M&A business
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An accountant would not have to ask the question. It is clear by studying the filing. The mistake was in favour of DECN or better said, the loss is/was smaller by an amount of roughly $ 231.000
Good to know - I am always pleased to find Money in the bank.
Smart , smart. Would not be surprised if DECN had not hired somebody to look into the CV of this “so-called” expert and if they found out then J&J certainly could have found out as well.
First you lie about the patent then you present an expert who lies about his CV, wondering what the Judge will think about all this.
Maybe it would be time to look into other so-called experts J&J used in court in other cases.
Be as it may: J&J lost all credibility and due to the presentation of a fake-wittness, DECN lost time and possible Revenues.
Sorry for my interference on this subject, themore as I am only in this stock since fall 2012.
It is very possible that he is ahead with his Investment or said the other way around, has a positive return on equity.
The stock Price we see today is split adjusted and you may recall that in 2009 the stock hit an absolut low and then again in 2012 but then a higher low. The traded volumes in the period pre 2010 were almost nothing and volume started to come in late 2009 and then around middle of 2012.
Let's assume he would have bought XXXXX Shares 10 years ago for amount x and would then have used the Price collaps in 2008 and 2009 to double up the amount by buying Shares and again in 2012 to invest more. From the XXXXXX Shares at start he could be sitting today on 2 Mio shs at a cost below 0.10. It always depends on the Money power one has available.
The average down during Price during collapses with the same amount or double amount, can of course then reduce your average Price up to 90%.
We can take a short example who it would work.
$ 10.000 $ 1.-- 10.000 shs.
$ 10.000 $ -.50 20.000 shs
$ 10.000 $ -.20 50.000 shs
Total 30.000 invested and 80.000 shs. = 0.375 or down 62 % from the first Price of $ 1.-- Now somebody with Money at Hand and convinced about the Company could have doubled or tripled his purchases and then the average Price of course would be much much lower as it already is with only the 1 to 1 Investment.
Read today that some hedge-funds used exactly this strategy with Brent so as to get down to a Level to be seen again, when Oil stabilises and recovers.
One should never take something out of context whithout posting then as well the Settlement in 2010.
Cragmont Capital, LLC vs. instaCare Corp. et al.
The Company received a legal complaint on March 27, 2009 in connection with its 2008 transaction with Cragmont Capital,
LLC ("Cragmont"). In Cragmont’s Complaint it claims it is entitled to recover the unpaid balance of $75,000 on a Promissory Note
allegedly due in February, 2009, plus interest of $14,063, and attorneys’ fees. Cragmont has amended its complaint twice, the last
amendment to raise issues concerning whether it has a legal right to exercise certain warrants.
The written agreement with Cragmont was signed in the first quarter of 2008. The Company raised various affirmative
defenses to Cragmont’s claims, including claims of breach of contract and misrepresentation, and has sought to rescind the entire
agreement. The Company terminated a portion of its relationship with Cragmont for cause, in May 2008. The Company believes that
Cragmont breached its obligations in connection with the promised parallel financing transactions. The Company would not have
entered into the March 2008 agreement but for the representations of Cragmont concerning the parallel finance transaction[s].
In March 2010, and as part of its recession, the company has returned the $75,000 it received as consideration in the
transaction. On October 1, 2010 the parties entered into a final settlement thereby bringing an end to the litigation.
I start to understand, why DECN (Former Instacare Inc) has not only friends. The ghosts from the past are still wandering around. Congratulations to KB that he was able to recover those Shares.
instaCare Corp. vs. Ronald Kelly, et. al. (“Kelly”)
In July of 2005, the Company filed a complaint in the United States District Court, for the Central District of California (Case Number CV 05-4932-RSWL), against Ronald Kelly, Linda R. Kelly, Kimberly Kelly, and Kelly Company World Group, Inc., seeking damages for:
1.
Fraud;
2.
Declaratory Relief;
3.
Breach of Fiduciary Duty;
4.
RICO violations;
5.
Injunctive Relief;
6.
Conversion;
7.
Breach of Contract/Breach of Corporate Merger Agreement; and
8.
Accounting and Ancillary Relief.
