RE:interesting how all the negative nellies come outHi Kindl,
Not being negative here because I bought a small position after I saw Kindl post recommending this and OEE.
However, just to get Kindl's prespective on EOU, I saw this post on another discussion board and would love Kindl's observation on this.
Posted 3/2/2016 12:47:48 PM by bsmark EUO.v: multi-bagger or pie in the sky? There have been some positive write ups about EUO.v by Green Tech, Scam and Seeking Alpha alluding to game changer/company maker event resulting from the sale of the GFI division to Swiss company SICPA, renowned in security inks for printing currency, bonds and others. In addition to proceeds of the sale, $16mm, the company will collect 5% royalty, $1.5mm minimum per year for the next six years.
Expectations are that the SICPA will achieve much higher revenue from the sale of the GFI technology then the EUO did in the past several years due to over 200 counties SICPA deals with all over the world. This will result in higher revenue to the company through royalty streams resulting higher stock price, a multi bagger so to speak.
Multi-bagger or pie in the sky? To be determined:
a. a. How much royalty income will flow to the company in the next few quarters,
b. b. How the pie will be divided between management, directors and shareholders?
I have no idea what is the answer to the question b. All I can do is to look at the past operations of the company to determine the management greed factor to form my opinion to invest or not.
The company has been operating since 1996 under the same name, had three divisions: GFI, Xenemetrix, Xwin Systems and they generated $4.4mm, $1.5mm, zero revenues respectively in 2014. The GFI was sold to SICPA at the end of 2015. Some of the management and directors were/are the related parties who provide loans, supplied materials and services to the company. The expenses not related to production in the last five years were ranging from 37% to 95% of the total sales under the following headings:
a. Consulting and management fees
b. Sales and marketing
c. Professional fees
d. G&A
e. Travel
f. Shareholder base expenses
g. Public co. costs
These costs were in the lower end 38%-37% range in the last two years which is encouraging.
Considering the fact that the company had lost money most of the years since inception and turned negative cash flow until last 3-4 years, I like to see the royalty income in excess of $4.4mm per year to offset the revenue lost from GFI division or the management expenses to be reduced under $1.5mm/yr. in order to generate excess funds to earn higher share value rating for the investors.
The Xenemetrix division has a long ways to go to become meaningful to the company since it brings $1.5mm revenue only with no associated costs identified. The Xwin Systems in development stage and burns cash with no revenue.
The shares has gone up to 20 cents from 14.5 cents in the last couple of weeks which is fair value for now. I think I missed the good entry point so I will wait.
Good luck to all who jumped in to grab some shares 30% lover then today.
apainter