XXXXXXXXX A SYNCRONYS SOFTCORP EVALUATION XXXXXXXXX
In May 1994, known as Redstone Capital, the company did a 1 for 400 reverse split.
In May 1995 the company was created from the merger of two companies - hence the irregular stock spike we have all seen on the charts.
Company released SoftRam in May of 1995 for Win 3.1 and SoftRam for Windows 95 in August 1995. In October the company announced a problem with the Windows 95 version. To avoid confusion the company recalled ALL the products from the shelf. As of Sept. 20, 1996 - 200,000 units have been returned and the company took a $12,344,652 charge in Fiscal 1996.
The company had little or no revenue since!
This was the beginning of the problems for the company. The company was sued by investors and the Federal Trade Commission began an investigation. The company has offered to settle the case for $3.25 million of which the insurance companies will cover the cost. THIS IS GOING TO BE ANNOUNCED ON JANUARY 27, 1997!
Stock prices
June 1995 $6 and $12.75
Sept 1995 $13 and $31.75 * SoftRam is selling great!
Dec 1995 $2.37 and $10.25
Mar 1996 $1.81 and $4.00
June 1996 $2.25 and $6.75
Managements average age is 42.5 - Pretty young and I like that.
Daniel Taylor (Chairman) came on board in May 1995 (merger) and is a reputable lawyer with experience in aquisitions etc... He's 38 years old.
Rainer Poertner (CEO and President) also came on board in May 1995 and has 15 years experience in the business. Was the CEO of two tech companies. One was the manufacturer of a Macintosh CPU add-on board. He is a more seasoned 48.
All the executive are well paid. I believe there are 10. These 10 individuals own 11,570,000 shares of the 15,019,293 shares outstanding. That leaves a float of only 3,449,293 shares. There are convertible debt shares but that's another matter and not a concern.
The Auditor is KPMG Peat Marwick LLP and they did a great job. It's an excellent sign to have such a big name looking over the books. Really adds credibility, expecially when dealing with Bulletin Board stocks.
There are currently 30 employees working for the company with approx. 5,000 sq of office space. 13 Research staff, 9 Sales and 8 Administration. The company plans of increasing these figures in Fiscal 1997.
The Gross Profit Margin in 1995 was an incredible 87%, and 90% in 1996.
The Total Operating Expenses / Sales were a very respectable 22% in 1995 and thrown out of whack in 1996 from the product recall.
It was these great ratio's in 1995 when the SoftRam product was selling that allowed the company to earn .29/Share 1Q 1995. If it weren't for the recall the company would have earned the $20-30 price tag.
The 1Q 1995 tax bracket was a high 40%. In 1Q/1996 the company reported ($1,588,360) in losses which can be carry-forwarded to offset future income. That SHOULD BE A HUGE benefit to shareholders!
Revenues are received from three primarly sources.
1995 / Ingram Micro 21% / Tech Data 45% / Navarre 0%
1996 / Ingram Micro 37% / Tech Data 30% / Navarre 11%
In 1995 66% of income came from two sources.
In 1996 78% of income came from three sources.
Overall, 96% of FY 1996 Revenue was from the SoftRam sales! That's incredible! If the company can bring out just TWO hot selling products and keep from dropping the ball, which I'd bet they learned, they could be the hottest stock of 1997. The question is, what's going to be the hot seller?
With RAM prices so cheap, will a new SoftRam make since? Will a CD Speedster make since when you can buy a 16X drive now. The company does mention that you really need an equivalent 33X drive to match a hardrive - so I'd bet that may work.
WHAT BROUGHT ALL THE ATTENTION TO THE CONFERENCE??? Do they have a
winner? Are they back in the game again?
The company sold $13 million of private placement on May 22, 1996 and that's where all the bank cash came from.
The company is very keen on aquisitions (the Chairmans specialty) to help develop sales! There are some interesting developments regarding some HOT selling products in Japan.
OVERALL:
If the company has products, which it sounds like they do, and they settle the lawsuit on the 27th of this month, the stock is a steal at the current price. With profit margins like theirs and the large loss carry forward the company only needs to make a lousy $.16 to earn a $5 price tag with a 30 p/e ratio. They have a -.11 for the 1st Q of '97 I wonder what the next 3 Quarters are going to look like with the product sales kicking in??? The company was expecting the 1Q'97 to be a large loss. Now it's all up to product sales.
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Wanted to bring this up before it disappears below.
Aloha |
