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Microcap & Penny Stocks : HITSGALORE.COM (HITT) -- Ignore unavailable to you. Want to Upgrade?

To: bob sims who wrote (1529)	5/27/1999 1:43:00 AM
From: Janice Shell	Read Replies (1) \| Respond to of 7056

Remember HITTs is more then just a search engine. Sure as hell is.

To: bob sims who wrote (1529)	5/27/1999 8:40:00 AM
From: Daniel Chisholm	Read Replies (1) \| Respond to of 7056

Hi Bob, HITTs still has $100 million in equity coming in Their 98 10-K (under NOTE 11) says this: a $900.0 million Promissory Oil Production Note to be delivered as collateral for LFT's obligation to pay the purchase price. The Company's security interest in the note is to be limited to $100.0 million and is to be an undivided interest with LFT, who has agreed to permit the Company to receive the first $100.0 million paid under the note. There is no assurance the Company can obtain stockholder approval for an increase in authorized shares or that, if the transaction is completed, any payments will be received on the note (in which case the Company would seek foreclosure on certain oil and gas leases securing the note). What I found perplexing about this non-cash transaction, as well as the previous $10 million one also from LFT, is that I don't understand how holding long-dated IOUs will help HITT grow its business today. Startup companies typically need cash to establish themselves. While I haven't been able to figure out how much cash they have on hand now, they did have only $19,742 at 31 Dec 98 (on a pro-forma basis). They also had significant current liabilities, totalling $3,293,360 at 31 Dec 98 (on a pro-forma basis). Even if their business model doesn't need significant cash to grow, simply keeping their creditors happy would seem to require a few million dollars today, not many more millions at some future date. Bob, you also write, I think HITTs is a great company. I guess time will tell. Let HITTs do its business. This is an excellant time to get more shares. You may want to pick some up for long term. If I assume that HITT will receive the full $110M that LFT has committed, and if I assume that they will receive it within a year, I still can't construct a case for HITT shares being undervalued at their current price of about $6. My best estimate (see my recent posts) of HITT's book value is about $1.95 for each of HITT's 54.8 million shares, assuming that the full $110M investment from LFT comes through. In order for a $6 investment in a HITT share today to break even, the company must more than triple shareholder's equity. On a company-wide basis, their business must earn over $220 million in order for shareholders to break even. Seeing how Yahoo! had total sales of $258M in the past twelve months, I find it difficult to understand how HITT might be able to generate such value in a reasonable amount of time. Bob, I must admit I'm puzzled. Would you be able to help me understand your argument as to why HITT shares could realize substantial appreciation from here? - Daniel