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Monday, July 24, 2006

Gensym Corp (GNSM) revisited

GNSM (sec) Rule engine software for mission-critical real-time applications. Manufacturing, utilities, communications, transportation, aerospace, finance, etc. Lots of vertical market effort, it seems.

CEO employment agreement: $288K plus 50% bonus [based on what?], 300K options $1.80 strike (three year vesting schedule), plus benefits and another $144K bonus for actual results.

Some guy owns 18% of the stock. Another guy owns 13% of the stock. Executives and directors, by the way, own 16%.

Results for Q4 ending Dec 31, 2005. They had a profit of $179K (almost no taxes). For the year they lost money. Balance sheet isn't very strong. AR heavy assets, but not much else besides cash.

72% gross margins. Barely crossing above breakeven in operating and net profits.

10-K for the period ending Dec 31, 2005.
7.5 million shares on March 24, 2006. 1.7 million options. Figure on about 11 million totally diluted shares.

Revenues are flat from the prior year.
2005: $17.7 million
2004: $17.6 million
2003: $14.6 million
2002: $17.5 million
2001: $20.2 million

They've been hovering around breakeven for years. They've been free cash flow positive for two years, but not by much.

The stock is around a dollar, for a totally diluted market cap of $11 million. Unless there's something good in their future, I'd say they're selling for about what they're worth. But I really don't know.

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