This pitch comes in from Alex Koyfman as an ad for his Penny Stock Millionaire, which has demonstrated a delight with tiny little medical technology stocks — so we’ll warn you up front that there’s every chance that this is a sub-$100 million company that could easily be jolted higher or lower with just a wee modicum of attention.
The last time we looked at one of their stocks, it was Milestone Scientific (MLSS) back in early November… a company aiming to revolutionize the standard injection needle — and it has risen a good 20-30% or so since they started teasing that one (I don’t know whether they reported good news or it was just the new investor attention driving them higher, I haven’t checked on the details… there was quite a bit of skepticism about that one among our readers at the time).
And this one, like Milestone Scientific, is sort of a healthcare stock… but it’s not one that requires lots of FDA clinical trials or deep scientific knowledge to understand, it’s really a technology and RFID tracking stock. Here’s how the teaser pitch gets us excited:
“This Technology Has the Power to Halt ANY Pandemic in its Tracks
“And it’s Not Experimental, Top Secret, or Waiting for FDA Approval
“The Small Tech Company Behind it is Installing it NOW, In Some of the Nation’s Top Hospitals
“And it Could Make YOU a Millionaire in 2015”
And who is it? Let’s check out the details in the tease… they start with a made-up story, similar to the headline stories of some of the returning Ebola doctors. This doctor was at risk of spreading the disease once he started to feel ill while back home in the US, and nearly caused a crisis in his local hospital:
“By the time word spread that a patient with a possible Ebola infection was in the hospital, both Dr. Pollack and the bodily fluids he’d violently expelled had been in direct contact with more than a dozen staff members.
“But this hospital was prepared.Are you getting our free Daily Update
"reveal" emails? If not,
just click here...
“You see, two months earlier, this trauma center had invested in a unique new technology that would turn an otherwise chaotic hive of contagious disease into an ordered and quickly manageable situation.
“The movement of every patient, every staff member, and every mobile piece of equipment was being tracked by a centralized system.
“Using this system, hospital administrators could tell who had come within a dangerous radius of Dr. Pollack and who, in turn, had come into contact with those individuals.”
And apparently this system, for tracking people and equipment in hospitals, is already being deployed:
“This very system is being installed right now in some of the nation’s best hospitals….
“Thanks to the work done at a small Michigan-based tech company, modern threats like Ebola, MERS, avian flu, pneumonic and bubonic plague, and any other highly communicable, rapidly spreading disease can now, for the first time ever, be contained, isolated, and eradicated with the speed and precision of a microprocessor.
“This company has developed a system that can take the chaos of an overloaded class 1 trauma center and not just track the movement of every object, patient, and staff member in real time… but actually determine when and where physical or near-physical contact took place between anyone working in or admitted to the hospital.
“A technology like this has the power to stop outbreaks before they spill out of the hospital setting….”
So, one assumes, this little Michigan tech company is going to make us all filthy rich… right? What, then, is the company? First we get a few more hints about how the technology works, and why it’s valuable…
“Applying RFID technology in a hospital allows for administrators to analyze, modify, and streamline everything from the way foot traffic is directed to which nurse, technician, or physician gets called up in the event of an emergency — all based on location.
“In situations where seconds can often mean the difference between a patient bleeding out or suffocating and surviving to recover, RFID networks are a godsend….
“There is universal appeal for this type of product in today’s hospitals, and the versatility of its functions is remarkable.
“These locator badges and tags can be attached to any worker or patient, but they are also made to be fixed to mobile equipment and beds.
“A centralized system keeps track of all of these moving parts, analyzing the inefficiencies and guiding improvements…’
“This company’s suite of products is so extensive that it goes so far as to market special hand-sanitizer dispensers that track who uses them, when, and where.
“Put all these parts together, and the end result is a hospital that functions more smoothly, responds to emergencies faster, creates less waste and overhead, and provides invaluable data in the tracking of contagious diseases.”
And then we get to some more specifics about this secret Michigan tech company — in the form of examples of their customers:
“One example comes from a Maryland-based hospital that recently put my company’s equipment-tracking system to use.
“This hospital reported that after the system was put into place, the time spent per nurse per day in locating equipment immediately dropped more than 90%….
“The program was so successful that this hospital is now moving forward with the company’s patient-tracking system.
“Another case is a major hospital center in the Pacific Northwest.
“Taking advantage of the same equipment and object-tracking network but on an even more extreme level, this hospital saved an estimated $600,000 on the first day of its use — more than the cost of the system.
“How is this instant savings possible? Simple: The system analyzed the number of IV pumps in use at the hospital and determined that there was a surplus of more than 25% — which immediately impacted budgeting for the next order….
“And this is just a small sampling. This company has worked with some of the most recognized hospitals in the nation — and each time, the results were the same.
“Time saved. Overhead decreased. Operations streamlined and optimized.”
And then we get to the part that makes me think I should never have even written about this one (but, well, we’ve come this far…):
“The company I’m talking about is actually pretty tiny.
“Just $10 million market capitalization, with the stock trading at a mere $0.10.
“But that’s exactly the kind of company I prefer.
“It’s young; it’s hungry; it’s got a killer product that facilities worth hundreds of millions of dollars are scampering to get their hands on.
“In fact, considering its size compared to how much potential its products have within its industry, this might be one of the best investment opportunities I’ve seen since the very dawn of the dot-com revolution.”
