TS03 Inc Trust Units TSTIF

RE:RE:another surprise

[dant2]

Dr Cash. Elgin is quite right. Consider ... if you wanted to take out TOS you would be wise to first quietly accumulate just under 10% of shares to avoid making your intensions public which is mandatory at 10%. This would be over 9M shares and we see no such underlying demand for shares.

You are correct in assuming that TOS might be a good take over candidate at some point in the future because larger companies rarely invent the next best thing in house - for a whole bunch of reasons it just doesn't happen.  They grow by buying innovative start ups, however.. they are risk averse to the extreme!

Consider, if you run a corporate division and you recommmend a buyout to bolster your division and it fails or it just turns out lack luster, well ... your career is done. Also, there is extreme competition for alternate uses of funds within the corporation so basically you have to compete very hard internally to have your investment idea win out over other investments, and believe me every company has a great many more investment possibilities than they have available funds. 

To your point, a duo FDA approval and ensuing recommendation for the VP4 would be extemely positive but ... Getinge still will not consider buying out TOS until they see VP4 sales ramp and increase considerably, and they will need to see their sales funnel of opportunities grow quite substantially. When this happens they can finally have the confidence they need to establish a valuation based on future discounted cash flows - DCF - and then compare these financial and strategic benefits to other competing investment opportunities.

A favorable FDA 510K ruling for duodenoscopes could be the catalyst that finally drives a significant sales ramp - albeit over several quarters. But I believe TOS will get this approval, hopefully by mid May and then things could get quite interesting.

RR and Getinge have telegraphed their intention to improve and extend a strategic relationship, but will they be able to reach terms acceptable to each party?  That is an unknown? Certainly a duo 510K approval will bolster TOS's position especially if increased adoption becomes apparent as a result.

But if this happens TOS may be better off to establish their own NA sales force if Getinges terms are unacceptable. The BOD - especially with the addition of Dr. Dieter - could conger a combination or any number of other alternate go to market strategies that could prove more profitable for TOS. RR and the BOD are considering such alternatives as there no guarantee acceptable terms will be reached with Getinge - and Getinge have failed quite miserably!

I'm not saying any of this will happen but we are currently in a state of flux and the stock price reflects this. But anything can happen!

To me short term TOS looks pretty scary but I think the worst of it is priced in. Medium to longer term TOS truly has fantastic potential.