Sulja Bros. Building Supplies, Ltd (SLJB)

[Eagle1]

Thanks, that is an Excellent Sterling post on LFWK....!!

With LFWK...

With LFWK, I think we might be seeing something evolve that could be quite historical. The verdict is still out, but I like it. Let me try to explain this as conservative as possible. Keep in mind, this is not me talking, but me deciphering what I think the company is trying to tell us.

Let’s first look at what was released in the 9 Mar PR:
http://www.knobias.com/individual/public/news.htm?eid=3.1.37c38e4fc4b4ccc31a259b52e3d7cc548b6acc4862....

** Sulja Bros. is a 24 year business with $30M+ Revenues annually since its inception.
** Assets = $25M with anticipated $200M+ within 24 months.

I will focus on the Revenues as opposed to the Assets because I think it’s more important to reflect what our EPS (Earnings Per Share) could be versus our BV (Book Value). Stocks normally react on a “proven” EPS versus a “proven” BV.

With Sulja Bros. averaging $30M+ in Revenues annually over the past 24 years, I think it’s safe to say that this is a company that is already established. I am not sure what are their expenses, but I will guess to say that they probably clear at least 30% as profits as a worse case scenario.

That means that I am figuring that they spend 70% in Expenses to make $30M. That means that I am guessing that it takes them spending $30M x .70 = $21M to make $30M annually leaving them with a profit of $9M.

This means $30,000,000 x .30 = $9,000,000 as Income/Profit.

From the PR below, the outstanding shares (OS) for LFWK are 300M shares.
http://www.knobias.com/individual/public/news.htm?eid=3.1.cdee6e96c3b2565802551559ec0ac934be5027b9ee....
I derived this by figuring that if 200M are in the Treasury, everything else is issued and outstanding from the total of 500M authorized. This means:

$9,000,000 ÷ 300,000,000 shares = .03 EPS

Using a conservative PE Ratio of 12 reflects below:

12 PE Ratio x .03 EPS = .36 per share

This means that with not factoring in any kind of growth such as higher numbers for actual Revenues or lower numbers for actual Expenses to alter the above price for the better, LFWK should fundamentally be trading at a worth to the market of .36 cents per share. It looks like that’s the price range from where they originally started naked shorting it from researching its volume history.

The key will be for them to first announce the closing of the merger to lock in on this potential then next the SEC filings would really substantiate the validity of the merger. So please treat the information I posted as speculation until confirmed by the company officially and/or publicly. The 9 Mar 06 PR stated an initial timeline of 30 days to completion was set. That’s sometime around the end of Mar to early Apr. I know it’s only wishful thinking, but they can finish the merger earlier since that time was a “no later than” time frame. BUT WAIT!!!

There is another piece to this puzzle that I think we must consider. The “naked short” issue. That .36 per share figure above is factoring in if LFWK was in a perfect world where its trading scenario presented enough shares for the public to buy (the Float). Well, there isn’t. As far as I’m concerned, it’s official enough for me to take the risk, but it would mean much more if they could file a Form 10Q/K and/or some Forms 3, 4, and/or 5’s if needed with the SEC to confirm authentication of LFWK share ownership. Then multiplying these prices by 10 would still be considered a discount with the value of their mergers.

However, from what have already been made known to the public, without going into much detail, I think the Float is gone. That means that anything that could generate any kind of significant demand for the supply of LFWK shares would create a major problem for covering any naked shorted position.

Those PRs could be viewed as smoke and mirrors to some people for now until key information is either filed or coordinated to the SEC for confirmation. Or until we actually see an announcement that the merger is complete which would make everything else secondary because of its value. As more and more news of substance is confirmed and revealed to substantiate those PRs, one would have to wonder where the shares would come from to fulfill the demand that will be generated for LFWK shares.

Well, if there is no supply of LFWK shares to fulfill the increase of demand for LFWK shares, one option would be for the MMs to significantly raise the bid to entice us to sell to a value that would be cheaper for the MMs (or their guilty clients) to cover versus waiting until a known valuation is confirmed. Waiting to cover could really cost them to cover shares at much higher prices.

The other option would be for them to get with company to work a deal to assist them in covering from behind the scenes. I think they will try to cover on the open market first before going to the company as things could get very very expensive for them then.

Either you believe and take the risk or you don’t believe and move on. I think things will be getting very interesting in the very near future. Personally, I believe!

All is well!
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