On December 18, 2006, the United States District Court, for the Central District of California ordered, adjudged and decreed that the Company shall have judgment against Kelly in the amount of $200,000, pursuant to the stipulation of the parties.
In addition, pursuant to a mutual release agreement executed by both parties, Kelly waived any right, claim or ownership interest in any shares of common stock of the Company. Kelly returned 31,958,000 (pre-reverse split) shares of common stock to the Company which were placed in one of the Company’s majority owned subsidiaries. The Company has recently stepped up its efforts to collect on this judgment.
If you post something against DECN why not posting the reply from DECN (AT THAT TIME INSTACARE CORP) in their filings. Sounds a Little bit different. (Although an old Story, but as you brought it up, here from the old filing in 2009)
This excerpt taken from the ISCR 10-K filed May 18, 2009.
Cragmont Capital, LLC vs. instaCare Corp. et al.
The company was sued on March 27, 2009 in connection with its 2008 transaction with Cragmont Capital, LLC (“Cragmont”). The Cragmont Complaint claims it is entitled to recover the unpaid balance of $75,000 on a Promissory Note allegedly due in February, 2009, plus interest of $2,812.50, and attorneys fees. Cragmont also has made claims of fraudulent misrepresentations in connection with that Note, including personal claims against the Company's directors Keith Berman and Robert Jagunich. A demurrer to the Complaint has been filed as to all misrepresentation claims. The Company terminated its relationship with Cragmont in May 2008 for cause. The Company does not believe that Cragmont Capital lived up to its obligations in connection with the financing transaction, and instead pursued another agenda detrimental to the Company. The Company anticipates that it will shortly be filing a cross-complaint against Cragmont and its principals for damages.
100 % with you.
The market is here and DECN should catch it's share and for this reason a quick Settlement should put the past ad acta and open the door for a bright future.
The advantage DECN would have as being a small cash-rich company is obvious.
Most starters who under the burden of debt start already with a problem.
- The production and the period for production costs money (Interest on the borrowed capital)
- The period to bring the product on the shelf at chain stores
- The period to be getting paid.
Taking this into consideration, a company with debt, pays interest on the loan for up to 6 to 8 months until they see a cash-flow back.
Now this interest cost will of course have to be added to the COG and the higher the costs the lower the margin and the lower the margin, the less you can negotiate discount prices.
This is the message from DECN’s management, that they want to be in the market at prices very attractive for customers and with cash in the bank, they would have this possibility as they would not be burdened by loan coasts and repayment dates.
People buying shares look at various criterias, however a sure fact is of course the cash in the bank gives a ratio cash per share and this is a component the market could be price 2 times.
Then comes the expected growth rate. How big is the market DECN is working in and what is possible?
If the market sees a 10 % potential then the next question being asked, how long will it take to achieve this target? If a certain consensus is agreed, that DECN would need 5 years then of course the market could give them a high Trailing Twelve Months Earnings per Share. Or to say it in figures: The present capitalisation would be ex Cash: $ 15 Mio and the market anticipates $ 300 Mio in 5 years (or 1 times revenue or 10 times P/E by then) then the stock would have to perform over a period of 5 years with an EPS far above the average and this is what DECN could make sexy for some.
Being Debt free, cash rich, huge market potential and with a very high growth rate just for the 10 % share.
But the best is yet to come. Based on the B.Graham Intrinsic Value Formula (made famous be W.B. and C.M.) DECN would actually be a must buy.
And the formula works even better with small companies than with bigger ones who already control the market. If you control the market, form which corner you get the growth. But if you are smaller company you can get growth by just taking some share out of the size the big one has.
But for having this possibility you need money and therefore a low debt to equity ratio would of course be favorable. But DECN would not have any debt and therefore – over time of course - actually the choice of some small cap funds for tracking the sector.
As you can see from the list below: P/E ratios are ranging from the low end of 16.77 to the high end of 36.59. And the debt to Assets by all rather high. But with cash in the bank, DECN would be an exception.
Not shown here the Japanese companies which are as well in the medical equipment, supplies & Distribution sector. They show even a higher growth rate than the US-counterparts but it may have to do with the high growth rate in the Asian markets.
