TS03 Inc Trust Units TSTIF

RE:RE:RE:It doesn't matter what TOS reports for Q4

[newdant]

I do share some of your concerns about additional future dilution. It's definitely something to watch for but in my opinion it would take a complete debacle for this to transpire. For now I'm not expecting that.

My quick back of the napkin revenue projection is $1.75M for Q4. 
- 1.2M for the 12 shipped VP4's @100K each
- 310K in consumables for avg 50 units installed during the quarter
- 160K for maintenance fees, this may be a bit low
-  80K other revenue, basically BA rate for avg cash of 14M during the quarter

These are just straight line numbers with nothing for royalty and no consideration for potential variabilities related to consumables etc. so they may be off. Maybe off by a lot because I haven't done tons of work on it and don't feel its warranted this quarter.

But if I assume 4.0M in expenses against 1.75M revenue then I can project cash to drop from 16.1M at end Q3 to 13.85M (16.1 - net 2.25 from Q4). Note that Q3 expenses were 3.27M.

These are just ballpark figures but they show that we do have some runway - perhaps considerable runway?  Also, TOS has 20M in inventory assuming an ASP of $100k per unit, and they will be generating minimum 2.5Mpa run rate in consumables by start of Q3. So there is considerable opportunity to generate cash as these units are sold.

But ... as you may suggest the runway does have a finite length and if TOS fails to execute it could put retail investors in peril ... again!  Not so much or Courage as any default pretty much makes them owners of the company.

Anyway, it's definitely a sketchy situation for retail investors since we're most at risk and we have no internal BOD seat to gain insight into what is really going on. To my mind it's definitely possible for the next few quarters to be like a stomach churning roller coaster ride for investors.  Hope not but if TOS trips up on sales its possible.

But... are the stars finally aligning for TOS? Retail investors are probably aware of the myriad market reports touting the sterilization market as the place to be over the next 5 - 7 years and beyond. Doubtful many retail guys have paid the ~5K to read even one of these - I haven't either, but I have been able to discern that TOS is named in virtually all of these reports - so... they are slowing becoming more well known within the industry.

Also, without reading the reports in detail you can still test their HSD growth claims by following the performance of industry players.To this end and as just one example, you can look at Steris's 'Applied Sterilization Technologies" division (primarily the US portion), and here you will find 2018 CAGR of around 8%, and through Q3 2019 virtually the same but with increasing profitibility. 2019 will cap out at about 570M with just over 40% average operating margin! And Steris has stated they expect this to improve further.

No doubt Fortive and Courage and all the others with deep pockets are continually reading these myriad industry reports and this is no doubt why Fortive is buying J&J's ASP division .. probably closing early Q2. Its a rich juicy market!

So, are the stars aligning for TOS? You be the judge but I'm thinking TOS finally has the right product with all of its superior processing and regulatory advantages, at the right time with ever greater concerns surrounding HAI's and a gradual transition towards increased sterilization practices, and in the right market which has excellent long term prospects for growth.

So .. do we sell now and leave this roller coaster ride for good? Sell now with the idea of buying back in when TOS drops to .25 cents after a poor quarter - which could come at any time?
Or hold on for large gains over time as TOS establishes important beachhead positions in the market? 

I'm sticking with the latter for now and I'd say they're having some success - not enough yet but things are starting to move in the right direction.

Incidentally, I was watching the Colorado Avalanche in Denver some weeks back and couldn't help but notice UCHealth ads plastered all around the boards and in lighted signs throughout the concourse. This is just one of a growing list of high profile US accounts TOS is targeting. Hopefully we will hear some colour on this during the upcoming call. The wait is definitely painful for retail investors!  Rick?

GL



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