IMGX, currently $3.50 Message Board

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Microcap & Penny Stocks : IMGX, currently $3.50

IMGX 0.0001000

0.0%

Oct 28 5:00 PM EST

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To: George Young who wrote (537)	12/9/1997 9:46:00 PM
From: Jay Morrison	Read Replies (3) of 665

George, Do you remember the posts a few weeks back about the range that most software companies trade in? 5X sales is a typical figure. Even if you assume the worst numbers possible, 12 months trailing revenue of $23 million for US domestic revenue (non-Dorotech) and assume 50 million shares (worst case dilution) the stock of IMGX should still be over $2.25 per share. If you assume average numbers of $32 million next year from $8 million this quarter and times it by 4, then assume 45 million shares outstanding. I get $3.50 per share with that calculation. That means flat revenue with no growth from adding Sybase and Intergraph, etc. If you assume that they will reach $8.5 million this quarter in US revenues and can continue to grow that going forward to about 43 million in revenue for the 1998 year and they can keep the shares at 40 million. With those number I get a share price of $5.37 per share. If you look at 1999 estimates of 80 million in revenue, that would make them about $15 million profitable which would be 37 cents per shares times about a 50 p/e and I see $18.75 per share. Since companies trade on 1999 earnings in the year before, we could see such a scenario by the 2nd half of 1998. What would it take for this scenario to occur? Convert the preferred and keep the dilution at 40 million shares. Sell Dorotech for what you can get. This removes the two big question marks hanging over IMGX. It can then trade at a level that other software companies typically do. That only gets us back to the $2 or $3 area. The other big test will come in February. They will report for Q4 of 1997. If they report over $8 million in US revenue, then we have a growth story. Sequential quarterly growth. Q2 1997 was $5.5 million, Q3 1997 was $6.5 million and Q4 1997 will be $8 million plus. Once the company has demonstrated that sequential quarterly growth, people will believe the companies estimates going forward. This is a crucial quarter for IMGX. If the preferred stock and Dorotech are not taken care of, the cloud will continue to hover and keep a cap on anything real happening to the stock price. Jay

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