xbootie Good solid questions:
Your foward multiple assumptions of course are subject to real time market conditions, but yes, that is a reasonable industry standard to operate within.
Your numbers are unintentionally skewed a bit, let me clarify just how top line funding (that is, money provided from funder to GSI arranged client) equates to net revenue being placed on GSI books.
For figuring purposes, the numbers presented will be from a GSI client that has a 125 million dollar recievable base.
Client recievable base and amount to be assigned legally via UCC filings:
125 million
GSI/Funder offer to subject client based on exposure and risk (using the before-mentioned S&P/Rating Agencies model)
100 million less 10% = 90 million cash. (actual cash advance over 4 quarters)
Available revenue from this transaction to GSI/Funder
10 million (1/4 immediatley available at each quarterly closing when subject funds are distributed)
Funder share: 3 million
Processor share 2-3 million
GSI share: 3-4 million
These numbers vary due to the risk and the projected difficulty of eventual collections.
The numbers presented to you are low ball assumptions, I am giving you the very worst it could be.
In fact, it can be much better without a considerable change in events, here is why:
The 125 million figure used here for illustrative purposes is assigned in full via UCC filings to GSI et al.
At this point, there is 25 million more in receivables between the paid amount at closing (per fiscal period) and the amount received and legally assigned. This is to protect the risk takers totally in the subject transaction, GSI and the funders advancing the money.
Any part collected out of the 25 million difference is found money which passes to GSI/Funder/Processor revenue, I don't know the exact arrangement, but it would make sense that the same percentages apply to found money profit (that is, more money is collected due to the expert capabilities of the processor) as apply to the basically 1/3 split outlined heretofore.
The processors that GSI utilizes are the very best in the business. They are very motivated by the fact that their contract calls for payment based on collections recieved.
The processors are paid only by collecting the amounts due, so their revenue is dependent on performance.
You can see the possibilities now, factually, only one small to medium size transaction comparable to the size depicted above must take place to drop 3 million in revenue to GSI. It would not take much performance to increase that number available to GSI earnings per share, after all, just this one deal presented as an example brings .03 per share topline to GSI.
Of course, that is top line revs to GSI, there are expenses to be deducted from that number such as office, administration, salaries, marketing, and so on.
That being said, GSI has taken every step to outsource most of the actual work to professional firms, so most of the expense is taken out of the equation before it enters GSI topline P&L.
All of the above is good timing for us shareholders, we are joining the party here very early.
Enjoy.
As you can now see, this is a very well planned business, all the components are in place. This has taken three years to develop and execute.
For the pps to be $1 with an average forward multiple of 17.9 that would lead to an EPS of 0.056 (0.0558) using the current share structure of 100m (to keep it simple) would lead us to net earnings of $5.6m.
$5.6M net earnings plus a conservative 30% would give us $7.28m gross earnings. Now if that equates to approximately 3% of the total revenues expected then we need to take $242.6m to get a $1 pps.
If the calculations are correct then there are 3 things that could happen in order to get our $1 pps.
1) An R/S after the uplisting.
2) Substantial contracts signed, sealed and delivered
3) With the share price being considerably more than it was when the initial merger was formulated GSIEF could retire a vast majority of the O/S.
I would appreciate anyone's comments, good or bad.
Cheers
XB
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