longrichard Monday, 12/11/17 10:35:55 AM
Re: None
Post #
12949
of 13496 Go
I did a little DD over the weekend trying to get a better understanding of what's happening. I hope you enjoy.
RJD Green DD
Facts
AS 750 million. OS 209 million + possible 20 million from Oct 6 2017 filing. No preferred shares OS. No convertible debt.
FYE August 2016 revenues $3.8 million. Net Income $797,000. EPS (using current 229M OS) = .00348
First 9 months of FYE August 2017. Revenue $2.6 million. Net Income $322,000. 9 month EPS = .0014
(note - these 9 month results were much better than 2016 9 month results. Obviously 4Q 2016 was a very good Q)
MY THOUGHTS. There are 2 important things that need to be done to move market cap up substantially. Audit completion and Iosoft traction. If RJDG shows evidence that they are on their way to their projected $9.6 million Iosoft revenues for 2018 (along with increasing the roughly $4.0 million existing revenues from other divisions) and they get these numbers audited then I believe RJDG market cap should be at least $25 million. This number is based on the 70% EBITDA for Iosoft and past net income for Silex division along with a modest PE of 10-15 and/or price to sales of 1-2. A $25 million market cap would push the share price over .10 (229M estimated OS) But as you will see from Iosoft projections future revenue could be multiples of 2018 revenues.
1) Audit History
March 28, 2017 press release. RJD Green Inc. announced the engagement of audit firm Zwick & Banyai, PLLC.
We expect to initiate audits within four weeks.
April 25, 2017 press release. RJD Green, Inc. announced the approved engagement by audit firm Zwick & Banyai, PLLC, and the firm has set a date of May 22, 2017 to initiate audits. The firm expects to conclude the audits within a four to six week period post initiating the audit.RJD Green upon completion of audits will file to move to OTC.QB fully reporting status.
August 8 2017 press release "RJD Green previously announced our expectation to commence auditing, in late May, auditing for uplift to OTC.QB fully reporting status. Upon reflection our Board of Directors requested auditing 2016 and 2017 since our fiscal year ends August 31, which was only three months away. The reason for the Board's decision was the cost savings created by waiting three months until the 2017 fiscal year ends, eliminating an additional year's audit expense.
Having completed our reporting through the third quarter of 2017; our team has geared for completion of the year-end information by mid-September for audit. Upon completion of the audits RJDG will immediately file for uplift to OTC.QB fully reporting status.
MY THOUGHTS. As a shareholder for about a year with an average price about .015 I'm not happy with the audit delays. I think it's important to get the numbers audited. But it actually made sense to audit FYE August 2016 and FYE August 2017 instead of 2015, 2016 and 2017. Obviously it would cost more to audit 3 years instead of just 2. And as you can see from above RJDG press release they mentioned the reason to wait was for "cost savings created by waiting three months until the 2017 fiscal year ends, eliminating an additional year's audit expense." I'm speculating the reason for the split with Zwick & Banyai was due to lack of ability to pay for 3 year audit. The May 2017 balance sheet showed $84,000 cash.
As a result of this you can see from October 6 2017 filing they sold some vendor debt for shares. Mr. Rabbit states; “This transaction allows RJD Green to utilize the monthly cash flow previously allocated to the retired debt, to provide the required capital for non-reoccurring expenses that include; the two year audit for uplifting, the uplifting to OTC.QB, and due diligence and escrow expense of the next planned RJD Green acquisition. They now have the cash to pay the auditor to complete the audit.
I have reached out to CEO Ron Brewer and confirmed there is a new auditor that will do the audit.
2) Iosoft Sales
April 2016 RJDG bought Iosoft. Mr. Brewer states; “IOSOFT’s existing three-year mean annual EBITDA is $182,297. The enlarged sales opportunity is projected to create a mean three-year revenue over $50,000,000 with 70% EBITDA.
June 6 2016 CEO, Ron Brewer, announced today the IOSOFT Division of RJD Green Inc. has reached an agreement to provide services and technology platforms for a premier provider of technology services to the healthcare industry nationally.
Contracts are scheduled to be executed in June, and services launched in July of this year.
After months of research and development, IOSOFT was chosen to provide "best in class" payment technology to more than fifty TPAs, Health Plans and insurance payers.
September 13 2016 announced that IOSOFT, Inc. a division of RJD Green Inc., has been retained by a multinational travel and hospitality payments company, to provide "best in class" payment technology for United States operations.
The Companies have executed non-disclosure agreements and will begin trading technical specifications and trade secret information. Although not in the healthcare payments industry, this multinational corporation hopes to gain a foothold in the $4 trillion travel and hospitality market. It has chosen IOSOFT for its experience and deep institutional knowledge and its well-known technical expertise in virtual payment processing.
