While I think that price might be stretching things, this is what I think management is trying to do.
I believe they have a 2 year plan
First year build out the business by opening clinics and prove the business model by growing revenues, cash and showing profitability. The more growth they continue to show the more attention they will get
After you get decent sized footprint, you will continue to grow but can shift focus on the financials. Once the clinics are opened and running they have very fixed costs and appear to be cash generating machines. this will allow management to clean up the balance sheet by paying off and/or renegotiating debt while increasing assets making the company less and less leveraged.
With excess cash they can start the process of a share buyback cleaning up the share structure.
After these tasks are completed you will have a company that is profitable and has a very clean and attractive balance sheet as well as a decent share structure. this will set them out for a buy out from a firm as this would be an easy company to buy and take over the clinics as most of the heavy lifting would have been done.
In my opinion Robert is looking for a large payout, if this company can do $25M in revenues or more and achieve 15%-20% net margin you are looking at net income of $5M and EPS of .01 with 710M outstanding, with PE of 50 which would not be abnormal for industry or growth profile you are looking at EPS of .50
Now that would value the company at $355M which could be a little high, but we have seen large sums of money thrown around for M&A for less. But I think that is the goal and the overall plan.
And to be honest there are a lot of things that can make this even more attractive. If they start penetrating other states, get federal funding, sell and distribute products from RSII, offer additional therapies, get hooked up with the VA clinics, obtain traditional financing and many other possibilities the sky is the limit.
I said last night that this stock is confusing to the OTC crowd, its not a momo, high volume flipping stock. This is trading more like a big board stock that is slowly increasing to its true valuation based on projected earnings and growth. That is very abnormal and we have not gotten the attention of people who would tend to invest in those types of stocks. We are kind of caught in that middle territory at the moment.
But so far management is knocking it out of the park and Q3 should be great and sure we will have news on multiple fronts between now and then. They keep us informed but also do not act like a company that PR's every week to bolster volume to get the PPS up, they are building the company and everything else will take care of itself.
Now it could all crumble and not pan out but they certainly have earned trust to pull it off
