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Microcap & Penny Stocks : STAX -----> Stelax Industries - A real gem. -- Ignore unavailable to you. Want to Upgrade?

To: Jim Chapman who wrote (580)	4/27/1998 1:43:00 AM
From: Scott Munson	Read Replies (2) \| Respond to of 1112

Please read in entirety before stopping, or groaning. Apparently everyone here has lost perspective on this stock. This is not an explosive time bomb. For every positive this stock has there is a negative. The fluctuations in the stock are a result of market makers. Realize that 27.4 million shares are in the float with 150 or so stockholders. Many are large shareholders that have not traded much making the active float much lower. Many times the company has fallen behind schedule with little or no notice to investors. Granted they have a wonderful product to offer, but there seems to be a lack of progress towards any goal. Ultimately it is possible that IF the product is successful, the patent, or the company, could be bought out by a large steel company. Here are some things to think about: NOUVINOX is a superior product that can be sold at substantially lower levels than competitive products. Stelax holds the patents on the process. That, however, seems to be the only thing going for us right now. This year is supposed to be the year of the breakthrough, ie. NOUVINOX rolls out the door. Let's stop for a minute and think in contingencies... Ignoring speculation, all we have is the company's word that things are in the working. Here is some food for thought: SSS=solid stainless steel N=NOUVINOX Remember that they are discontinuing SSS production according to the financial statements. 1. What will be done with all equipment used to produce SSS? 1a. Will there be a loss associated with this? 1b. Will the ending of the SSS program slow the progress of the N program? 1c. Where do the original ASA and the Schmolz & Bickenbach orders for SSS stand as far as percentage completed? 1d. How much more of a loss will be incurred to finish SSS commitments, specifically the original $9 mil. ASA and the Schmolz & Bickenbach orders -OR- will these orders be voided? 1e. What will become of the new German mill - can it be used in N production? 2. Will the current inventory of raw materials be completely used to fulfill current SSS orders, or will it be used in N production? 3. When can we expect to see the specifics of the ME and VA orders? 3a. Have the delivery dates changed from mid-1998? 3d. What kind of results do you expect to achieve with these orders (profit)? 3e. When will these results be hitting the balance sheet? 3f. What type of capital inflow will be needed to fulfill these orders? 3g. What form will this inflow take (equity/debt)? 3h. Has the lack of profit hurt the chances for debt financing? 3i. Can the shareholders expect more share dilution? 4. Was the planned 12/97 delivery of N sent to ASA - if so, how much? 4a. What is the size of the yearly contract for N with ASA (tonnage)? 4b. What are the specifics of the North American marketing campaign with ASA? 5. What kind of world marketing program is currently in place (specifics)? 6. Are other third party distributors producing any orders for N? 6a. How many of these parties are there now? 6b. Are more being sought after? 7. What type of timeframe are we looking at to incorporate full N production? From this list stem other issues... 3i deals with share dilution - STAX has 31.9 M shares outstanding, BUT has the right to issue up to 50 M. These are just some of the issues involved. This is not meant to scare people away from this stock. What it is meant to do is to make people aware of just some of the issues involved with the valuation of this company. All information within comes from publicly available financial statements, news releases, and company statements. Stelax has an opportunity to be a valuable company, but much, if not all, of the stock action thus far has been overreaction to events and market maker manipulation of a thinly traded stock. Much speculation surrounds what will happen with the price, (note: 1.00 to 1.40, and back to 1.00 in the past 2-3 weeks) and the company. Little information comes from the company right now as there is little to report. Growth is slow to say the least, and it comes in fits and starts. It is probable that will will see a price spike if there is news of fair amounts of NOUVINOX being delivered, but expect the spike to be short lived, plateauing somewhere between 1.00 and the top of the spike. If, however, the following financial reports show no improvement because of ongoing losses, expect the price to sink back to current levels. It will be hard to predict and short lived, not an easy way to make money. One must analyze the risk/reward of all factors here and make an educated decision. True, long term price appreciation can only be gained if Stelax starts producing positive numbers on a year over year basis, improves investor relations, and meets scheduled deadline goals (or keeps the public appraised of the situation). I have had opportunities to get in and out a number of times. Each time I see a spike I think about selling, but remember that there are tax consequences if one plans to hold long term. Bundle this with the short life of the spike and the unlikelihood of getting a sale anywhere near the top (as those are probably intra-market maker trades), and you don't realize much gain - ie. day traders beware. Well, enough said for now. There is an infinite amount of rambling to be had here. I encourage feedback on this issue. If you didn't already know, or couldn't tell, I have been long this stock for almost three years, although I have varied the number of shares via. sales and repurchases. I plan to make an appointment to visit Stelax hqtrs. in perhaps June as my wife is taking an internship in Dallas for a short time before she finishes her Ph.D. Please let me know if anyone has any questions I may not have thought of. (I will continue to accrue more on my own as well.)