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Simulations Plus, Inc. Message Board

  • dickmilde dickmilde Jul 24, 2014 4:47 PM Flag

    Yes... There will be some dilution.

    But you need to see this in the proper context... Walt is effectively buying $5 Million in sales which is about 1/2 the current sales for SLP. But, it's only costing us $7 Million to get those sales. Or another way to look at this is that he is getting a 50% sales increase and only using about 8% of the SLP market cap to get it. And to Jbailey's point SLP is the surviving company NOT Gogingen.
    There will be some challenges with this. Cogingen is located in New York and SLP is located in California. Walt is not a stranger to business travel so this should be OK, never the less I like close better because it's easier to keep an eye on things. Another point worth mentioning is that Cogingen has about 35 employees compared to SLP's 30 employees. I expect that over time that we will see a higher sales per employee ratio. This will probably come from increased sales for the same number of employees. Walt has a long time habit of finding productive stuff for employees to be involved in :-)

    As a summary I see an increase in total profit but a slight decline in profit margins... This will be corrected over time.

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    • Mr. Milde,

      I think you are right that SLP will be the surviving Corporation, but you have to admit that this quote in the earlier release states the opposite, which is strange, imo.

      'The Agreement calls for the merger of Cognigen with and into a wholly-owned subsidiary of Simulations with the subsidiary continuing as the surviving corporation. "

      A minor oversight or Freudian slip? Probably a minor oversight. But I am paying close attention to details.



      Sentiment: Hold

    • On the surface, this looks like a no brainer. The big question is - is Cog profitable? Also would seem like some G & A synergies would allow some cost cutting. There are some interesting quotes from Cog leadership on the wires. Not sure if I can paste a link here or not, but will try. If not, google Cog and poke around.

      • 1 Reply to deserttrader_2003
      • There has been an additional press release with the following...
        "As noted in the initial press release, Cognigen is a profitable company and the Company anticipates it will continue to operate profitably. Because Cognigen’s revenues come primarily from consulting activities, the margins are not as high as for Simulations Plus’ software offerings, but management anticipates net margins of approximately 10 percent going forward,"

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