Labwire Inc (LBWR)

[Bobwins]

Creede....as you say, Labwire is a small company with no debt. Expand the K-9 unit business and you are going to need debt and lots of people. Debt because you will have to finance the growth. That is what is so sweet about the software side of the business. The business is VERY scalable. Big clients, install software, train, collect fees as the big clients expands the program to many thousands of employees. Minimal capex and you can wait for the receivables because your expenses are not that great for each installation and are covered by existing staff.

The k-9 operation is labor intensive plus the trained man/dog units. The labor is the biggest component of the expenses and needs to be paid immediately after starting the service. Customer pays in 60-90 days and somebody has to finance the payroll until then plus the payroll taxes. The bigger the operations, the bigger the financing. Add 5 more contracts and the headache gets 5 times bigger. I agree it fits with the customer base near the Gulf and that they can probably cross sell the services to existing clients. I'm just not sold on the business model. I like the software side of the business MUCH better. The K-9 side could cause some cashflow problems that could divert attention from the better long term business plan. We'll see how future financials look but I bet if you separate out the two businesses, the software wins hands down for profitability and scalability. Bobwins