I really can't quite understand why LTBR trades so lousy and I have to think I got this wrong so I want to make public my thoughts and hear what you guys think.
Consulting: As much as the technology part of the story could send this stock to 20, the consulting part places a floor on the stock. There are actual clients, and real revenues and tangible profits. Now when they had 1 client, the UAE, I understood that you can't value that but now they have 7 clients and although 1 client does not a business make I think 7 countries and an entire region does. The question is what the actual revenue might be. As a reminder, LTBR made in one year with the UAE, a country looking to build 14 reactors, a 41 billion dollar plan, 35 million dollars, mostly to set up the two regulatory arms that would oversee the plants similar to the NRC. Since the completion of this, UAE revenues seem to have evened out at approx. 5 million a year or 1.1 million a quarter. On the opposite side of this is LTBR's contract with Egypt wherein they made 700,000 over 2 quarters, or 350,000 per quarter doing a feasibility study-- certainly nothing on par with the UAE. The latest PR from LTBR states that they have been asked to continue with the nuclear feasibility study and in addition to research renewable alternatives such as solar. Let's be conservative then and say that LTBR's revenues from the UAE and Egypt are this quarter 2 million dollars (basically the same as last quarter). Now on to the GCC statees.
So I am assuming that LTBR made last quarter (calendar year ended Dec. 31, 2010) 2 million-- 1.3 million from the UAE and 700,000.00 from Egypt. In fact, let's call it 1.5 million from both. On Dec. 2nd LTBR announces a contract with each of the GCC states (6 of them), the work is to be split between LTBR and Excelon, but spearheaded by LTBR. Now you would not sign a contract absent payment let alone issue a PR. I am not sure how revenues are accounted for at LTBR, but is it too much to assumed that each country kicked in on average $700,000.00 and that money was split 70/30 with Execlon. In other words the revenues from all 6 countries amounted to 4.2 million (using Egypt as our benchmark) and that LTBR received 70% (the other 30% goes to Excelon), or LTBR received roughly 3 million dollars. Is this not freaking conservative? But if it is true, LTBR will be announcing gross revenues at a minimum of 4.5 million dollars or over 100% increase in sequential quarterly revenues. Now there is one more thing:
Insta, I think the consulting "gravy" has turned out to be far more delicious than the dry ol' tech "turkey". I hope that changes. I think your longstanding strategy is well intact, and I applaud you on your well-timed calls and success. Perhaps it's the tech that's the gravy. I think that's where you are going, and its hard to argue since it's the consulting that's brought in the chicken-scratch. A well-connected company acting in important sectors in key locales, with growing profits and influence, is certainly tantalizing. One needs eagle-eyes to see the situation clearly, but yeah it's tantalizing. It's just that I've seen this little flegdling crack it's egg shell, flap its wings, soar high and catch its own prey, yet it's always come back down to the nest. What will change this? "It's different this time"?
It was reported (http://www.thenational.ae/business/energy/kuwait-weighs-nuclear-future) that LTBR was hired by Kuwait as a consultant to help them not with alternative renewables but with a building a nuclear program with a modest 4 reactors. Now this agreement with LTBR looks like the UAE agreement with LTBR where they will be asked to help establish a sovereign nuclear regulatory arm to oversee matters. Now the UAE gave LTBR 5 million to begin this. I know that the UAE program was a monster but would it be aggressive to assume that Kuwait gave LTBR 3 million as advanced payment? Add this to the 4.5 million we already have and hell LTBR could produce close to an 8 million dollar quarter. It is all about the headlines. Imagine this headline LTBR books 8 million for the quarter and 400% increase over the last quarter!!! Moreover, this really does establish their consulting business as a real business not some fly by night please Tidu Mani introduce us to the Sheik. They report real sequential growth with a 6 fold increase in clients, and rich clients to boot!! 8 million a quarter would be 32 million a year and with 40% margins that would be a profit of almost 12 million or a dollar a share (putting aside R&D-- just trying to evaluate their consulting business as a stand alone business). A dollar a share (that's 12 million in profit on gross revs of 32 million .40 x 32 million is approx. 12 million net and there are 12 million shares outstanding) and if we gave this consulting business a 33% discount to the market multiple (market multiple is 15 lets give it a 10) because no one seems to trust or believe Seth then we have a 10 dollar stock not even considering their technology!!!!! Now you could say, Devil, the consulting business is not stand alone but part of a bigger business and that business is a pipe dream and they are throwing good money after bad. Good point, but they already raised 14 million to throw at that "bad" business so who cares? Now I actually believe in the technology but still.... my point is ....screw it buy every dip and take it into Jefferies conference and take it into the quarter and the conference call. We will know in one month maybe I got it all wrong and revenues are $900,000.00 but I don't see how.