Big Tree Group Inc (BIGG)

[mcmike]

TNSX waking up: DueDiligence #5

Transax continues to remain under the radar even though they have made 3 material announcements this year that point to significant coming increases in transactions and revenues:

2005 Revenues were $3.38mill. vs $1.20mil in 2004

In February, Transax announced a strategic relationship with with Brazilian firm CEBIM (Centro Brasileiro De Informatica Medica S/A), developer of the country's premier medical Practice Management System

"It is expected this strategic partnership will generate additional revenue of approximately US $2 Million per year for Transax."
http://biz.yahoo.com/iw/060214/0109830.html

In April, Transax announced a contract with the Brazilian self-managed healthcare company Caixa Beneficente dos Funcionários do Banespa, or Cabesp.
"the contract is expected to add in excess of $400,000 in annualized revenue."
http://biz.yahoo.com/iw/060420/0124045.html

Just this week the company announced a U.S.-based pilot with National Health Services.

"Transax will generate revenues in two ways under this agreement. As with existing clients, Transax will collect revenue on a per transaction basis for the delivery of its real-time billing and adjudication process. Transax will also receive additional revenues for provision of real-time payment to medical providers following the auto-adjudication of healthcare claims. The Company believes this model, with respect to real-time payment of auto-adjudicated healthcare claims, has not been previously achieved in the U.S. healthcare marketplace."

Elizabeth Gannon, President & CEO of National Health Services, commented, "Transax, with its cutting edge technology, offers a unique set of solutions which address key issues facing health insurers today. We are excited to offer the MedLink solution to our growing network of healthcare partners, many of whom are requesting alternatives to the high costs and time associated with processing claims and payments."
http://biz.yahoo.com/iw/060510/0128133.html

Real time payment functionality, which gives medical providers payments in days instead of months was first announced in December 2005
http://www.cbronline.com/article_news.asp?guid=16FD946C-FD19-4FE9-A929-915BD15E1BB0

At the end of April Transax reported preliminary Q12006 results.
They noted that "During the quarter ... replaced many legacy solutions amongst our client network, resulting in 65% of transactions now coming from Point of Sales (POS) installations. Five medical laboratories were newly integrated with the Company's solutions this quarter in Brazil. During March 2006 the Company undertook a record 150,000 real-time medical laboratory transactions on behalf of its clients."

The medical lab relationships are not new, but with upgraded solutions the transaction volume is sure to jump.



Transax is scheduled to report their first quarter on Monday May 15.
They have signed on a new IR marketing firm: Transax International Retains ROI Group Associates, Inc. for Investor Relations Marketing

"ROI assists clients in gaining exposure with retail and institutional investors, raising capital, locating and completing acquisitions, and developing research and investment banking relationships. All of this is done as an integral part of a systematic, long-term investor relations program."
http://biz.yahoo.com/iw/060327/0114577.html

At the turn of the month Transax participated at the National Healthcare Payer Summit

This meeting was postponed from December due to last year's hurricanes, but gave the company the chance to showcase their HIPAA compliant Medlink solutions. I would suspect that the company's capabilities that brought National Health Services to a rollout were also an eye opener for the healthcare providers and health insurance companies who attended the summit in Palm Beach Gardens, Florida
http://biz.yahoo.com/iw/060425/0124910.html

The current market cap of TNSX is only about 1.32 times last year's revenues based on not quite 32 million shares outstanding.

The one cloud: a $1.6 million converted preferred share sale, announced last January, to Cornell Capital for which an SB-2 has just been filed. This financing terminated a prior promissory note to Cornell and gave the company working capital in January of $550K and, based on the filing this week, an additional $800K.

The conversion will be at a 20% discount to "the lowest daily volume weighted average of the Company's common stock, as determined by price quotations from Bloomberg, LP, during the ten (10) trading days immediately preceding the date of conversion???" I have made inquiries re. what the "date of conversion is"


Last year’s SB-2 filing was eventually withdrawn, and I suspect this one may be as well. Even if it isn't and the number of shares outstanding balloons my projections are that the price/sales for 2006 will still be below 1.5.