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Gold/Mining/Energy : Markatech - MKD (VSE) -- Ignore unavailable to you. Want to Upgrade?

To: BlueIce who wrote (204)	4/12/1998 12:53:00 PM
From: Ted Kosokowsky	Respond to of 416

First cut at a Financial Projection Assumptions Capacity 7,250,000 CDs per year 900 CD/hr * 7.5 hrs/shift * 3 shifts * 7 days/week * 52 weeks/yr =7,371,000 Direct cost/CD 0.18 for raw materials and labor F. Diluted Shares 6,000,000 CD Selling Price $1.30 at low volume, declining at higher sales Capacity 25% 50% 75% 100% Units 1,812,500 3,625,000 5,437,500 7,250,000 Selling Price $1.30 $1.25 $1.20 $1.15 Total $Sales $2,356,250 4,531,250 6,525,000 8,337,500 Costs Royalty 9% 212,063 407,813 587,250 750,375 Direct Costs 326,250 652,500 978,750 1,305,000 Overhead 150,000 175,000 200,000 225,000 Total 688,313 1,235,313 1,766,000 2,280,375 Net Income 1,667,938 3,295,938 4,759,000 6,057,125 Income Tax 33% 550,419 1,087,659 1,570,470 1,998,851 Income after Tax 1,117,518 2,208,278 3,188,530 4,058,274 MKD Share 60% 670,511 1,324,967 1,913,118 2,434,964 Per Share $0.11 $0.22 $0.32 $0.41 Share Price Multiple 15X $1.68 3.31 4.78 6.09 Multiple 30X $3.35 6.62 9.57 12.17 Multiple 40X $4.47 8.83 12.75 16.23 This shows at 50% capacity MKD should show $6.62 share price with 30X multiple. Not bad. There are many unstated assumptions and numbers with no real backup except for a guess. I have this on excel, so if anyone has better data, if you support it I will use it and redo the numbers. I have no idea what the real overhead will be, but lease costs of $30,000 per year, salaries starting at $100,000 per year, and office costs of 20,000 seemed like a good place to start at 25% capacity. I assume the selling price will drop to attract larger orders, and overhead will rise with higher capacity. I think this should be conservative. Any comments? Ted

To: BlueIce who wrote (204)	4/12/1998 1:12:00 PM
From: Ted Kosokowsky	Read Replies (1) \| Respond to of 416

Each time I do the numbers I scratch my head in amazement that this is only trading at $.15 per share, OK, .30 post consolidated. But this is now officially a real deal. Although I hate the consolidation, the consolidation alone doesn't give management more equity. It is the options that do. But the only way they cash in is if the share price goes up, which also makes me money. So the only thing I can do is get over it and move on. The projections show that for every million CDs, 6 cents per share goes to MKD. So even if they don't get any outside orders, at a conservative 20X multiple, the stock is worth $1.20 . This gives me that basic confidence to hold the stock. But the West Coast from Portland to Vancouver is a hotbed of music and software. The plant has a high probability of running at 75% capacity by year end, and experience shows that a second machine is needed by the end of the first year. It is conceivable that they could be at 12 million with a second machine by the end of their second year. They will not have the same margin, but that volume should still be able to show as much as $.50 per share net income. You're right, that is speculative. But I am a speculator and these blue-sky numbers is what makes me excited. Any comments? Ted