February 22 2017 RJD Green CEO, Ron Brewer, announced today the IOSOFT Division of RJD Green Inc. has reached agreement to provide services and technology platforms to PlutoXPay, a new venture of A & G Healthcare, a premier provider of cost containment services to healthcare providers nationally.
Sales & revenues are expected to be initiated in the next month. Revenue performance, based on historical industry standards, could be greater than $30,000,000 annually.
After extensive development, IOSOFT was chosen to provide "best in class" payment technology to more than ninety TPAs, Health Plans and insurance payers.
May 2 2017 RJD Green Inc. announced the IOSOFT Inc. sales launch, and rollout of their next generation payment software has been met with a huge response in the healthcare payment space.
From presentations at healthcare expos, where IOSOFT's offering generates real enthusiasm among attendees, and initial marketing efforts of its nine salespersons to strategic payer companies (TPA); commitments from healthcare administrators has been greater than planned or expected.
IOSOFT is in beta processing with three payer firms, and with three companies moving to the full implementation of the software services over the next sixty days. IOSOFT has further commitments to initiate the beta process.
As customers move to full launch of services over the next sixty days, IOSOFT management expects monthly revenues to ramp over $100,000 with profits over $76,000.
As the Company meets this benchmark, rapid acceleration of revenues to previously budgeted projections is expected on a monthly basis.
June 20 2017 RJD Green Inc. announced the beta implementation process has been completed and initial implementation revenues will be completed in July with full revenue streams coming forward in August. Annual revenues for their first contract are expected to exceed $240,000 annually.
IOSOFT begins beta processing with four additional contracted clients, two beginning in August and two in September with full implementation of the software services over the sixty days beta processing launch. IOSOFT has additional contracts forthcoming on a monthly basis, which will accelerate in quantity per month launched after the current four companies are fully implemented.
As these initial clients are fully implemented, revenues are projected to be over $1,100,000 annually from the initial five
clients.
As IOSOFT completes this benchmark, rapid acceleration of revenues to 2018 budgeted projections is expected on a continuing monthly basis.
September 26 2017 RJD Green Inc.'s Healthcare Services Division announced it has procured an initial eight contracts to implement in the fourth quarter of calendar year 2017 and first quarter of calendar year 2018. The final implementations of three contracts are under way. A twelve month revenue expectation from these initial contracts is $9,600,000.
Vincent Valentine, IOSOFT President, states:
"After unforeseen delays we are excited to start creating the revenues we expected six months ago. Our marketing partners are now very active in the health service community nationally and they fully expect to continue growing our revenues monthly, which allows us to meet the significant revenues forecast for 2018.
"From ongoing negotiations that are occurring now, we expect to see more accelerated monthly contracts procured in the first calendar quarter of 2018."
MY THOUGHTS. Very confusing with so many balls in the air for Iosoft. But I think the key is the May 2 2017 press release about the launch of their new product. Their 9 salesmen generated better than expected interest from TPA's (Third Party Administrators). The juggling of beta tests, full implementations along with new beta tests and implementations makes it difficult to follow and understand when and how much revenue will occur. But what is apparent is that Iosoft is picking up steam and it looks like all systems go.
I learned Iosoft launched the actual payment and billing software in November. My guess is this is why things were pushed back. But now things are beginning to pick up and the reason why they reiterated the $9.6 million revenue forecast for 2018.
Overall I think RJDG suffers from a lack of awareness. Couple that with most of the trader's focus this past year on marijuana and bitcoin stocks and you can see why there's lack of interest. The delays in audit and Iosoft sales certainly add to that. But if you go read the press releases and OTCMarket filings you can see the story developing. I'm not sure anybody has "put the pieces together". But the posted numbers for 2016 and first 9 months 2017 (remember FYE August 2017) are solid and just based on those it deserves a much higher market cap. And if I'm right about the audit and Iosoft then RJDG is a steal here going into what could be an explosive 2018.
It's also possible the timing of events over the next 6 months could work to shareholder's advantage. FY 2017 ended August 31, 2017. 10K should be out by December 15, 2017 (NTK filed) along with updates on Iosoft sales and audit progress. And Q1 2018 ended November 31, 2017 so the 10Q should be out by January 15, 2018. Q2 2018 ends February 28, 2018 and should be filed by April 15, 2018. I'm guessing around this time the audit should finally be done and Iosoft revenues should be significant. An audited RJDG with increasing Iosoft sales uplisting to QB tier would be a stock I want to own.
And just to stress how undervalued RJDG is currently. Suppose Iosoft "only" does $2 million for 2018. The revenue would be over $6 million with net income a little over $2 million. So a horrible year would get you an EPS of a penny. And you'd be sitting on shares you bought at a penny. Now that's what I call risk/reward in shareholder's favor.
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