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Re: ergo sum post# 61049

Friday, 03/18/2005 1:17:14 PM

Friday, March 18, 2005 1:17:14 PM

Post# of 123876
Here is some information where no PUMPING is necessary if you just analyze it thoroughly enough.



BUSINESS SUMMARY:

Veltex Corporation (Pink Sheets: VLXC)

Veltex Corp. (OTC: VLXC) clearly has enormous appreciation potential based on its realistic revenues and net profits projections! It is very rare to discover a company whose stock is so undervalued and yet has everything in place for a dynamic near-term upward move to significantly higher prices. This is an extremely well managed company, with a strong vertical infrastructure in place that expects to generate revenues in excess of $40 million in 2004 with net profits of over $6 million or approximately $1.00 net earnings per share (EPS). The Company is currently undergoing its audit for 2003, which is expected to be completed soon. Furthermore, Veltex expects to have its 2004 audit done in the second quarter of 2005. Upon its completion the Company plans on becoming fully reporting with the SEC and moving to a larger exchange. Investor confidence should be significantly enhanced when Veltex becomes fully reporting. Additionally, larger investors and institutional traders will be able to purchase shares of Veltex once the Company is listed on a major exchange and is filing SEC statements.



We strongly believe that VLXC shares could justifiably be trading in excess of $10 per share (potentially much higher) within the coming 12 months. If the stock only carried a Price Earnings Multiple (PE) of 10 X, the shares would be trading in the $10 area, based on 2004's net profits forecast of $1.00/share! Our excitement is magnified by our belief that 2005 will continue to show substantial growth in revenues and net earnings. This year, Veltex plans to enter the $6 billion surf apparel industry and hire up to 50 new sales representatives in the first two quarters of 2005. Also, the Company has developed several products that it plans to market to major retailers such as Kohl’s, JC Penney, Sears, Wal-Mart and Kmart.



It would not surprise us if Veltex topped $50 million in total sales in 2005 and/or made some further synergistic acquisitions, which would further greatly expand the Company’s profitability. The shares are currently trading about midway between VLXC’s 52-week low/high price range and, in our opinion, present an exceptional buying opportunity for investors. Keep in mind that the “float” is relatively small at only 1.4 million shares, so, as the investment community “discovers” this company, demand will undoubtedly accelerate and, consequently, the share price of VLXC could move rather rapidly to much higher levels. That is our expectation.



This is truly a rapidly growing, exciting Special Situation with substantial upside appreciation potential!



CORPORATE BACKGROUND - EXPLOSIVE GROWTH AHEAD!



Veltex Corporation is a vertical manufacturing, import, and distribution company composed of three divisions:



v Veltex Apparel, specializing in caps, apparel and apparel accessories for the Promotional Products Industry and distribution of merchandise.



v Velvet Textile Mills, specializing in the manufacture of high quality fabrics including velvets, 100% cotton twill, denim, sheeting for consumer and industrial products.



v KCA Garment Industries, specializing in the manufacture of garments, specifically shirts and pants.



The synergy between the three Veltex divisions gives the company the ability to offer extremely competitive prices to the contract ready-to-wear market and the promotional products market, because there are no middlemen. Veltex produces the textiles, manufactures the apparel goods, and can truck the order to the customer eliminating at least two markups in the process.



Velvet Textile Mills is engaged in the business of the production and distribution of high quality, specialized textiles, primarily for use by manufacturers of automobile interiors, furniture, and ready-to-wear garments. These materials include jacquard, denim, microfilament, velvet, twill, canvas, duck, and pinpoint oxford fabrics. Production is done in Bangladesh because of low costs that allow the Company higher margins of profit, due to the relatively low costs of the material and labor, compared to U.S. sources. Further, the Company can import many of its materials into the United States quota free, similar to other competitors from countries such as China, Vietnam, India and Pakistan.



Labor costs in Bangladesh are 95% lower than in the United States. At the Veltex facilities in Bangladesh, a highly skilled textile mill worker is paid approximately $100 per month, while unskilled workers receive approximately $50 per month, and these salaries are generous by Bangladesh standards. These labor costs are approximately 17% lower than labor costs in China and make the price of finished goods such as caps and t-shirts extremely attractive on the world market.



Bangladesh currently subsidizes 25% of the value of all textile exports and this subsidy is expected to continue through 2005. Further, the United States does not impose import quota restrictions on textiles from Bangladesh. This makes the goods produced for Veltex particularly profitable.



