DD on SPCL – Updated figures With the pendi

DD on SPCL – Updated figures

With the pending reverse merger with PixelMags and splits involved I decided to analyze the change in share structure, give details on the share structure and most importantly come up with a valuation of the current shares.

My valuation on the current shares places the shares at a target of $0.0022 (worse case), $0.0263 (where it should be now) to $0.12 (truest industry valuation); that's a 3 to 170x gain from Friday's close. Below I will show how I came to these figures. Say I’m crazy but this reverse merger (look at the merger, not the split!) is a mother lode.

Let’s look at the share structures first:

Current:
Authorized: 2.17 Billion
Commons: 2.16 Billion
Preferred: 10 Million

Outstanding: 1.83 Billion
Current PPS: $0.0007
Current Market Cap: $1.3 million

After Merger/Splits:
Authorized (1/10): 217 Million
Commons (less preferred): 207 Million
Preferred (no change): 10 Million

Outstanding (1/100): 18.3 Million
Post-Merger/Split PPS (1/100): $0.07
Post-Merger/Split Market Cap: $1.3 million

From the DD I’ve done, PixelMags revenues are in the $48 million range and growing. These 3 sites confirm it:

http://listings.findthecompany.com/l/18058157...Angeles-CA

http://www.zoominfo.com/c/PixelMags-Inc/353841771

http://www.buzzfile.com/business/Pixelmags,-Inc-310-598-7303

They are also going to be majority owned and backed by a billion dollar big board company:

http://investorshub.advfn.com/boards/read_msg...=124960949

I kept the valuation of PixelMags to a 1x sales valuation for simplicity, where I think it should be at least priced now. Price to Sales ratios in the Software & Programming industry average anywhere from 4-9x sales so I’m low balling this as well.

http://csimarket.com/Industry/industry_valuat...p;ind=1011

Valuations:
Putting a $48 million market cap (1x sales), where it should at least be valued now, on the post-merger PixelMags with the post-split outstanding of 18.3 million shares, that would place the PPS at $2.63 ($48m/18.3m os), or $0.0263 pre-merger/split, that’s 38x higher than the current PPS.

Putting a $48 million market cap (1x sales) on the post-merger company with the post-split shares maxed out at the 217 million authorized shares (maxed out but I don’t see this happening), that would place the PPS at $0.22 ($48m/217m as), or $0.0022 pre-merger/split, or 3x higher than the current PPS.

Putting a $216 million market cap (4.5x sales), where it would be valued possibly within the industry, on the post-merger PixelMags with the post-split outstanding of 18.3 million shares, that would place the PPS at $11.80 ($216m/18.3m os), or $0.12 pre-merger/split, that’s 170x higher than the current PPS.

Conclusion:
With filings, etc. most likely due this week SPCL is 3-170x undervalued at this level imo. Those that are only looking at the reverse split and saying this is a bad thing are caught in the penny scam mindset that all reverse splits are bad. Look at the incoming value of the merger! They are also splitting the authorized shares which is unheard of in pink scams. The current SPCL shareholders will own just over 8% of the incoming company. This will be a company with $50 million in revenues and growing, 217 million shares authorized, 18 million shares outstanding and only has a $1.3 million market cap now. Even if you maxed out the shares to the authorized post-split (won’t happen) you have only a $6.5 million market cap. That’s trading at .13x sales, cheap!

This imo is like getting in on a big technology IPO at inside ownership levels. Look at all the DD done on PixelMags; this would be an oversubscribed play if they were coming public through the more expensive IPO route. The reverse merger route is cheaper and better for everyone involved. I would rather own 8% of PixelMags, a possible hot tech play (FB, GOOG, etc.) that will most likely up list to a major exchange and garner a market cap in the $100’s of millions than 100% of SPCL, or basically nothing.

Good times ahead!