Secure Point Technologies Inc (fka IMSCQ)

[pumper_stumper]

Now I'm worried that we are about to wake up one day soon and that five years will be a total waste. (And this from someone who bought a lot of shares in the high 20s and 30s) Here's my, I realize, grim view now.

Most pro IMSC folks here believe that Implant stock will be purchased anywhere from $1.40 to $5.50 per share based on the attraction of IMSC’s superior technology to McGann’s alleged “victory lap” and statement that Implant was talking to five or six companies as it goes through its “strategic alternatives.” IMSC’s technology IS superior, but that’s just for openers. The rest of the board’s pricing rationale seems lately to be based on hope, not logic, nor on the real world conditions that affect pricing.

Smiths bought Morpho for 2x revenue. Morpho had annual revenue of approximately $350 million, low or no debt, had positive cash flow, and had products – more than one – that complemented Smiths. American Science and Engineering, right down the road from Implant, was sold just last month to OSI Systems for $269 million, approximately 2.5x revenue. ASEI was struggling, but it was cash flow positive, had no onerous debt and even paid a dividend of 5.4 percent.

--- Companies sell for 1x to 2 x revenue more often than not, unless they are a wildly innovate biotech or technology start up in an industry that generates revenue in the billions of dollars, and much of those purchases are paid in stock, not cash.

Why would any company pay even 2x Implant revenue when the company loses large sums every quarter, has dwindling margins and doesn’t even hint at its cash flow situation? Yes, it’s generating much more revenue than in the past, but it still bleeds money. The company lost almost $1 million in Q3. The average unit sales price of the B-220 decreased 38.6 percent. Gross margin was only 29.6 percent, and declining.

But let’s say for the sake of argument that L-3 or someone does pay 2x projected FY16 revenue of $50 million, or $100 million: The per share price would work out to 56 cents a share. BUT some $80 million of that $100 million would immediately go into PP’s pocket, leaving $20 million to be split between remaining shareholders MINUS all costs such as attorneys, investment advisors, etc. (legal fees alone in Q3 were $263,000.)

I don't think IMSC will be sold for 2x revenue. It would be lucky to be sold for 1x revenue given its financial performance, it’s debt and the fact that Platinum, is in a very tenuous position in the courts.

This might be the reality, and no matter the urge to “hold on”, “no BK,” “any day now,” “I’ve been in in too long to sell now” and other rationale, we might have held onto losing lottery ticket too long. (believe me it's painful to even write that)

I think we find out which way IMSC will go in the next week. I really hope that I'm wrong about the outcome, but have planned for worst case because I/we have been burned way to often with this company. My opinion now, sadly....feel free to ignore it.

PS....I've left a small core of shares just in case Implant does exactly the opposite of what I expect....always the case with this damn nightmare stock.

You said it wonderfully!