Flexpoint Sensor Systems, Inc. (FLXT)

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Flexpoint (FLXT) Reaches Tipping Point with Mass Production

"Flexpoint Sensor Systems (OTC: FLXT) recently announced it has entered mass production of its Bend Sensor® to fulfill orders from a Fortune 500 toy manufacturer during the third quarter. The move represents a significant tipping point for the microcap sensor-maker as it ramps up production to more than 750,000 sensors in its first year, which significantly exceeds the production levels that it has witnessed in past years.

The company’s Bend Sensor® offers a superior solution for applications that require accurate measurement and sensing of deflection, acceleration, and range of motion. With a one-piece construction with no moving or mechanical parts, the technology is highly resistant to wear and cost-effective to mass produce. The company’s team offers extensive customization options for the sensor for incorporation into countless types of products across many industries.

In this article, we will take a closer look at this agreement and others in its pipeline, as well as how it may impact shareholder value over the coming quarters.

Near- & Long-term Potential

Flexpoint announced the agreement with an American-based Fortune 500 global toy manufacturing company on April 7 and is now in mass production as promised. According to the company’s press release, first year annualized volume is expected to be in excess of 750,000 sensors. Management believes that this agreement alone will approach and possibly exceed 20% of overall revenues in 2016 and 2017 combined. Over the long-term, the global toy manufacturer is poised to significantly increase its sensor orders as it expands usage into new toy products. These increases are expected to help the company meet its revenue and cash flow targets for 2016 and beyond.

The agreement could also help accelerate similar contracts with other toy manufacturers given its non-exclusive nature. According to the company, pre-production pilots have shown the efficacy and resiliency of the sensors with the overall system exceeding lifecycle goals by 500% or more. The customer’s original product team lead engineer noted that the sensors offered the very best price and performance compared to various competitors in the industry.

Numerous Other End Markets

Flexpoint’s Bend Sensor® is applicable in a growing number of industries, ranging from the large automotive industry to the nascent virtual reality space. While the toy industry is an exciting near-term development, the company has numerous other agreements in place and plans to hire additional machine operators in 2016 to meet expected increases in demand for its sensors across these industries (it’s facilities have a 20 million sensor per year capacity).

For example, the company met key milestones and deliverables associated with a turnkey design/development contract with an automaker and Tier 1 supplier in the automotive industry. Management anticipates completing the final phase of the project during the fourth quarter of this year and moving into production at some point in 2017, noting that the revenue contribution from the relationship would ‘increase dramatically’ during 2017.

“Flexpoint is a company with multiple areas of expansion, progress and growth,” said CEO Clark Mower in a May 23 press release. “We are beginning to receive purchase orders and produce deliverables for multiple long term, large-scale production orders. As a result of this, revenues have dramatically increased during the first half of the year. We look forward to continually generating custom solutions for recognizable cutting-edge technology companies.”

Looking Ahead

Flexpoint trades with a market capitalization of approximately $12.1 million with 71.63 million outstanding shares as of May 2016. According to its most recent investor presentation from April, the company expected at the time to become cash flow positive by the first quarter of 2017 with revenues in excess of $1 million. Since then, Flexpoint has moved the cash-flow-positive target up to the second half of 2016, a clear sign of accelerating revenues. The company also stands to benefit over the long-term from a move into the burgeoning virtual reality, medical, and internet-of-things industries with its innovative sensors.

Investors may want to take a closer look at the opportunity given these improving financials moving into the latter half of 2016 and into early 2017.

For more information, visit the company’s website at www.flexpoint.com and view their investor presentations."

http://analysis.secfilings.com/articles/49-flexpoint-flxt-reaches-tipping-point-with-mass-production