______Dave, and all other interested ConSyGen Investors______________
ConSyGen's financial health - The company raised $5.1 million from the Reg. D. subscription. They have more than enough money to fund themselves until contracts start to come in.
note* - the subscription was at a price of $5.875 and was done through a pension fund of a large German company. The funds primarily gave ConSyGen the qualification to apply for NASDAQ and help fund the company's expenditures until the business rolled in.
Target Sell Price - Well, at this stage of the game it is hard to say how high CSGI could go. I am looking for a return of at least 80% to 100% on my holdings.
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5,000 @ $6.625 ~ $33,125
2,000 @ $5.875 ~ $11,750
1,000 @ $4.250 ~ $ 4,250
1,000 @ $4.000 ~ $ 4,000
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9,000 .................. $53,125
My current avg. is ~ $5.90
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I will probably buy an additional 1,000 shares tomorrow.
Now, exactly how fast the stock will move up is hard to say. It really depends on the size and quality of the contracts that are announced.
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[ CSGI's burn rate is approx. $4 million a year ]
[ approx. 17 million shares outstanding]
[ avg. price per LOC = $.30 ] ----- although this may currently seem high, I think it is very conservative to use this price as the avg. for all of 1998. I think once the bulk of the demand comes in the price per LOC will shoot up dramatically.
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Okay, with the above figures, CSGI would have to only convert approx. 15 million LOC to achieve break-even. [ (15 million LOC x $.30 per line) = $4.5 million ]
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25 million LOC - [ (25 million LOC x $.30 per line) = $7.5 million ]
Net revenues = $ 3.5 million [ $7.5 million - $4 million {burn rate) ]
eps = $.21 per share [ $3.5 million / 17 million shares ]
multiple x 30 - stock price = $6.30
multiple x 40 - stock price = $8.40
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35 million LOC - [ (35 million LOC x $.30 per line) = $10.5 million ]
Net revenues = $ 6.5 million [ $10.5 million - $4 million {burn rate) ]
eps = $.38 per share [ $6.5 million / 17 million shares ]
multiple x 30 - stock price = $11.40
multiple x 40 - stock price = $15.20
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45 million LOC - [ (45 million LOC x $.30 per line) = $13.5 million ]
Net revenues = $ 9.5 million [ $13.5 million - $4 million {burn rate) ]
eps = $.56 per share [ $9.5 million / 17 million shares ]
multiple x 30 - stock price = $16.80
multiple x 40 - stock price = $22.40
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55 million LOC - [ (55 million LOC x $.30 per line) = $16.5 million ]
Net revenues = $12.5 million [ $16.5 million - $4 million {burn rate) ]
eps = $.74 per share [ $12.5 million / 17 million shares ]
multiple x 30 - stock price = $22.20
multiple x 40 - stock price = $29.60
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As I have previously stated, I believe that the Automated Factory Approach will be the best way to convert code. The conversion houses will be in great demand once the flood gates open.
The question becomes, "how much code will CSGI get ?"
since their burn rate is only around $4 million it would only take one or two large projects (8 to 10 million lines), or several small ones (3 to 5 million lines) for them to become profitable.
The stock could jump up dramatically (100% or more) if a couple of large projects are announced, or start to slowly move up on smaller ones.
Our alliance partners are also working to bring ConSyGen business, and we should not forget about them.
Agiss - Is only one of 10 or 12 companies on the list to get contracts from the Canadian Gov. They have already announced they are working on several assessments and they believe they will be in the running to receive a $10 million contract. ConSyGen has already done several successful pilots for them, and Agiss is currently wrapping their services around the ConSyGen toolset. Agiss, by itself, could use ConSyGen's tool to convert 25 to 50 million lines of code.
Strategia - Although STGI has been rather disappointing thus far, they still are only one of a handful of companies who have established testing facilities. ConSyGen is currently working on a 1 million line project for them for the state of Tennessee. exchange2000.com Strategia has been very slow to hand over code, that is why this project has taken so much time. (you can't convert what you don't have) ... but they should also start to see business pick up as we move into Q1 and Q2 of 1998.
SCBI - provides management and technical services to state and local governments, public utilities, Fortune 500 companies and other large organizations. We have done pilots for SCB and I expect their clients to come back to them with the full projects as we move into Q1 and Q2 of 1998. SCBI also wraps their services around the ConSyGen toolset and I feel that they will also be a major supplier of code to ConSyGen.
*note- on September 16, 1997 SCBI made the following press release:
SCB COMPUTER TECHNOLOGY AWARDED $5.4 MILLION
CONTRACT BY MISSISSIPPI DEPARTMENT OF HUMAN
SERVICES FOR YEAR 2000 WORK
biz.yahoo.com
In this release the following is stated: >> "We will expand our facilities in Jackson, Mississippi, to accommodate a Year 2000 factory which will use appropriate automated tools for the assessment and repair of program code, including our proprietary development tools in our Pro2000sm suite of services.'' << .
MILLENNIUM - Millennium Enterprises concentrates on the Hewlett-Packard proprietary market. Millennium is currently marketing the software package that CSGI converted for them and CSGI will get their share of the revenue. I do expect millennium to bring more business ConSyGen's way. This article refers to the Millennium project that was completed and successfully tested. www2.hp.com
INSI - Integrated Systems Inc. is a Winnipeg-based systems integration and consulting company with operations in Ottawa, Dallas, and Los Angeles. The company has developed a sophisticated approach to project development and management which ensures the highest quality and most effective results from its managed projects. It also provides specialized consulting services to companies undertaking business change, systems integration and replacement activities. We were just awarded a 1 million line project for one of their clients, and I expect more projects to come our way from them as well.
CHASE - Chase Technology Group Plc is a value added reseller, supplying products from Panasonic, Apple, HP, Mannesman Tally, Canon, Olivetti, Star and TI to large corporate accounts Chase also offers a comprehensive support, repairs and maintenance service. Chase will wrap their services around the ConSyGen toolset. I expect Chase to win many contracts in Europe.
Millennium IT Pte. Ltd. of Singapore. - Is our alliance partner in Singapore and the rest of South East Asia and will install Conversion Centers in Singapore and Manila. Many of the articles I have posted on this thread show that even if the U.S. banks are made year 2000 compliant, there will still be huge problems in the monetary system if banks around the world remain non-compliant. Given that Asia is one of our largest trade partners and the need for compliant systems is just as great world wide Millennium should do very well. We may not see too much business from Asia in Q1 or Q2, due to the current problems, but as we move in Q3 and Q4 it should really pick up.
Let us not forget that ConSyGen will also be bidding for business. The Motorola pilots were done directly with the company and I believe they will be able to win projects themselves.
Think about it. If each of our partners give us only four (3 million line) project in all of 1998 and if ConSyGen themselves only gets three (3 million line ) projects, that would add up to more than 90 million lines of code. [ ( 7 partners x 4 projects x 3 million line each ) + (ConSyGen's 3 projects x 3 million lines each) ]
Even at a bargain basement avg. price of $.25 per line for ALL OF 1998 that would = $22.5 Million in gross revenue. [ 90 million Loc x. $.25 per line ]
Do you think that ConSyGen and their partners will get more than 3 or 4 projects each for all of next year ? Well, I think so.
Do you think that the price per line will jump up once the flood gates open and the programmers can't be found and those that are already working will go to the highest bidder ?
Well, I think so.
All I can say from here is STAY TUNED I have made my move and I am looking forward to the business rolling in and the stock moving accordingly. . If you have an avg. higher than $6 or $7, you might want to consider averaging down. |
