Saturday, June 09, 2007
AFP Imaging Corp (AFPC)
Latest 10-Q for period ending Mar 31, 2007:
Strong balance sheet, 2/3 equity, almost have net cash.
34% gross margins.
Operating loss for 3 months and 9 months. Both positive last year. SG&A killed them this year.
Not capital intensive.
Free cash flow is positive.
Big cash spent on acquisition.
April 19, 2007 acquired Quantitative Radiology (Italy): 3-D dental "computed tomography" (CT). AFPC has been the distributor in the Western Hemisphere except Brazil. Paid with private offering and loan.
Analog film processor business declined 19%. They seem to be focused on new digital radiology methods which is growing.
The SG&A increase is due to several factors: 1) writeoff of financing costs (they dropped a lender), 2) costs associated with the increased business, 3) tech support cost increase associated with the new equipment requiring a dedicated infrastructure support system, 4) sales and marketing cost increases due to new 3-D x-ray machine with 2 big trade shows, brochures travel entertainment etc., pursuing some veterinary market stuff, but most seems to be related to a huge increase from acquiring a distribution channel business.
They're trying to scale the business and move into digital radiology. Will this pan out? If so, they might end up with well over 10 cents per share per year.
The stock is selling for $1.80, which is probably about right.