Systems America, Inc.(fka SYAI)

[stervc]

10 bagger & All, to explain another SYAI vision…

Before reading this, please understand that I could be 100% wrong. Please understand that the validity of this post will be predicated upon the company executing its business objectives for growth that it has publicly laid out and ”not predicted” upon any other stock or track record of success or failure within the market. My valuation posts are nothing more than something to use as a framework to measure where a stock could be trading ”IF” if they deliver what they mentioned to be their goals for achieving. Respectfully, here is why I don’t see things not at all as you do.

SYAI issued 9,000,000 shares of common stock in connection with its recent acquisition of Mile5 Solutions as indicated within the company filings below:
http://www.otcmarkets.com/financialReportViewer?symbol=SYAI&id=86543

The company mentioned that there would be no dilution (except for acquisitions). This leads me to think that some amount, give or take, in that 9M shares area will be issued for the upcoming acquisitions that were PR-ed. If you were to take just what you posted from the news below, you would have a total potential of over $89 million in revenues and a more important $12.3 million in Earnings from just three of the four companies with term sheets already signed as indicated below:
http://ih.advfn.com/p.php?pid=nmona&article=53432774

The current Outstanding Shares (OS) amount for SYAI is currently filed to be 81,182,219 shares. There are a total of 4 companies with term sheets signed which would equate to…

9,000,000 shares per acquisition x 4 = 36,000,000 shares to be added to the SYAI OS

That would make the new OS to be…

36,000,000 + 81,182,219 = 117,182,219 shares

So now the question is…

Why would these companies be willing to accept such a small amount of 9,000,000 shares for each acquisition to consummate?

The answer is because of how much the value of these 9,000,000 shares will be worth once the $12.3 million in net profits is placed into SYAI. This is the risk that seems to be accepted to leverage the worth for executing each acquisition. Let’s observe…

Below is the fundamental formula used by the market to asses a fundamental valuation of a company…

Earnings Per Share (EPS) = Net Profits (NP) ÷ Outstanding Shares (OS)

NP = $12,300,000
OS = 117,182,219 shares (after 4 acquisitions)

EPS = NP ÷ OS
EPS = $12,300,000 ÷ 117,182,219 shares
EPS = .104 per share

Considering the variety of fields the company will be venturing in to, I think it is safe to consider 12 to use as a conservative Price to Earnings (P/E) Ratio. To understand the consideration use of a P/E Ratio for assessing fundamental valuation, read the post below:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=57154170

Considering a 12 P/E Ratio would justify the SYAI share price below…

12 P/E Ratio x .104 EPS = $1.24 per share

This would then warrant a fundamental value to gage just how much the 9,000,000 shares for each company being acquired would be worth:

9,000,000 shares x $1.24 per share = $11,160,000 value given to each acquisition/owner

Please know and understand that this piece of speculation is just that… speculation. When you don’t have all of the facts, you have no choice except to speculate in attempt to determine what will be announced to help in making a sound decision to invest or not. The 9M amount of shares could easily be higher or lower, but I think it is safe to presume that it won’t be billions as you had previously hinted as an option. Again, this is only my opinion as either of us could be wrong.

Let’s consider a more worse case scenario and presume that the companies being acquired wants 18,000,000 shares instead of 9,000,000 shares. That would make the new OS to be…

18,000,000 shares per acquisition x 4 = 72,000,000 shares to be added to the SYAI OS

That would make the new OS to be…

72,000,000 + 81,182,219 = 153,182,219 shares

With using the same logic above to derive a fundamental valuation, consider below with this more worse case scenario OS…

Earnings Per Share (EPS) = Net Profits (NP) ÷ Outstanding Shares (OS)

NP = $12,300,000
OS = 153,182,219 shares (after 4 acquisitions)

EPS = NP ÷ OS
EPS = $12,300,000 ÷ 153,182,219 shares
EPS = .0802 per share

Considering a 12 P/E Ratio would justify the SYAI share price below…

12 P/E Ratio x .0802 EPS = $.96 per share

This would then warrant a fundamental value to gage just how much the 18,000,000 shares for each company being acquired would be worth:

18,000,000 shares x $.96 per share = $17,280,000 value given to each acquisition/owner

So as you can see, with very minimal dilution and no reverse split, there is a variety of options that could work out to be in the best interest of the company and just the same in the best interest for SYAI shareholders. Also, we should give thought to SYAI obtaining cash to help finance some of their targeted acquisitions as PR-ed below which would also minimize yet still any of the minimal dilution:

http://ih.advfn.com/p.php?pid=nmona&article=53664435
…After exhaustive due diligence conducted by Bridge Bank of the Company, Bridge Bank had agreed to provide Systems America a secured $6 million asset-based line of credit and $2 million term loan to fund specific targeted companies. The Company is discussing similar debt facilities with several banks and mezzanine debt funds to raise over $20 million in financing. …

I do agree that for banks to give SYAI this kind of approval for funds, it had completed a very strenuous and legit due diligence process that would confirm the legitimacy of SYAI that much more in my opinion. This adds to why SYAI is one that I am willing to sit quietly and patiently to wait and see what will materialize.

v/r
Sterling