Catalysts
1) Close SDI Sept. 30. $125 Million is the Minimum share going to IMP and has potential to be larger as has been stated on this board. The 18 year length too is just a minimum.
2) Analyst coverage will more than likely come at the time of the close. No analyst wants to come in before the deal is 100% finalized, but whoever the first analyst is will undoubtedly have the largest sway over public interest and perception. It would be smart for this analyst to already be building a large position as we speak. 12 month target will be set around $2/share.
3) 2nd SDI Contract to be signed before year end as others have stated. Total contract size will be large larger than first SDI contract, however IMP will have smaller proportion. Still, good estimate could be $100 million like Profo is estimating. Based on the fact the total contract value could be close to a billion, it puts the client in one of the largest governments looking. Based on the fact that InsightPro was licensed by Swiss Re in 2014 in Brazil as an introductory tool to the Orion Platform, it appears to me the ducks are lining up on who the client is and the value. Term length unknown but will be largely moot.
4) January-March 2016 look for Vertex to willingly expedite the conversion of the royalty into additional warrants. I need some help with this one but it appears there may be some TSX clause restricting the number of warrants to be issued in a 12-month period to any large client in an unbrokered deal. I have been going through TSX regs but still haven't found what the clause will be. The royalty is only a placeholder and obviously it is in Vertex's best interest to convert to fixed royalty into warrants to allow the share price to run faster and higher as earnings from operation can fully flow to the shareholders.
5) Rumours of 3rd SDI contract could be announced end of 2015 through 2016 at any time. Typically it appears the "advanced stage" of contract talks can drag out, but the first SDI length will most likely be by far the longest. These next contracts should take the expected time of 2 years to create and collaborate if all goes well. No guess for me on size/location yet... but look into where InsightPro has been introduced.
6) InsightPro being licensed again by, most likely, Swiss Re, in Argentina, Colombia, Peru and Chile, and if you can dig for a similarity, all 4 countries do not yet have flood insurance infrastructure. Easy to draw the lines here. Let's bet at least one SDI out of these countries in 2017.
7) NASDAQ? Based on intentions linked with the reverse split, which I would stake a large amount of money on will not end up happening due to the above catalysts. The NASDAQ hype will always be here during appreciative periods, and if we do ever get listed, then enjoy a wild ride back to previous levels.
8) Acquired.
Hopefully I haven't forgotten or missed anything.
Can anyone shed light on possible warrant restriction to help explain why Vertex needed to be given the royalty until they were allowed more warrants 12 months from the initial grant?
2016/2017 could have a realistic run rate of $150 million each year. Let's assume more conservative operating margins of 50% and $10 million in SG&A, which is very high. EBITDA is $65 million... from 0. That's a valuation of $3.64 on a realistic contract multiple of 7:1. This only includes 2 SDI contracts that are being discussed here, with $350 total revenue over 2 years, a 50% margin, $10 mil in SG&A per year and a 7:1 multiple. I am shaking my head right now.