DECN with no Debt would be outstanding in this sector and my guess is, they would fetch a P/E at the high end closer to 40 than not. l wish list for looking into early 2015
My wish list going into 2015:
- All filings out
- DECN settled with J&J
- Cash booked in the bank
- Various magazines taking the story up creating shareholder-awareness a cross the board
- Genstrip hitting the market through private deals or under private label deals
- CE mark granted – opens the European Market
- Maybe a surprise with an separate product
I would guess plenty of money would chase this wonderful bride.
And what is Special about this? Nothing
I am keen to hear your new Story.
When posting a post from me, just copy / paste the whole text.
AND AGAIN, WHERE DOES IT SAY, THAT I TALKED TO MR. K. BERMAN?
I agree with you, to get funds and other Boys attracted they Need to be en - current. It is actually that Corporate Governance requests this.
I took the opportunity to talk to the Company with reference to this subject and of course they would prefer as well, that such a Situation would not exist, but you cannot turn the clock back. Based on the way it stands: Everything: the 10 K and 10Q will all be out at the latest of end of January. What I cannot tell you, if the 10K for 2013 Comes before and the the 10Qs for 2014.
The reason: The new Auditor insisted to re-audit the 2011-2012 although the latest 10K covers the period 2012 however in the 10K for the period of 2013 the 2012 is of course an integrated part. So as a matter of fact dual-work or twice done. They are almost done with 2013 which of course is the must to cover for moving over to the 2014 period with the 10Q's which is easier as they do not have to be audited like the 10K.
I talked to the Company:
Where do you see the word "K.Berman"? Just curious
It is always good to go "positive" into the Weekend.
Of course not. There won't be a cash pay out. The Money will stay in the bank of DECN and be used to finance the production Pipeline. If the Company performs so will the stock and a higher Price will of course add value to your personal fortune of those shareholders who will stay with the Company.
Nobody is forced to stay with DECN or buy DECN this is all free choice as actually with any other Company.
Trying convulsive to build a Story about something which had nothing to do with DECN and or Pharmatech.
Case closed and even published with a press-release.
The recent FDA letter was singularly directed to Shasta Technologies LLC. No other company was included, either, directly or indirectly. PharmaTech was in full agreement with the FDA in its criticism of the deficiencies of the Shasta quality procedures and monitoring system. That shared opinion significantly contributed to the acquisition of GenStrip and the immediate quality and regulatory oversight that is now provided by PharmaTech.
Shasta during this period did not belong to Pharma-Tech or DECN. They had a simple licence Agreement. I would guess that everybody knows the difference between being a licensee or the owner. Today, Pharmatech is the owner and Pharmatech is controlled by DECN.
Right on target what you wrote:
Just my opinion but how often do we see a company with $15M or so in the bank with an already FDA approved product and proven sales chain and at least one more product ready to go?
In the .OB market I would guess - None.
Can you help with this post, where I say I spoke to Mr. Berman?
Explicit the wording: Mr. Berman
Agree with you. But then what is wrong changing the formula if it is dictated by Forces we have no control over.
As an example I can give 4 recent Settlements in Europe. They came in all 60 % lower than estimated in the press. But the markets took it in a positive way. No shareholder likes when his Company is blocked due to litigation and no shareholder likes Money being spend for lawyers just to drag a case on.
We may have diverging opinions in this case but I as a shareholder prefer a quick solution and the go back to Business with Genstrip and if possible with another product.
I would be happy if you bring me a small Company that was sued by the biggies - especially J&J - and won the Kind of amount we are talking here.
But for some it is Money, for some it is not Money. And I go with the US press and UK press that took the subject up in early 2013 and did not give much credit for DECN to make it against J&J. And voila here we are:
To put the figure $ 15 - $ 20 Mio into perspective, this would be as if DECN would have been operative and made $ 7.5 Mio or $ 10 Mio net Profit per year.
I take it. Thanks
I try to Digest certain things.
1.) We have DECN who got sued by J&J. As a rule if this happens, most of the smaller ones will not survive it.
DECN SURVIVED
2.) What is an andisputed fact: DECN won - without if and when.
