Rox- I am running late today, but will try to put up a post over the weekend explaining why I think we are close to a major mulitple move up. I have bought over 400,000 shares myself over the past month or so putting me around a 1.5 million shares. What I will post is some "tea leave" reading stricly based on info published in the past filings.
Rox-Let me explain why I am loading up on BKSD at these prices.
At the current market price BKSD has a primary market cap of just under $5 million. Yet by both listening to the Conference Call a few months ago, and reading the Beacon Equity Research Report (link at the bottom), I am confident that the Company will have revenues in excess of $20 million this year (Beacon says $23 million). While I sure am not expecting to see the stock hit the Beacon price target this year of $.85 a share, I certainly expect to see the stock closing the gap between its current price valuing the Company at .25x revenues, and the Beacon reported 3x gross revenues BKSD Industry peers trade. While the stock price might indicate that this is just another "penny stock" speculation. The underlying numbers for this year tell us something different. Here is a company that has not yet even been in existence for a full year but is already on track to not only do the $20+ million in revenues, but is also on track to deliver some $3 million plus in positive EBITDA for the current year. All thanks to the exceptional Management Team and not only its ability to find acquisitions, but to actually close two in the past 11 months. And even more so to make an acquisition of the caliber of US Voice and Data for primarily cash during one of the worst financial periods in twenty years.
But fundamentals alone don't necessarily make a stock price go up. But if you can add "sponsorship", you have a very good chance of seeing stock price performance in line with the fundamental growth. It is quite obvious, just by looking at the meager number of posts on this board, that BKSD sure doesn't have much of an investor audience or obvious "Wall Street" connection at this time. But if a company is going to "make it", while "under the radar" is the time to load up. I have pretty much stated above why I think the Company is going to "make it". But I am also now confident that we will shortly see an increase in the audience, not immediately due to any significant "paid for" promotion, but due to a major Wall Street connection.
I have mentioned in past posts, that while I have never worked for the Company, I have worked in the past for the Company's Investment Bankers, Apogee Financial and Midtown Partners. Several weeks ago, I was in Tampa and visited with Apogee and Midtown. One of the topics of discussion was BKSD, and in particular, what their feelings were about the fact that Vicis Fund (New York based $2.5 Billion Fund) would soon be BKSD's controlling shareholder with over 30% ownership. (In order to get the last 3 million to close the USVD deal, in addition to the 24 million converts at $.125 and 24 million warrants, also at .125, they also were entitled to receive 10 million shares from Mike Nole the Chairman, 10 million from Mike Dance the head of Brookside's Austin division, 2.5 million shares from Apogee, and 2.5 million from Mid-town. This was in the past filings). This clause went into effect on Dec. 27. While you might expect that Management and Investment Bankers who had to give their personal shares might be a bit bitter, each were actually very upbeat about having Vicis as Controlling Shareholder. Both Apogee and Mid-town have worked with Vicis for more than 15 years and know that Vicis does support its investments. Not just through funding, but from a market point of view as well.
The only thing that has been a bit puzzling is that Vicis has not yet exercised the clause giving them the 25 million shares. But once they do. They will have to report this ownership in SEC filings which will give them over 30% of the common shares outstanding. Since Vicis will then own over 10%, they will be deemed "Control Persons" which means that they will not be able to sell more than around 1% of their stock per quarter. Owning over 30% will take a long time if that was their "exit strategy". Particularly when you add to the 25 million common, the 24 million Preferred shares that they paid $.125 for and the 24 million .125 warrants. IMO, the only way out for them is to continue to guide and finance the growth to the Company until the critical mass is such that the whole company can be sold at one time. With their access to cash, the strong management team, and the growth potential of B to B VOIP, it shouldn't take very long for BKSD to reach the $150 million a year critical mass to be a potential buyout for the likes of Avaya or Black Box, their Billion dollar peers. I did just recently speak with the Investment Bankers, the Chairman and the CFO who all believe that the transfer of the shares and control of the Company should happen very shortly. For whatever reason, the top priority was getting the registration filing that was done last week out of the way first. (BTW, IMO, that registration statement is certainly nothing to be concerned about versus dilution at the current stock price. It was primarily to register the underlying fixed price warrants which average right at double the current stock price. And if all warrants were exercised, would put over $20 million in fresh cash in the Company.)
One last point. While visiting with the Company and Investment Bankers, I discovered that the real trading float of the stock should be something under 10 million shares. A stunning number when you realize that more than 25 million shares have traded at an average price under a dime since the US Voice and Data deal was closed in October.
Bottom line. I don't know when this is going to take off. And certainly don't have any idea how high it will go, but when one considers that the whole float is only being valued at around $600,000, and Funds like Vicis, only four months ago put a lot of money into the Company at more than double the current price, it would seem that at least triple should be easy over the next few months. This is why I and friends are buying whatever HILL or UBSS wants to sell us.
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