at a price of 70 cents. Hence the stock price would be supported by the low PE ratio. Future earnings would allow them to meet final NASDAQ requirements with few shares outstanding. Further price appreciation will finally be at hand. While I must admit, I would prefer the option of a stock buy back way over a future reverse split. It doesn't look like we could count that possibility out. If the CEO timed it perfectly right the stock price after the reverse split might be supported by the PE ratio, EPS and earnings, even thought I know this often is not the case. If the Net Income does not support a low PE ratio then a reverse split would kill us and we would all continue to suffer. I just don't see how LTGL will be able to leave 100M shares outstanding and ever show a significant EPS which will correlate to a higher stock price. Hence they will have to buy back shares or do a reverse split eventually. I don't believe they could sell enough Neon to make a significant EPS with 100M shares outstanding. I think it should be interesting to see where we go from here. Other thoughts??? Maybe the revenue potential and net income with this big deals are much higher than I am realizing but I don't think so. If we see some of the good deals anticipated it would still appears to be a very safe long term hold and maybe a good buy at the right price. Other scenarios? Eric