3.) Having been blocked for doing Business since J&J sued them, it is then clear that advisors and Management who fought this war are keen to settle it and go Forward with cash in the bank and keeping Genstrip.
4.) A delay for another 1 or 2 years just To go for a higher figures means what? That the market in front of your nose will be taken up by others. So where is the Beef? Maybe to gain another $ 20 Mio in 2 years but having accumulated as well more litigation costs and during this period not being operative?
I have seen similar cases In Europe in the causa Nestle versus smaller companies in the Nespresso litigation. All was settled within 2 years. Why: The smaller ones wanted to be sellers in the market and not wait until somebody else will grab the potential market share. Greed can be destructive as it destroys a lot . So I give credit to DECN and their Management that they entertain the idea as well: To Close this chapter.
Why should a shareholer contact an attorney:
To tell him, DECN got sued from J&J for patent infringement and due to this could not be operative. To tell him, that DECN won the case versus J&J and now is trying to recoup some Money for the damage? And now this attorny should go out and sue DECN for having won?
Are you serious?
You write: Settlement is not Profit? What is it then?
Strange: If I get sued I have to pre-invest all legal costs. This is what I call an expense and it is booked as an expense. If I get Money out of this, exceeding the expense, then it is a Profit. At least this is what my accountant would tell me.
$ 15 Mio - $ 20 Mio is Peanuts?
To get this Kind of Money over a period of 2 years would mean broken down: between $ 7.5 - $ 10 Mio net Profit or 75 Mio to 100 Mio Revenues.
And it is not 3 years it started in 2013. For me then a fantastic return on equity. If not for you then please Show me a small cap with this Kind of return.
Something we always should Keep in mind if DECN Ends up with $ 20 Mio.
Show me a small cap Company that made a net Profit of $ 20 Mio within 2 years. Does not exist, but if DECN get's this Settlement then it is actually a Profit for 2 lost years fighting against J&J.
I would then say, not bad for a start.
Screening through the 1oo's of small caps who have nothing than an idea but market caps exceeding 30 Mio plus then DECN with a capitalisation of roughly $ 15 Mio is a gift.
Being supportive for a possible deal that would give DECN 20 Mio Cash into the Treasury, I thought to entertain the idea, what this would mean for the future.
Let,s calculate a possible Cash Turnover Formula.
Assume DECN in 2016 would generate sales for 30 Mio (or 1 % of the Lifescan market share)
Assume DECN would have 20 Mio Cash in the Bank.
Assume those 30 Mio Revenue would yield a net profit of $ 3 Mio (10%) it would then mean, that their cash is yielding: 15 % (3 Mio of 20 Mio)
So then at the end of 2016, DECN would have $ 23 Mio in the Bank.
So the cash turnover ratio would be 30 Mio divided by $ 23 Mio = 1.3. (This would be much too low of course, but it would as well mean, that DECN would have to much cash at hand) as this would mean, that every $ 1.—of their cash generated only $ 1.3 worth of revenue.
CONCLUSION: If with my extremely low forecast of a Cash Turnover Ratio of 1.3 DECN profits yields 15 % of their cash in the bank, what would it then yield if DECN would reach 100 Mio revenues in 2017 (3,3% of the market-share Lifescan has)
The CTR would be: With 10 % net profit margin = $ 10 Mio.
Ratio: 100 Mio divided by 10 Mio (2018) plus 23 Mio (Reserves plus 2017) = 3.3 % and the yield to cash would be (10 Mio of 23 Mio) = 43 % Yield. (Every Private Equitiy Company would get tears in their eyes with such a return on Cash)
What would this do to the stock? Well that would be rather obvious – up – up – up.
Let’s assume the company has 50 Mio O/S by then.
The capitalisation based on a P/E Formula of 15 (expected growth rate) would be 150 Mio (based on 100 Mio revenues)(excl.Cash)
The company would have Cash at hand of $ 33 Mio which would be too much based on the low CTV. So the company would do what AAPL is doing: Use the 50 % of the Cash to buy back shares or roughly 16.5 Mio. If this trend becomes a pattern, so the stock will get 2 momentums:
- Expected growth rate of 15
- Expected buy backs every year of shares with 50 % of the revenues.
