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EUO. V - EUROCONTROL TECHNICS GROUP INC. 0.18
Outstanding shares: 89M


EUO just sold their fuel marking (to prevent illicit commercialization of fuels ) technology division ( Global Fluids International, “GFI” ) to Swiss Big Whale SICPA which has USD 1.4B in annual revenue, 3,000 employees and works with about 200 governments around the World . SICPA has been in trade security since 1927. SICPA is the leading global provider of security inks to print currencies like the Dollar, the Euro and the Yen, designs passports and government bonds and solutions for the authentication of value documents and products. Its Security Solutions Division currently secures over US$40 billion per year in excise tax and VAT collection and ensures the traceability of more than 70 billion tobacco, beverage and pharmaceutical products worldwide. It is just mindblowing that this blockbuster company went out of their way to reach out for a technology held by a small micro cap Canadian public company. SICPA´s political connections go far beyond what any Venture listed company could ever dream of. See links here [1] SICPA CEO (International Advisory Board) http://www.atlanticcouncil.org/en/about/international-advisory-board [2]SICPA CEO, Atlantic Council on GFI

[3] Philippe Amon, Israeli Presidential Conference

[4] SICPA OCDE https://issuu.com/oecd.publishing/docs/oecdobserver304_november2015_cop21_ (page 45)

EUO got CAD 16M upfront payment for the sale of GFI and is currently trading at 18c X 89M shares = CAD 16 M mkt cap with NO debt on the books. EUO also, and this is where it gets more interesting, gets a 5% royalty (with a floor minimum of 1.5M CAD/ year) on all of the contracts SICPA will get for the fuel marking programs they will be selling to Governments around the World. This includes both the logistics for the program plus the actual synthetic markers being used. Oil/Fuel marking programs is a 1B USD market globally (as per CEO Bruce Rowlands estimate). GFI only has one serious competitor which is Authentix in USA. GFI is the only ISO certified fuel marker on the market and Mr. Rowlands, has repeteadly refered on public appearances as Authentitx tech being "horse and buggy" compared to GFI´s. The only reason EUO was never able to compete on a global scale Vs. Authentix was by its very limited resources and size ( EUO only got 3 contracts: Albania, Uganda and Tanzania, and lost many tenders because of bribes Authentix could get into with government officials which EUO could not). By contract, EUO will also be supplying Xenemetrix spectrometers on a exclusive basis to SICPA for their fuel integrity programs , these are needed to read into the fuel samples taken to check fuel has not been tampered with or illegally smuggled or else. Xenemetrix is a 100% owned subsidiary of EuroControl, so this will be another layer of extra income for EUO (gross margins around 40-50%).

Now let´s say SICPA only gets 10% of this global market or USD 100M / year which is around CAD 140M, 5% of that flows to EUO = CAD 7M / 89M shares = 7.9c of income flowing to EUO. How much is EUO worth then? I dont know but certainly not 18C ! , the market is OUT TO LUNCH on EUO.As the market is depressed I will say PE of 5 = 40c. What is best yet, let´s say EUO´s plan is to spin that out as dividends, which EUO´s CEO is on record as saying this is their intention, apply a conservative 8% yield, now it gets better = 99c. Not bad for a 16c stock. Again, this is only with a 10% of market penetration for SICPA´s new unit Global Fluids International (GFI), a very high yield of 8% which in this negative interest rates World I am sure could actually be much lower and it leaves out any value for Xenemerix division and XwinSys. As an aside, there is a curent tender (see link http://ec.europa.eu/taxation_customs/taxation/excise_duties/energy_products/other_energy_tax_leg/index_en.htm ) to supply with a new fuel marker the 28 states of the entire EU which I estimate could easily be worth around 150M-200M that will be awarded before end of 2016. The size of this contract alone has obvious blue sky potential to EUO shall SICPA get to be awarded with it. Say 150M at 5% royalty = close to 12c CAD in royalties to EUO just on that contract alone representing clear path to above 1CAD share valuation.

Xwinsys (fully automated metrology system for the semiconductor industry that combines 2D and 3D image processing technology with Xenemetrix's ED-XRF technology ) is a company maker onto itself, it is much more advanced than what reading through their last MD&A or even their last Jan. presentation would led one´s to believe. Check what Robert McWhirter has to say about it here: Robert McWhirter on BNN http://www.bnn.ca/Video/player.aspx?vid=804337: I suspect Mr. Rowlands will be looking for a similar type of deal as with SICPA if successful, i.e: upfront payment + royalty stream in return for selling the tech. I could only dream of where the stock would be at with 2 large secure royalty streams at once supporting annual dividends maybe higher than current market cap.Actually news just broke out yesterday on XwinSys
that is now has successfully concluded its trials with an unamed chip manufacturer, this news is like a drug manfacturer getting final approval from the FDA, after its successful trials. This is a major news developement and should have EUO flying. The potential is somewhat
staggering and yet the stock continues to fizzle.


To sum it up I believe EUO is the best risk / reward opportunity on the Canadian market at present as it is trading at 18c, its valuation is backstopped by it current cash value of around 17c a share and NPV of 22-24c factoring minimum royalty payments going forward and presents a blue sky scenario of potential royalty streams than could easily far surpass its current market cap going forward. Further potential roll outs of other commercial applications of their Xenemetrix spectometers such as Petromarine not even discussed here.

Note: Just about the time I ended doing my EUO write up, another write up has surfaced on Seeking Alpha, with very good detail on the company prospects but with a somewhat conservative price target of 0.55 per share ( my thoughts being closer to at least a 10 bagger from current price level)

http://seekingalpha.com/instablog/1107010-edward-vranic-cfa/4556266-petromark-can-stop-funding-terrorism-criminals-smuggling-oil