So we can double our caveat from earlier about small companies. As a general rule, companies with $10 million market caps are not real, not viable, and should not be recommended by investment newsletters. It’s just stupid. If your company’s market capitalization — the value of the entire company — is about the same as the net profit that Becton Dickinson (BDX, a major healthcare supplier) makes in a single day, why are you publicly traded? It’s OK to be tiny, even though it indicates you’re probably nowhere near as revolutionary and exciting as the teaser pitch makes it sound, but companies this small should be private until they’re big enough to withstand public scrutiny — if their technology is that great or that unique, being public means they can be bought in a hostile takeover anytime… and if it’s not (and sorry, but it pretty much never is for $10 million companies), the stock can be easily impacted by chatter from promoters and newsletters and, well, anyone else who even happens to mention the ticker to 20 of his closest friends.
The teaser pitch implies that, of course, this tiny company is that one in a million that’s real:
“I don’t just choose companies if they have a clear winner in terms of product and market positioning… I take it a step further and add another requirement to the list.
“If their share structure and trading history show signs of weakness, I stay away from those stocks regardless of how great their plans are.
“The reason: I invest to make money, and if I don’t get the most bang for my buck when it comes to trading, I sit it out and wait for another one to come around.
“That said, at $0.10 and trading very tightly for the last year, this stock will move — and fast.
“I fully expect a doubling within the first quarter of 2015… and I’m saying that conservatively.”
Well… sure, it could double. Alex Koyfman talking about it a few times to his subscribers ought to be more than enough to make it double. That’s the problem with companies that are this ridiculously small, the justification for it being a $10 million company and the justification for it being a $20 million company are pretty much the same… just add a couple hundred new interested investors, and you’ve got your double.
So who is this company? Well, Koyfman’s subscribers haven’t gone off entirely half-cocked on this one — not yet, at least — because he’s been hinting at it it since mid-October, seems to have officially recommended it to his subscribers in early December and then teased it using this same specific ad starting in mid-December… and the stock is still more or less unchanged (I saw the ads on December 18 and didn’t cover them — frankly, I was kind of hoping they’d die off since the company was small… but after it started up again I thought we should at least bring a discussion into the open).
Which is a long way of telling you that, yes, the Mighty Mighty Thinkolator has a name for you: This is Versus Technology (VSTI), which is actually from my Mom’s home town of Traverse City, Michigan. Known more for its cherry festival and, now, Michael Moore-led film festival than for any tech company startup culture. And you can see the full ad from Koyfman here if you’re interested in more of the spin from Penny Stock Millionaire.
And though it has that ticker symbol, it is not filing with the SEC and it trades over the counter (and doesn’t trade very much) — and the company itself seems to think it’s effectively a private company, apparently you have to register with the company to get any kind of financial information, and they imply that trading on this info they’ll send you is effectively “insider trading”… so again, not a company that should be publicly traded. And perhaps one that doesn’t want to have its shares changing hands on the OTC at all. They released their last financial data press release, about the 2012 fiscal year, about two years ago (they were profitable that year, driving the shares up to 20 cents or so, for whatever it’s worth).
Data isn’t available about them from the quote services, which is probably why no one really trades the stock…. who knows what their sales are, or their earnings? Margins? A mystery all around. And not a new, startup thing — Versus Technology has been traded OTC since the mid-1990s, and it reported at least some information to the SEC up until about a decade ago and reported at least some basic annual financials via press release until two years ago. They’ve been involved in tracking and monitoring systems the whole time, though it has morphed over the years (originally they were involved in infrared tracking and security systems, then mixed infrared and RF tracking in various settings, and now focus on RFID specifically in health care), and I have no idea what their business has been like… but it’s 20 years old, at least, and is worth $10 million on the public markets, and we’d have to ask them to find out what their financials are these days. According to this article, they had 50 employees back in 2011… but for more info than that, you’ll have to dig deeper and probably ask them… all I see on the surface are press releases about business they’ve won, and that’s only one announcement every few months.
So… sure, it sounds like an interesting story. Real time tracking is certainly a boon to healthcare, at least in the abstract, and in the process of snooping around for just a few minutes I came across a half-dozen other tiny-sounding companies, mostly private, who are selling real time tracking systems for staff and equipment for healthcare settings… and presumably some of the big players in hospital technology, supplies and services could jump into this in a moment (or perhaps already have — I seem to remember Becton Dickinson having a RFID push a decade or so ago).
Which ends up with… “No, thanks” for me. If I can’t even see an annual report, have no idea what the financials are, and would have to trust the company to send me something that’s legitimate after I’ve bought shares, with the implication that anything they tell me is “insider information” … well, no thanks. It may be a fine company, and perhaps they’re doing fantastically well (I have no idea), and maybe they’ll turn that huge rush of business Koyfman hints at into a red-hot IPO someday and make all the current shareholders rich… but it’s also possible that if you buy that storefront downtown that has churned out one quick bankruptcy after another you’ll be the one to finally turn it into a hot business, and when you stare through the windows of that empty storefront today you have about as much knowledge about the potential of that retail location as I do about the potential of Versus Technology. This is effectively a private company which has traded over the counter in a tight price range ever since they stopped telling the public how they’re doing, and it’s hard to see why public shareholders to get involved in the absence of any real information.
If, after all that, you’re interested in getting on board (heck, their website is pretty nice!), please make sure to contact Versus Technology first or dig deeper than I did and actually get some kind of financial information about the company — and think about why you should trust that information — before you buy the stock.