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TBJK (Timberjack Sporting Supplies) Analysis

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RULiquid Member Level  Wednesday, 08/04/10 09:53:37 AM
Re: TOUCAN post# 189
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TBJK (Timberjack Sporting Supplies) Analysis

SEC fully reporting and current: http://www.sec.gov/cgi-bin/browse-edgar?company=timberjack&match&CIK&filenum&State&Country&SIC&owner=exclude&Find=Find+Companies&action=getcompany

A Nevada Corporation (currently shows in default): http://nvsos.gov/sosentitysearch/CorpDetails.aspx?lx8nvq=4jZsvs%252fbJcQ6cDKk3CsEDw%253d%253d&nt7=0

On November 19, 2008, Paragon Capital LP (Alan P. Donenfeld, Managing Member of Paragon Capital Advisors LLC, which is General Partner of Paragon Capital LP) purchased 300 mil shares of TBJK resulting in Paragon owning an aggregate of 400 million common shares representing 95.01% of total issued and outstanding common shares of 429 million. Alan Donenfeld is now President, CEO and sole director of TBJK. http://www.sec.gov/Archives/edgar/data/1368960/000121390008002400/sc13da1_timberjack.htm

From last 10Q period ending March 31, 2010: “As of May 5, 2010, there were 429,000,000 shares of common stock outstanding and no shares of preferred stock outstanding.” 980,000,000 common authorized, 5,000,000 preferred authorized. Also, this statement may be found in the 10Q: “The Company's current business plan is to seek a suitable acquisition candidate through acquisition, merger, reverse merger or other suitable business combination method. We plan to seek, investigate and acquire one or more properties or businesses with the intent to maximize or further enhance shareholder value. The Company has limited capital. As such, it is unlikely that the Company will be able to take advantage of more than one such business opportunity. We intend to seek opportunities demonstrating the potential of long-term growth.” http://www.sec.gov/Archives/edgar/data/1368960/000121390010001734/f10q0310_timberjack.htm


A little about Paragon Capital (www.reversemergerparagon.com ):

Alternative Public Offerings, Reverse Mergers and PIPE Financings

A reverse merger occurs when a public entity acquires all of the stock of a private company in exchange for approximately 90% to 95% of the shares of the public entity. Then the newly merged company takes on the name of the private company, installs the private company’s directors and officers, and files with the appropriate regulatory authorities. This transaction and change of control completes the reverse merger, transforming the formerly private company into a publicly traded company. http://www.reversemergerparagon.com/5727.html

Paragon is looking to partner with private companies that have the following characteristics:

> A targeted public valuation of at least $30 million
> Trailing revenues of at least $10 million
> Trailing net income of at least $3 million
> Strong management team and growth plan
> Any industry and any geography

Paragon is an investment fund located in New York City. We have invested in over 50 public companies in the past several years.

Paragon also sponsors alternative public offerings which allow private companies to easily and quickly "go public". Paragon sponsors the alternative public offering by:
(1) providing a publicly traded shell company for the reverse merger, and
(2) investing in the company at the time of the reverse merger.

Paragon’s investment management team has more than 70 years of experience in structuring and financing companies.

Paragon seeks to find private companies that wish to go public in the U.S. We will partner with these companies to sponsor the alternative public offering. We seeks to invest in private companies that can grow rapidly as a result of raising capital to be deployed for: acquisitions of companies or assets, building manufacturing capacity, and expanding sales and marketing.

A slide show presentation of Paragon Capital LP can be found here: http://www.slideshare.net/ShenLinChang/rmte . This slide show is worthy of viewing. According to the website, this presentation was uploaded approximate two months ago (May 2010). To bring out three slides in the presentation:

Slide 25: Timeline for Partnering with Paragon Week 1: Sign agreement with Paragon for cooperation and partnership. Weeks 2 to 3: Paragon makes recommendations of high quality service providers. Interview and select PCAOB auditor. Interview and select Chinese law firm and U.S. SEC legal counsel. Weeks 5 to 16 (will depend on whether financials are previously reviewed or audited): Complete PCAOB audit, legal structure (WOFE) and documents.

Slide 26: Timeline for Partnering with Paragon (continued) 1 to 3 Weeks after Completion of PCAOB Audit: Paragon begins financing process and meetings with other investors. 4 Weeks after Completion of PCAOB Audit: Completion of reverse merger and financing. After Completion of Reverse Merger: In consultation with Paragon, select investor relations firms. Plan future financings. Plan uplisting to AMEX or NASDAQ.

Slide 27: Requirements for Partnering with Paragon A public valuation of at least $30 million to $50 million. Historical revenues of at least $10 million. Historical net income of at least $5 million. Growth capital to accelerate expansion. PCAOB audited financials.


***Recent Events***

After a quick call to Mr. Donenfeld, we confirmed that:

1. Paragon still owns all 400 million shares.
2. Outstanding share count is 429 million shares.
3. A reverse merger was in progress with a Chinese company with a NET INCOME of about $10 million.
4. Closure of the transaction would be complete “in a few weeks” (from first part of July).
5. A requirement of Paragon initiated reverse merger would be that the private company must have a growth rate of 30% or more.
6. Follow up call confirmed that the transaction would be complete within a month (from end of July). Banking and some legal filings are all that is left. Confirmed that a reverse split would not be part of the transaction. Could not confirm whether a reverse split would take place post-transaction.


Analysis:

The Nevada Secretary of State shows the company is in default. To become current, the company would have to pay a fee and submit filing. This is really a non-issue.

Paragon states that one of the goals is to plan uplisting to AMEX or NASDAQ. One of the greatest advantages is the availability of institutional investors.

According to Paragon’s information, the new company gets 55% to 75% (as stated in the slide show presentation) or 90-95% (as stated on their website) of the outstanding common stock. For illustrative purposes, we will assume 75% of outstanding shares of TBJK will go to private company in exchange for a benefit (assume money) for Paragon Capital. We also assume that Paragon wishes to retain a portion of the outstanding shares as an investment in the new company (the slide show presentation lists 10 Chinese companies that Paragon has invested in since 2005, 7 of which have been since 2009).

75% of 429 million outstanding common shares equals 321 million shares that will go into the newly merged company treasury (shares are retired). This leaves 108 million outstanding common shares, 79 million of which Paragon Capital retains (which for practical purposes, since these shares are closely held, we will assume these will not be part of the public float) and 29 million in the public float.

A 10 million net income (current number of Chinese company) divided by 108 million remaining common shares equals basic $0.0926 earnings per share (EPS). An uplisting to NASDAQ, and using a price per earnings (P/E) ratio of 10 equals a stock price of $0.926 per share. Keep in mind that the stock must meet minimum stock price requirements to be listed on NASDAQ. For this reason, we may see a modest 2:1 to 5:1 reverse split to get the PPS above $1, a small sacrifice to get listed on NASDAQ.

Current bid/ask is .0034 x .005, a ridiculously low price per share. Even without using a P/E of 10, the share price on net income alone values this at over $0.09 per share.

I think it is safe to say that we are in a gold mine situation. Good luck, and see you on the other side!

Charts (look in IHub Message Board IBox): http://investorshub.advfn.com/boards/board.aspx?board_id=16642


Brick


This post is in my opinion.

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