Leet Technology Inc (LTES)

[Sobek]

No, I don’t get involved in what people do with their shares or if they even have any. All I do is call it the way I see it and look for the true opportunity to capitalize. I wouldn’t be here if I didn’t see opportunity.

I’m simply calling out the ratchet on TDG’s common shares, the 100 million authorized shares staring me in the face, and the fact this is the OTC where that equals very bad outcomes 90% of the time.

IN GENERAL, the way the OTC works is when the restriction is lifted in six months, any shares the lender has are most likely coming in the market. And with anti dilution rights, they keep getting shares no matter how low the pps goes from dilution even if the company has to file for an increase in commons. Why do you think there’s OTC companies with billions of shares outstanding, trading at .0004, and were at like $2 a share two years ago? They sell as many shares as they can, refinance the debt, and issue more shares. When they hit bottom, they reverse split and start all over. And any investor in on the wrong side of the dilution runs or holding out for the gold is pretty much screwed. All the company pays for is the interest. The market pays the rest when the lender sells their shares. Then they turn around and do it again but this time increase the shares issued because by then the pps would of dropped substantially from the selloff.

All BDIC did was issue ten percent of the company’s common with a ratchet as a lien on the loan. But because they did it in two separate transactions, they can sugar coat it by calling the loan a loan and the SPA an SPA. It still has all the characters of a typical toxic OTC loan when read in the same breath. Anti dilution rights and basic 144 restricted common shares issued in the same amount as the principle. But what sucks for us, is because it’s an SPA, unless otherwise indicated which it is not, they can sell these shares whenever they want after six months and don’t even have to return them to the company if the company pays off the loan in advance.

This ‘package deal’ for TDG is giving them an annual return on their investment around 25%. And get this, if they sell 500k shares at .22 and above in the next year, their ROI is now up to around 50%.... hmmmm… just like a hard lender.

If they were interested in share value, they would of taken a preferred placement, not created this monstrosity.

And for the record, even though in the Sept 2nd PR they state the LOI allows for BDIC to make interest only payments with a balloon payment at the end of the term, they did not mention that in the 8-K issued on October 7th, over a month later. LOI’s change and I have to believe they scratched that because it was not disclosed in the 8-K and we now have a basic simple interest and principal loan with monthly installments due. If they would disclose the details of the LSA, that would help but they didn’t so, I have to take the 8-K at face value. PR’s are forward looking statements, filings are solid evidence.

Based on quarterly numbers from the last 10-Q

Right now what we’re looking at is approx $345,000 in gross profit a quarter after all the 2,100 units are leased. From there we have approx $260,000 in costs to keep the business running. Now we have monthly installments due to TDG (based on principal and interest) of approx $66,000 a quarter. That leaves approx $19,000ish a quarter or, roughly $6500 a month left over. Even if they were to stay in this budget, that’s only 55 additional units a quarter.

Also on the other hand, if I ASSume they still have the interest only payment part of the deal still in effect, estimate we can add on about $30,000 a quarter to the bottom line. But still, that could only produce approx another 142 units a quarter, nowhere close to where we need to be to keep up with the current demand.

Its simply going to come down to how and when they refinance this loan. If TDG is seriously going long, watch for the share structure to change. If not, they will most likely need every last one of those shares.