Replies to post #32 on SHELLS

[leagle]

XMLGE - Hi Timing - I thought that was interesting so I did some DD.

It looks like the shares outstanding will actually be about 85 million shares. They list in the latest filing "diluted shares" as 83,641,996. Plus they have options @ .04 for management of 2 million for Kupecz and about 700,000 for the rest of management.

So - they have about 2.3 million in cash - liabilities.

That gives you a figure of about 2 1/2 cents per share.

They continue to operate at a rate of $20,800 per month according to the proxy.

Others potential issues I see -

Is there a change of control payment to management under any of their contracts that would kick in and take away from the cash?

Reverse split was approved which can be implemented at any point by the board.

Potential litigation with ecMarket disclosed in the proxy.

I'd be interested in your comments. I'm not trying to bash here, just want to get the full details out on the table. If you add the value of a shell, which is typically about $500,000 and throw in some potential for the tax loss carry forwards, which is usually valued at about 10% - that gives another $1 million.

So - take $1.5 million and divide by about 86 million shares and you get another .0175.

This gives us a value of about .042, which, coincidentally is where it is trading. That would be IMO the value of the company to an entity looking to go public via reverse merger. One could argue the value is high even at that point.

The real issue is whether there will be a PREMIUM OVER VALUE for current shareholders.

So - I don't know if there is a lot of value that will be given to shareholders. Management will take care of themselves for sure, but will they leave enough on the table for there to be a premium for current shareholders?


This appears to be the explanation for the additional shares

As a result of these transactions, we will have issued 24,417,300 shares of our common stock to Paradigm Group, or 42.1% of the issued and outstanding shares of the Company as of the date of this proxy. We also understand that Paradigm Group has also purchased an additional 2,146,932 shares of our common stock in open market purchases for an aggregate holding of 26,564,232 shares or 45.8% of the issued an outstanding shares of the company as of the date of this proxy. Paradigm Group also holds share purchase warrants to purchase 11,681,633 shares of common stock at a price of $0.50 per share, an additional 2,072,886 shares of common stock at $1.00 per share and 9,116,800 shares of common stock at $0.065 per share.