The stock would outperform year over year and become a Darling of the Small-Cap or Medium Cap Industry.
And this all: Because DECN was in a position to start with plenty of Cash and no debt. From this point of view then, I would fully support the management in their idea: To get this deal done. Close the books and go ahead with Genstrip and another product and go for revenues of 300 Mio which could easily be financed by the ever growing Cash-position even after deducting 50 % of the net profit for buybacks. Well, if this is nothing to go for?
The time for monopoly is over. It is all about market share. Closing a deal and getting cash into the treasury will open the window to go after the market. Give me a small company that will at start have millions of cash in the bank and no debts? Will be though to find one. Except DECN if they finally settle.
But being blessed with liquidity and a billion market in front of your nose will get the necessary attention. Let’s wait for the release of a settlement, which I would support and some journalistic figures will take the story up.
When you have 3 billion market (share of Lifescan) in front of the door a lot would have to go wrong not to get a heavy slice out of it. DECN reminds me of Jazz that you could have purchased in 2009 around the same price of $ 0.40 Today $ 168.—At that time, this was the laughing stock. Trying to prove themselves against the big ones, but they did it. Never ever underestimate the unexpected. The market DECN could penetrate is huge and if they – if and when the cash is in the bank – team up with the right people to marked their product – and maybe as well another product – those laughing today could be the ones crying tomorrow.
Agree - and DECN can go back to Business.
Exactly
Ok - did not see it but I cannot imagine it, the way he communicates and as a matter of fact would not make sense.
In the other post where I send you the link the wording seems clear to me: Stick with the product and have cash to go Forward.
Frankly either I am confused or somebody else here.
Nobody said, DECN will give up GENSTRIP on the contrary.
Based on my understanding:
1.) Get plenty of Money in the bankd
2.) Can go Forward negotiating deals with Retailers
3.) J&J never can use the patent question against DECN.
I would say, this is the needed Trigger that DECN becomes a "producing" Company with 1 or 2 products and not a litigation Company.
As a producing Company one can trade the stock ahead of expectations and with this Kind of Money in the bank they will not have expenses from the interest front because they do not Need any borrowing nor Dilution.
Sorry, I did not see it that way, that they give up the Strip.
Read: Frankly, if they Keep (here I understand DECN) the product and also get a slug of what will become a lot of working capital, it is a win-win-win. DECN gets the bounty, gets the snob appeal of having beaten Goliath (which believe it or not has a huge effect on big investors), and J&J gets to keep their patent that can never again be used against DECN.
Thanks for this.
Exactly as well my Point.
This will be the start of the new cycle:
Let's try to work out a target - base.
To put a possible value on DECN the best is going forward step by step.
1.) The estimated size according to Global Data: the entire monitoring market will reach $12.2 billion by the year 2017. As a point of reference, in 2010, the test strips themselves accounted for close to 90% of the total market value. Therefore, over $11 billion will be up for grabs in 2017 on the sale of test strips alone.
2.) According to a report compiled by industry and Roche analysts; Roche controls 29.1% of the blood glucose market, Lifescan 26.5% (Lifescan is owned by Johnson and Johnson, JNJ), Bayer (OTCPK:BAYRY) 14.6%, Abbott (NYSE:ABT) 14.6%, and all others 15.2%. In order for one of these companies to gain momentum in developing countries it is necessary for them to drive down price points and to offer a more affordable option.
3.) Which way will DECN take to penetrate the market? This is up to the management of course, but besides selling directly through the “growing” online channels, the will sell through the know Retailers and they as well will negotiate with interested parties that will sell then under a private label brand.
Taking the 2017 market size of 11 billion and the 26.5 % market share from Lifescan we are talking about a direct potential of 3 Billion under control of Lifescan (J&J) It is obvious that DECN would target those clientele. But the question is: What is probable and what is possible. As one wrote in an UK Forum, 10 % for Lifescans market share would be a non-brainer and I give credibility to this voice as it must be an Ex Janssen guy who understands the market mechanism.
