I could write a book on how all of IDNs patents are public domain to begin with
Golly.... my little gadget can read a PDF 417 barcode!.... whose gadgetry cant?
Wasn't "Charlie" a Tuna?..... thats what made Parcells immortal
Quick quiz.... what did Parcells nick name a cornerback name Elvis Patterson?
How about going out on a limb and giving us your opinion on valuation
be sure to use things like the recent 10-Q..... But remember.... I have already said I can pick that to pieces.... so careful treading into uncharted waters
$108K for the wireless.... moving costs around to make margins appear better...
But what the hey... net... net is a cash burn of $1.3 million... which is immediately reflected in the share price
Current value $0.66 shr cash... $0.30 shr in value of the enterprise.... similar ratio as the last report
Did I mention this at a prior time?.... even doubling the revenue will NOT result in a share price appreciation as cash will burn off in that time frame
Play any strength to your advantage
Funny how much of an afterthought this P O S has become for me
Too little too late....
That cash component of the valuation speaks volumes on the value of the business...
for them to succeed... they need to do it now.... their is no time left... I'm saying it right here and now... that there is another significant dilutive event in the not too distant future...
My gut tells me they got jack squat for the wireless.... and they spent valuable cash on the recent patent purchase.... that no one else seemed interested in in the lifetime of the inventor... the inventor couldn't monetize his patents..... and its apropos that IDN bought them because IF their is one thing IDN has been good at in their 2 decades is the inability to monetize their own patents
Its my opinion... obviously... but give me a reason to think that IDNs business is worth anything more than the $0.28 per share in Enterprise value that the market is currently giving them... why should investors give IDN a chance? other than Las Vegas type casino
I've offered a valid opinion on last Qs revenue "spike" of near 100%... the Ludlow's still have a controlling interest in the company... and just as the Q was loaded hen they resigned their management control... this Q was loaded as they sold a large block of stock... is it coincidence that the sale was almost exactly 1 year after they announced their resignations?... or was it a planed (scheduled) event that called for loading all possible revenues to be booked?
It can be said this is a cynical analysis.... but there is nothing to indicate that revenue can be grown at margins that are good enough to support the current 10 mil shares... when IDN did $12 mil yr in revenue they did so at exceptional margins.... and they were only kissing break even
You would have to define lucrative.... would that mean a $1 million profit a year out?....
What happens to cash in that time?... does it burn to critical levels?.... making a 4th dilutive event in a short term period... how much dilution would that be..
I've pointed out that the Lions portion of the current valuation is in cash.... what happens if they are down $6 mil in cash and have less than $2 mil remaining
Do you have a $.50 stock... that needs to raise $8-$10 million... that basically doubles the share count again....
So that hypothetical $1 mil profit is now spread over about 20 million shares...
a whopping $.05 per share... we give a generous P/E of 15 and that's $.75 per share plus the cash which would be lets say in the $8 mil range.... which would be $.40 per share on the dilution... add them and you get all of $1.15
You could have sold yesterday and got $1.15... and you wouldn't have any of the risk that I laid out above.... and you can attack this analysis all you want... but bear in mind that I have quite the track record analyzing this company for over a decade
Best case scenario is IDN hits on all cylinders and its dead money
Book value is $1.88... and it includes $8 mil in cash ($.80 share)... $8 mil in worthless goodwill and $3 mil in what are really worthless intangible assets
Enterprise value is $2.76 mil and divide that by 10 mil shares you get about 28 cents per share...
add the 80 cents per share in cash and you have $1.08 per share.... imagine that.... the valuation fits the share price exactly
Tax loss carry forwards are never worth dollar for dollar... and then you only realize the rate on the transferred value
Cash burns.... and last Q there was a $1.8 million cash burn... we are at the end of yet another Q... they burn the same and using the same metrics above you will see 15-20 cents cut from the share price
Cash will also not sell at a premium in a sale.... the company is being valued at $0.30 per share plus cash.... so IF you got a steep premium of 40% on that $.30.... it would be $.42 plus the cash on hand.... which as I just showed could be burning at $.20 per Q..
So that means with a 40% premium on the enterprise value... less the cash burned this Q you could be staring at $1.02.... after the PREMIUM
IF the company were to sell at $3-$3.50 that would be awarding a premium to the enterprise value of 733-900%... and that I do not see for a company that has never been able to turn its "valuable" patents into a profit after darn near 20 years
IF they received anything of significance for the wireless they would have said so... why do we know that?... because if it was significant they have to tell us by law
BTW... historically... after the IDN Mobilisa merger the Lions share of revenue was from the US Navy's no bid contracts on the wireless side....
It was the drying up of these no bid... earmark contracts from the congressman... that finally broke IDNs back... so they have sold off and abandoned their former cash cow
all I did was point out that after you subtract the cash from the current valuation the street values the business at $2.5-$3 million.... successful companies that are sold are lucky to get a 40% premium on the value of the business... that would equate to $1 on IDN.... and the reality is 25% would be generous...
You cannot place the any premium on the cash... cash is just that.... and it burns
Where I started the post is as important or more so... gut instinct is that the Q was loaded to provide a pop for the Ludow's to dump shares... and dump they did with taking 40 cents less on $1.40... the reality is the shares did not recover from that event... and they still have a large position to sell
I said in May it would be wise to take advantage of $1.50+.... on Aug 17 the day before the Ludlow's sold I again said I would take advantage of strength in the shares at $1.40 (hey did Count Ludlow take my advice?... still sucking the blood from longs)...
I've played IDN like a Stradivarius (I'm long gone but love to follow)..... I've given my opinion and both my track record here... and my gut tell me I've got it pegged
I must admit that I too swallowed the quarterly revenue increase until I saw the filings... always read the filings of companies you own especially small ones
You would be better off liquidating here... and rolling into beat up energy plays (be careful of SDRL & LINE)... because they will eventually recover and see gains in the 100s of %s
Todays news got me to visit IDNs Edgar filings...
I see that the Ludlow's sold about 400K shares on Aug 18 a few days after earnings... on the 17th... IDN was $1.40... the Ludlow's were willing to take $1 per share as they sold into strength... a 28.6% discount..... It appears they still own about 600K shares
Now I fully believe that current mgmt. wants to be divorced from the Ludlow's... their ownership... that terrible separation agreement... and the lease
I want to remind everyone of the loaded Q3 IDN had last year as the Ludlow's resigned.... given my knowledge of this company... the Ludlow's control.... I have to put my tongue in my cheek as I question IF this past Q was not loaded once again to start the final divorce from the Ludlow's... if it smells like krap... it usually is
Hindsight is always 20/20 with IDN
BTW...... this Indian nation deal IMO could be in preparation of selling the whole company
With 10 mil shares outstanding.... $7+ mil in cash.... the market is only valuing the business at about $2.5 million... so given traditional models of valuing a company in a sale.... a 40% premium would be steep for a successful company... which is just an additional $1 million on the valuation.... (you don't get a pop on cash)
and as cash burns.... so does the valuation of the company... You could really be fully valued at $1.07... which is why the Ludlow's would take $1 now.... and that separation agreement with the Ludlow's...is so onerous that another company may want no part of it vs the revenue and earning potential of the company
also beware of the generous packages that current ownership has been giving themselves...it could pop the shares outstanding by about 10% on a sale.... which reduces the value to current holders
and at this time this is an analysis that was done objectively
Oh well.... back to shorting energy