Stocklemon Reports Law Enforcement Associates Part II
Stocklemon Publishes on Law Enforcement Associates (OTC:LENF) Part II
It is the opinion of Stocklemon.com that fair value for LENF is $.09 cents a share (read below for explanation).
Numbers Don’t Lie, Promoters Do
According to the company’s most recent press release regarding their earnings,
“The Company had net loss after taxes and interest expense of approximately $18,000 for the second quarter 2004, as compared to a net gain of approximately $43,000 for the same quarter in 2003. But for the expenses of certain stock issuances in the quarter, the Company would have posted positive earnings and in fact, would have had a second quarter gain after taxes and interest expense of approximately $6,000.”
http://biz.yahoo.com/bw/041116/165605_1.html
Are they proud of that? Bragging that you would have made a $6,000 profit for the quarter is nothing to be proud of..unless you just got a promotion working at a fast food restaurant.
The Business is Going Nowhere.
In LENF’s November, 2004 10-Q we read:
Cash $ 334,467
Revenues (first 9 mos 2004) $ 4,466,614
Outstanding Shares 25,025,436
Let’s compare this to the company’s same quarter filing two years ago when the stock was .30 cents.
In the same quarterly filing from November, 2002 :
Cash $ 961,475
Revenues (first 9 mos 2002 ) $ 4,716,995
Outstanding Shares 19,899,436
More Insider Sales
In Stocklemon’s first report, we pointed out that the largest shareholder sold stock on 6 different occasions over the past year for an average price of .32 cents.
http://finance.yahoo.com/q/it?s=LENF.OB
This is nothing next to the flurry of selling we have seen over the past month. Below is a timeline of “hype” press releases combined with insider activity. The insiders of LENF did not even wait to see how the stock played out before they started to sell their shares. These insiders started to dump as soon as there was upward momentum in the stock.
September 15- First mention of going into stun gun business:
http://biz.yahoo.com/bw/040915/155410_1.html
September 15- President Paul Feldman sell 10,000 shares at $1.20
October 6- Researchers Have Begun Development of the Gun:
http://biz.yahoo.com/bw/041006/65386_1.html
October 12 - Paul Feldman sells stock in 6 transactions
6,500 @ $ 2.88
6,150 @ $ 2.36
10,000 @ $ 2.5
13,500 @ $ 2.87
50,000 @ $ 2.1
50,000 @ $2.23
October 12- Chairman John Carrington disposes of 156,454 shares @ $ 3.69
October 13- Testing of the Stun Gun
(how can you test a gun that began development a week beforehand?)
http://biz.yahoo.com/bw/041013/135456_1.html
October 13- CEO Perry Martin sells stock on 4 occasions in one day
10,000@ $4.01
5,807 @ $3.93
5,000 @ $3.37
5,000 @ $3.92
October 14- Feldman sell another 50,000 shares @5.63
This is why LENF is worth .09 cents…Giving them the benefit of the doubt.
Law Enforcement Associates likes to fancy themselves as a competitor to Taser, even though they do not have a stun gun for sale…but we will give them the benefit of the doubt.
Law Enforcement Associates last quarter would have made a $6,000 profit if they did not expense stock..so again we will give them the benefit of the doubt.
Taser currently trades at 97 times earnings
If LENF was to make $6,000 a quarter x 4 quarters would be a profit of $24,000 for the year.
With 25 million shares outstanding if they traded at 97 times earnings the stock should be trading at
$.09 cents a share
Even Their Local Daily Can’t Believe This Bill of Goods
The promotion around LENF has gotten so out of hand that even their local newspaper had to comment on the overvaluation and misinformation that surrounds LENF:
http://newsobserver.com/business/story/1746348p-8020415c.html
Stocklemon believes that the recent rise in share price in LENF is mainly do to the tremendous amount of stock promotion sites who are on the promotion bandwagon. Some have disclosed their compensation and others have not. Below is a sample of the stock promoters who are “behind” Law Enforcement Associates.
Agora
http://www.agora-inc.com/reports/EVS/WEVSEA11/
OTC Stock Exchange
http://www.otcstockexchange.com/disclaimer.htm
OTC STOCK EXHANGE WAS PAID 50,000 shares to promote LENF
Emerging Stock Report
http://quotes.freerealtime.com/rt/frt/N?symbol=LENF&art=C2004111600321u8959&SA=Latest%20News
Hot Stock Chat
http://quotes.freerealtime.com/rt/frt/N?symbol=LENF&art=C2004100800282u6987&SA=Latest%20News
Bellweather Report http://quotes.freerealtime.com/rt/frt/N?symbol=LENF&art=C2004100600280u7197&SA=Latest%20News
McNulty and the Magical Patents
In the first report we illustrated how the patents acquired by Law Enforcement Technologies from James McNulty are as worthless as the McNulty’s failed former company that could not compete in the stun gun market. Well it seems like Mr. McNulty has done well for himself selling his molds to any penny stock that wants to attract undeserving attention. McNulty also sold his molds to Stinger Systems which trades on the Pink Sheets as we can see through Stinger’s filings.
https://www.otcstockinfo.com/repository/656840/656840_FR2.pdf
Conclusion
It is the opinion of Stocklemon that Law Enforcement Technologies has used the success of Taser to initiate what has been a successful and financially rewarding stock promotion for the insiders. The underlying fundamentals are not that of a $150 million company, but rather that of a company that struggles to break even after having no substantial growth over the past 4 years. When this recent hysteria plays out, Stocklemon believes that LENF will eventually trade near the .09 cent price target we have put on the company. Cautious Investing To All.