So if we leave the 10 % as given we talk about 300 Mio Revenue but for sure to buck would not stop here as DECN could as well expand into other territories and as well offer – besides strips – something else. We should not forget, that DECN if blessed with funds from the J&J case would be in a position to act debt free and therefore create enough velocity to expand rather rapidly.
But all this kind of speculation has attached so many if’s and when’s that it would be wise to concentrate on the obvious one, the 10 % or the 300 Mio Revenue Base. If reached – and markets have a tendency to visualise certain targets long before actually reached, DECN could fetch a market Cap of $ 450 Mio (1.5 times sales or 15 times net profits if I keep 10 % for this item)
Then we have to come back to the O/S question. If and when DECN can count the money from J&J then it is clear the dilution party is over. No need for further issuing shares as they could refinance themselves easily and even start a buy-back program.
So based on my model: DECN with 60 Mio O/S once everything is over and 450 Mio capitalisation would be equal to $ 7.50 per share.
If and when DECN has enough cash in their Treasury to finance their pipeline, they could use part of the surplus to repurchase shares (like Apple and others are doing because there is no better use for their surpluses) This of course would then throw the mentioned stock price target over board. The question is: What does DECN want in 3 years. I would say, the management is not that young anymore to stay on board for xx years and this of course could then mean, that a well driven and cash rich DECN could become a very attractive bright for some.
Having said all this: From my point-of-view, DECN offers (once the J&J case is out of the way once and forever) a very very substantial upside. Whatever will be paid into the Treasury will be considered Cash per share. My take is, that we are going to end up with at least $ 1.—in Cash (or less) and from there on the party will begin and the market will start to figure in the possible revenue base within 3 years.
For every market student going back 50 years the saying goes: Gee why wasn’t I around when this stock was cheap. Well I will tell you, some would not have bought it because at that time nothing was perfect and to many if’s and when’s. And so it happens every day: We see something and despite we are in a position to make a cross-analysis and can see the potential even if we attach a 90 % discount to the market potential, we quarrel about this and about that and then walk away. But this is not the stock market. A cheap stock presents something the majority cannot see or doesn’t want to see and from my point of view, it is good so otherwise everything would be priced at perfection and then nothing is left on the upside.
Conclusion: It is obsolete to dream of targets but it is right to figure out a high probability of price within the next 3 years and $ 7.50 is certainly not that speculative then.
A final note: Nobody from us knows what Kind of Settlement will take place; in Dollar Terms speaking. There are various possibilities. But of importance is, that enough Money is in Play to make DECN an outperformer in 2015.
With this Kind of cash, DECN could trade $ 7.50 within 3 years. See my previous Posts. But if you fight another 2 - 3 years, you may win the battle but lose the war. The market is here now to penetrate and with this Kind of cash they can move rapidly
It is all about generating revenues and as I said before, once the dust has settled, DECN is free to negotiate deals under their Label or under private Labels and more.
Do not Forget, cash in the bank is the only cash you have for sure. This would put DECN into a very comfortable Position to finance their Business out of Treasury. No third-financing no further Dilution but signing up Business that creates revenues. 15 - to 20 Mio would be equal to 45 to 60 Mio buying power if one measures Money based on the velocity rule. Not bad if we multiply this by 3 for a possible Revenue Turnover at start.
Sometimes one should think twice before becoming too greedy. If I would be DECN I certainly would consider.
Out of this, DECN will grow strongly.
NGL fits the same criterias but has not a message board. Book-Value double of the present Price. Thanks for this huge Discount.
Starting to build up positions here. From $ 30.- down to $ 10.- is enough for a scraming buy. Could be the Blockbuster in 2015 as soon as the market get's the message that oil and gas will still be around in the near future.
I am sitting here at the bid and nobody wants to give me Shares. Not fair I would say.
Read today in the New Yorker from the 17 year old Student who made roughly 70 Mio in the stockmarket.
One Quote from him why he made it in start-ups, Young companies and even pinky ones. (risky Business)
“It all comes down to this,” Mo continued. “What makes the world go round? Money. If money is not flowing, if businesses don’t keep going, there’s no innovation, no products, no investments, no growth, no jobs.”