Veltex Apparel imports and distributes apparel and caps to the promotional products market in the United States.



Veltex Corporation purchased the name, inventory and warehouse contract of LA CAP in October 2002. Considerable competitive advantage exists for Veltex Apparel because of the vertical nature of Veltex Corporation’s manufacturing activities.



A garment generally carries several levels of mark-up:

Farmer to Yarn Maker
Yarn Maker to Textile Mill
Textile Mill to Apparel Manufacturer
Apparel Manufacturer to Wholesaler
Wholesaler to Distributor


A Veltex Apparel garment only carries three levels of mark-up:

Farmer to Yarn Maker
Yarn Maker to Veltex
Veltex to Distributor


In other words, Veltex capitalizes on its manufacturing capability and eliminates the Wholesaler from the sales chain. The primary reason for the existence of the Wholesaler in today’s marketplace is to import the merchandise from overseas producers and distribute that merchandise in the United States. However, Veltex has eliminated this need for a Wholesaler/Distributor by expanding into the United States, thereby creating its own Wholesale/Distribution operation.



VELTEX SUPPLY CHAIN – A MAJOR COMPETITIVE ADVANTAGE



Rather than compete with every other Bangladeshi, Pakistani, Indian, Vietnamese, and Chinese manufacturer of apparel in selling to the Wholesalers in the United States, Veltex becomes the Wholesaler, eliminating at least two mark-ups.



By eliminating the Wholesaler and selling directly to the Distributor at prices normally paid by the Wholesaler, Veltex immediately increases its market share. Veltex expects an increase in sales volume that will more than make up for any loss in its present Wholesaler client business because it will not be selling more garments for less money. Rather, it will be selling more garments at the same or higher prices it receives from its current Wholesaler customers.



Traditionally, the production end of the equation has remained fragmented:

No real organization between the textile mills and the garment manufacturers
Manufacturers establish sales relationships with the U.S. Wholesalers
Wholesalers have few relationships with the textile mills
Distributors have no relationships with textile mills and manufacturers
There is a barrier to Wholesalers in the United States creating their own mill and manufacturing operations offshore without extensive research and large investment
There is a barrier to manufacturers creating their own distribution in the United States owing to the low level of familiarity with US business requirements and practices


Veltex Chairman & CEO Javeed Matin used the knowledge he gained working in trade finance in the United States to open a trading business. In 1996 he became aware of a mill that was going out of business in the Southern United States, purchased the looms, and installed them in an old mill (Velvet Textile Mills) located in Comilla, Bangladesh. He funded the growth of Velvet Textile Mills through a reverse merger into a publicly trading shell in 1999, then returned to Bangladesh to manage the business of Velvet Textile Mills with the goal of building its business to a level that would support the creation of a United States distribution company.



By building Veltex Corporation in this fashion, he gave the company these unusual advantages:



Familiarity with U.S. business requirements and practices, as well as a wealth of contacts.
A publicly traded U.S. corporate entity.
A solid, well regarded textile mill and manufacturer in Bangladesh.
A revenue base in Bangladesh that produces approximately $20-million yearly, outside U.S. tax.
KCA Garment Industries has revenue approximately $29-million yearly, outside US tax.
A credit line supported by revenues from Velvet Textile Mills.


Veltex Apparel expects to under-price its competitors by $0.50 up to $2 per garment. Since Veltex already manufactures for many of the top quality lines, the product will be the same top quality but at a lower price. Veltex-manufactured garments are usually marked up 100% or more from the price paid to Veltex, so the Company can make more money even if it sells only the same number of garments. Nevertheless, Veltex expects to greatly expand its business through price competition, because it knows that its competitors cannot win.

TARGET MARKETS


Veltex Apparel sells to companies that sell to the end-user. There are two divisions:



Ø Promotional products distributors



Ø Consumer Labels and Gift shops



Promotional Products Distributors


This group is made up of a wide range of companies from Jack Nadel, Inc., to Universal Pictures and Walt Disney Company stores, to corporate promotions departments, to advertising companies, to online promotional products merchandisers such as CafePress.com, to small local t-shirt shops and personalized gift stores.



These distributors supply customers from Little League teams to major corporations, and their product is used for uniforms, corporate wear, and promotional gifts.



It is the thousands of distributors in this area of the apparel industry that make up the $6-billion in promotional apparel business done annually.



