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Gold/Mining/Energy : Unitec Int. Controls Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Technopeasant who wrote (369)	5/1/1998 9:17:00 AM
From: Richard Saunders	Read Replies (1) \| Respond to of 856

Steve/ are you a Unitec shareholder? disclaimer: continue to hold a position.

To: Technopeasant who wrote (369)	5/1/1998 10:04:00 AM
From: John B. Smyth	Respond to of 856

Thanks for putting things into perspective for others, Steve. What really has to be analyzed is the leveraging that can happen by the extra business that is generated. Assume a GPM of 40% with the added sales of $400K in a quarter. A high interest loan for 2 months to contribute $100K in materials would be $6K. The GP would be $160K less the finance cost leaving $154K as a contribution to overhead. While the cost is high when compared to conventional lending, the benefit far outweighs not availing ourselves to this avenue. The risk is also high for the lender as there is no receivable available to support the loan and he must rely on the ability of the Company to complete the project. I should also point out that the conventional lenders are not cheap either. While we borrow at a point over prime against receivables, there is also monthly administrative fees and loan application and processing fees which result in very high actual costs on smaller loans. The banks are not getting fat on prime + lending. It is important to maintain a view of the big picture. Thanks for your input. Best John