How right he is and DECN keeps going all the way against J&J. So what could $ 0.35 become if all goes well:
To put a possible value on DECN the best is going forward step by step.
1.) The estimated size according to Global Data: the entire monitoring market will reach $12.2 billion by the year 2017. As a point of reference, in 2010, the test strips themselves accounted for close to 90% of the total market value. Therefore, over $11 billion will be up for grabs in 2017 on the sale of test strips alone.
2.) According to a report compiled by industry and Roche analysts; Roche controls 29.1% of the blood glucose market, Lifescan 26.5% (Lifescan is owned by Johnson and Johnson, JNJ), Bayer (OTCPK:BAYRY) 14.6%, Abbott (NYSE:ABT) 14.6%, and all others 15.2%. In order for one of these companies to gain momentum in developing countries it is necessary for them to drive down price points and to offer a more affordable option.
3.) Which way will DECN take to penetrate the market? This is up to the management of course, but besides selling directly through the “growing” online channels, the will sell through the know Retailers and they as well will negotiate with interested parties that will sell then under a private label brand.
Taking the 2017 market size of 11 billion and the 26.5 % market share from Lifescan we are talking about a direct potential of 3 Billion under control of Lifescan (J&J) It is obvious that DECN would target those clientele. But the question is: What is probable and what is possible. As one wrote in an UK Forum, 10 % for Lifescans market share would be a non-brainer and I give credibility to this voice as it must be an Ex Janssen guy who understands the market mechanism.
So if we leave the 10 % as given we talk about 300 Mio Revenue but for sure to buck would not stop here as DECN could as well expand into other territories and as well offer – besides strips – something else. We should not forget, that DECN if blessed with funds from the J&J case would be in a position to act debt free and therefore create enough velocity to expand rather rapidly.
But all this kind of speculation has attached so many if’s and when’s that it would be wise to concentrate on the obvious one, the 10 % or the 300 Mio Revenue Base. If reached – and markets have a tendency to visualise certain targets long before actually reached, DECN could fetch a market Cap of $ 450 Mio (1.5 times sales or 15 times net profits if I keep 10 % for this item)
Then we have to come back to the O/S question. If and when DECN can count the money from J&J then it is clear the dilution party is over. No need for further issuing shares as they could refinance themselves easily and even start a buy-back program.
So based on my model: DECN with 60 Mio O/S once everything is over and 450 Mio capitalisation would be equal to $ 7.50 per share.
If and when DECN has enough cash in their Treasury to finance their pipeline, they could use part of the surplus to repurchase shares (like Apple and others are doing because there is no better use for their surpluses) This of course would then throw the mentioned stock price target over board. The question is: What does DECN want in 3 years. I would say, the management is not that young anymore to stay on board for xx years and this of course could then mean, that a well driven and cash rich DECN could become a very attractive bright for some.
Having said all this: From my point-of-view, DECN offers (once the J&J case is out of the way once and forever) a very very substantial upside. Whatever will be paid into the Treasury will be considered Cash per share. Figures are ranging between $ 12.5 Mio but then up to $ 120 Mio if all is figured in. My take is, that we are going to end up with at least $ 1.—in Cash and from there on the party will begin and the market will start to figure in the possible revenue base within 3 years.
For every market student going back 50 years the saying goes: Gee why wasn’t I around when this stock was cheap. Well I will tell you, some would not have bought it because at that time nothing was perfect and to many if’s and when’s. And so it happens every day: We see something and despite we are in a position to make a cross-analysis and can see the potential even if we attach a 90 % discount to the market potential, we quarrel about this and about that and then walk away. But this is not the stock market. A cheap stock presents something the majority cannot see or doesn’t want to see and from my point of view, it is good so otherwise everything would be priced at perfection and then nothing is left on the upside.
Conclusion: It is obsolete to dream of targets but it is right to figure out a high probability of price within the next 3 years and $ 7.50 is certainly not that speculative then.
A final note: Nobody from us knows what Kind of Settlement will take place; in Dollar Terms speaking. There are various possibilities. But of importance is, that enough Money is in Play to make DECN an outperformer in 2015.