Consumer Labels


Major consumer apparel labels such as Polo, Calvin Klein, Guess and Swatch are moving into the promotional products industry with lines designed specially for these markets. Whether one is talking about these cross-market labels or the more traditional apparel lines such as Liz Claiborne, Perry Ellis, or j. crew, most of what they sell is produced by outside manufacturers.



Veltex Apparel is currently in negotiation to produce khaki pants and shorts as well as other garments for major names in the consumer apparel products industry.



$6 BILLION SURF APPAREL INDUSTRY & MAJOR RETAIL STORES



As stated, Veltex plans on entering the $6 billion surf apparel industry! Using similar business models as Roxy and Quicksilver, Veltex will create and design apparel and accessories in order to establish itself in the surf apparel marketplace. This will provide another area of great growth potential for the Company. Even capturing a small percentage of this huge industry will significantly impact Veltex’s bottom line, as the Company can offer its customers a quality product at much lower prices than its competitors.



Veltex expects its products will also be offered in major retail and department stores in the first half of 2005. The Company will offer its own brand name products as well as private label apparel and accessories. A new product line is currently being created and designed to offer additional options in this market.



RECENT FINANCIAL FIGURES – RECORD RESULTS!



Veltex Announces Record Sales and Profit in 2004

CITY OF INDUSTRY, Calif., Feb 16, 2005 /PRNewswire-FirstCall via COMTEX/ -- Veltex Corporation (Pink Sheets: VLXC), a vertical manufacturing, import and distribution company for apparel and accessories, announces preliminary, unaudited, consolidated financial results for Calendar Year Ending December 31, 2004.

Total revenues were $41,639,889. Net income was $6,034,417.

Javeed Matin, CEO of Veltex Corporation commented, "We are proud of the growth of our Company and look forward to even greater heights in 2005. At this time I would like to extend a heartfelt thank you to all of our worldwide employees, suppliers, contractors, customers and shareholders. Keep up the Good Work!"

As far as 2005, Mr. Matin commented, "We anticipate our completed US GAAP quality audit for 2003 will be issued approximately March 15, 2005. The 2004 audit is expected to be issued approximately April 15, 2005."

Veltex sales in 2003 totaled $19.99 million, Company sales in 2002 totaled $13.9 million, and sales in 2001 were $8.7 million. Audited financial statements for the Company's 2001 and 2002 results are available at the investor relations section of the Company's website

STRONG EXPERIENCED MANAGEMENT TEAM COMMITTED TO MAJOR SUCCESS


The Company’s management has diverse experience and major expertise in business, textiles, banking and finance, and the import and export business. Management is focused on major success for Veltex and maximizing share valuations.



Javeed Matin, Chairman, President and Chief Executive Officer, is the Company’s founder and guiding force. He has extensive experience in international trade and whole sale business.



Melissa Barras, General Manager, has many years of experience in management and administration.



Teresa Margaret, Customer Service Manager and Manager, has years of experience in Distribution Company and customer service management.



Jordan Ross, Vice President of Sales and Marketing, brings 28 years of sales and marketing expertise in the wholesale and retail marketplace. His experience includes assisting major retail suppliers in entering and penetrating the premium and incentive industry for corporate and special markets.



CONCLUSION:



We firmly believe that Veltex Corporation (OTC: VLXC) is severely undervalued at its current price of only $1.20. As a matter of fact, we can not recall ever finding a stock whose price is trading at LESS than two times forecasted Earnings Per Share (EPS). The Company continues to experience record revenues that have increased from $8.7 million in 2001 to projected $40 million+ in 2004. If one applies a very low and conservative PE of 10 X to 2004's projected net earnings of about $1.00 per share, it equates to a share price of $10.00, or about 7 times higher than VLXC’s current depressed price of $1.20. Moreover, the Company’s revenues and net income are expected to continue to accelerate at a record pace in 2005 and beyond. The current market cap is very low at less than $9.4 million or about one fourth of this year’s projected sales! Veltex has an exceptional management team, excellent profit margins, and is now positioned to become a major player in the multi-billion dollar apparel market. As a matter of fact, its distribution company alone could become a $100 million sales entity over the next few years. We are very enthused about the dynamic growth of Veltex and the incredible appreciation potential that we forecast for VLXC. We predict that this Special Situation will be a highly rewarding GRAND SLAM HOME RUN for loyal long term investors!

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