Lol. "Freudian Slip". Nice one Clark. How many more years before you get the chance to use that one again?
You're very intelligent Clark, I'm glad to have you here. Whether you're bullish or skeptical, you see potential here, as we all do.
I know you're here for a potential flip as well, but the fact that a trip one stock has the potential to actually be investable, speaks volumes as to the possible magnitude of returns here. Especially considering its at trip one. The OTC has its way of overvaluing companies when they do show signs of progress and a possible actual investment.
I'd like to spend a little time breaking down the recent orders and time lines here on what we could expect, and how we can start to plot these revenues on a chart and determine growth rate. This is after all what gives a stock value. It's not solely how much they make, it's more of how much they are expected to make.
A company could be making billions of dollars in profit and have a lower company valuation than a company making millions in profit. This happens when the company making billions has peaked or growth rate has become negative. The company making millions could have a higher market valuation if the sales pale in comparison, but the growth rate is phenomenonal.
Case in point... Recently, TESLA had a higher market cap than FORD. Ford makes much much more profit than Tesla. Tesla actually just recently turned a profit and was valued in the billions long before.(Interesting side note: Fords SP in 2008 hit $1.01!) It seems crazy to many, but it's not what they make, it's the growth rate and growth rate only. A company making billions could be essentially worthless to the market if the sales are stagnant. A company growing at 100 percent a year with no profits yet, could be a goldmine in the markets mentality.
This could be the story here if the company executes properly. HCTI could easily see that 100% growth rate. Commercialization has just began. Profits will take years, but market valuation will precede that.
Last year the company recorded $167k in gross revenue. About $150k of this came from Industrial Finishes, the other $17k was recorded in Q2. I have assumed this was revenue recieved from PPG for sale of it's hardener from HCTI to PPG for PPG to use it in the manufacturing of its newley released product.
Its not known when the order was filled or payed for. We just know it was paid in Q2 2016. Since then, we have received 2 more orders from PPG. 1 reorder was on 3-2-2017 and one on 5-3-2017. This means the first order took at least 9 months for PPG to sell. Then they reorderd. Then they used the second order in 2 months and reordered again.
This action in the orders, and the time line of them, tells me the orders are increasing from PPG. More important, it demonstrates that PPG has at least accepted the performance of the product. (Another side note: I still don't know exactly who this/these consultant(s) is/are, but the fact that he/they helped HCTI ink a deal with PPG, tells me they're the real deal, and I wouldn't expect it to be cheap).
Now, going back to the growth rate of which I assume 100 percent is easily obtainable...This year will likely be double, triple, or more. I would guess about 300 percent growth rate YOY. I believe we will make about $600k this year, which is approximately over 300 percent growth rate from the $167k we had in revenue last year.(This does not include Q4 of 2016, we still don't know the revenue from that period, or Q1 of 2017. Also, Q2 of 2017 will be over at the end of next month...Time flies).
Assuming the 300 percent growth rate, that growth rate would indicate about 200k in 2016, 600k and 2017 1.8M in 2018, 5.4 in 2019, 16.2M in 2020 and 145M in 2022.
I'm being conservative with this number. Remember, the company has forecasted revenue of 2 million this year, I would guess closer to 600k for the FY 2017. Im calculating this based on the increase in frequency of orders from PPG and their release of a second product. Initial order of 17k. Next orders, lets say 20k. With 2 products thats 40k, and at every 2 months, so 6 times a yeat equals 240k. IF reordered. HCTI states 1.2 million from them this year. I would guestimate 250k. Large scale pilot orders in Eu and Asia are probably 50k. Total commecial orders this year they estimate at 800k.I would guess 300K. Thats about 600K. This would calculate to a 300 percent growth rate in revenues YOY from the approximate 200k last year. The preceding calculations are following that growth.
Of course, it can't go on forever like that, it would have to slow down eventually. The move would be parabolic. We could easily experience parabolic growth, it's just impossible for any company to maintain 300 percent forever. It can for a while though.
The business model is there. I love it. The execution will be the hard part. It will demand large capital expenditures. If they were to stick with IF only, they would not need to take on many further debt obligations and could grow organically, using the funds from sales to fund future purchase orders. In this way, while the debt would remain low, the gross revenues would as well.
HCTI has decided to scale up, many partners in various verticals and regions. They can do this since the business model is scalable. Again, I agree with the business model. However, this requires much more upfront capital, and risk. If they were to pass the filed trials in Europe and Asia and get large commercial orders for 5 million dollars worth of product, could they fill the orders? Unfortunately, the answer is no. That is unless they have agreements with manufactures and other partners to fund, or "front" purchase orders, or using related party loans or external private placements to fund the money.
While this model requires more upfront Capital and debt/risk, it's the only way to penetrate and obtain market share before competition or bigger money takes over and fills their position.
We seem to have the better mouse trap. This is a nice way to obtain the market share. Unfortunately, the past has proven that the best way to obtain the market share of the TAM, is to actually be first to market rather having the better solution. So, since the company has the product which works very well (this fact is proven by the accelerating of orders from PPG and years of testing they did prior) and the business model is planned around quick market penetration, this is a recipe for success in actually OBTAINING that market share. It's not only a great business model, but a great market to be in. The market itlsef is absolutely enormous. Combine that with the fact that the market itself is growing as well, and there is a situation where even a small market share of a consistent percentage of that market still presents large growth opportunities.
As for now, that's all the information we have. We need filings to correctly plot this growth and forecast a future company valuation. Fortunately, the company has provided updates all along the way. They may not have company names, but that doesn't matter as much as the sales. They could partner with joe blow, but if Joe blow makes money, it's all good, or vise versa. They could partner with DOW, but if DOW doesn't sell their product, the name is meaningless.
This was proven with the release of the PPG PR. It's great that we have that partnership, but the market has said, " Oh well, show me the money!".
So, we need financials to make this call. The company has provided regular updates on occurring orders and events. We can use these to an extent. As I've stated in the past, the only PR about an order that was old enough to have been followed by a filing was the IF PR. This revenue was portrayed on the next filing. I expect the same with all of these orders as well. I'm glad to see them increasing in frequency. 1 order from PPG was a blessing. Now that we have three, it gives a lot of validity to the properties and results of the product.
Getting in with PPG could not have been an easy task. To stay with them is very telling. Like I say, I'm using these PRS as a guide to come up with revenue projections. My numbers are far lower than the companies projections of 2 million on 2017. If we do get my expected revenue of 600k, I will be very happy with that growth rate. I believe the market will as well. If we actually do get the 2 million they project, hang on because we will be making 100 million in 3/4 years easily.
I'm just not setting my expectation that high. With my expectations, the stock will do extremely well. Anything else is just a bonus.
These type of growth number will suck in investors with private placements. They will likely pay a premium. When this type of news is revealed to the public, the stock soars higher than the SP paid by the New investor(s).
There are many ways this could be huge. There are also many ways this could fail.
There's really no in between here. It's bank or bust! Good luck peeps.
