Grupo Resilient International Inc (GRUI)

[Stronglong]

Ok folks, please correct me if I'm wrong...but I get the idea that Frank and Tom are positioning the new company for sustained growth in the share price in the way they have managed the creation of the new company.

Just look at the numbers.

The new company will have an OS of 47.22 million. 17.22 million shares will be created for issuance to HISC shareholders (861 million divided by 50), while I believe that Actsoft will have 30 million shares (I'm assuming that Tom Mitchell still values his company at $15 million, so he gets 30 million shares of the new company since opening price at BB is 50 cents per share). I'm not sure whether any more parties (owner of BB company?) will be getting shares. If so, then OS might rise higher, but if it is just a shell without any revenue, I cannot see a significant addition to the OS.

More importantly, see what the new merged company will be getting in return. They will be getting all the software side of the HISC/Actsoft partnership, namely the $25 million in revenue that Actsoft is projecting to do this year + all the monthly software revenue that will come from the CTs etc. So we are getting a company with projected revenues of at least $25+++ million (and I think Actsoft can meet the $25 million quite easily)....with an opening market cap of only $23.6 million. If I take Actsoft profit margins of 36-41% (ok, once again, conservative me will use 30%)...that translates into 2006 profits of $7.5 million. 2006 EPS is then projected to be 15.9 cents per share! A P/E of 30 gives me a price of $4.77 (0.159 x 30) while a conservative discounted cash flow model (5% annual growth and 8% long bond rate) gives me a price of $5.30 ($0.159/[0.08-0.05] = $5.30)

Now tell me, doesn't 50 cents for the new company sound undervalued?