TS03 Inc Trust Units TSTIF

one last kick at the can

[dant2]

Some good thoughts regarding Cantel Medical. I think they could be a better fit than Getinge.  From their 3^rd Q earnings call just 3 days ago, …due to recalls from other suppliers they sold over 1000 AER’s in the US during 2016 and this normalized to 6-700 last year.  Their new pass through HLD AER – 510k just received – processes up to 5 devices per cycle, and this would feed nicely into the VP4.  They are the leader in endoscopy market with revenues of ~760M  in that segment last year. They sell primarily into CSD and they see 80M annual endoscopic procedures @ CAGR 7% ongoing. Excellent WW sales and service footprint and consistent screaming success in the marketplace. Describe themselves as the leading and only infection pure play in the business – this acknowledged by NYSE with total revenue last year of `850M.  Who cares about surgical work flows. I like their almost singular focus on disinfection and sterilization. Cantel has managed to grow profitably through acquisition at `16% CAGR over the last 15 years or so. There share price is `$108 USD and the share count is just 42M.

With these kinds of potential partners out there I'm wondering why we would even consider re-signing with Getinge? After all they will likely not provide additional licensing fee's to help out our cash crunch - which they caused incidentally ... and probably on purpose.  Also there will be no new revenue until 2019 earliest with 100+ sitting in GET inventory now and another 100 earmarked for the TOS direct sales team. I remember RR touting hospital GPO’s as great vehicles for very large orders but none of these have materialized to date and RR no longer mentions them?

With a new and better suited partner we should be able to garner up front license fees of 10 - 20M and see initial revenues probably in Q4 and certainly by Q1/19. Yes it's a lot of work and the devil you know is perhaps better than the one you don't but I sincerely hope RR has both the energy and the guts to take this on if it is better for shareholders - i.e. no dilution and positive near term revenue visibility.  

I don't hold him entirely responsible for the Getinge fiasco since you can't give notice for material breach until it occurs, and that didn't happen until Getinge refused to provide the PO for 2018. Until then TOS was happy to sell off the guaranteed receivables through their factoring agreement.  But Rumble knew the risks and was wise to call the 1.875 warrants early and sell his shares in two tranches at 3.60 and 3.00. He mighten have had exact numbers but he knew all along that market uptake was very poor. Unfortunately he obfuscated this reality from shareholders as long as possible while he waited and hoped for the duo 510K to put a match under sales. 

Unfortunately this this came too late and here we are with many unhappy shareholders and OUR company in a more vulnerable position than it’s been in for several years.

That said and with the oxygen problem finally solved and this new 510K in hand we should be getting a much better deal from Getinge.  Perhaps 10% market share in 3 years and 20% in 5 years, cash up front and sales funnel and install visibility.

I have no doubt there are plenty of 40ish industry exec’s out there with the skills and energy necessary to bring TOS forward from here, and judging from this board I suspect there are plenty of shareholders ready to force a change if RR doesn’t deliver this time around..  One last kick at the can … let’s hope it’s a good one!
GLTA