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Internet Stock Review, Thursday, 06/10/2010.
Los Angeles, CA 58…72F Sunny.
Chicago, IL, 60..72F Sunny.
Port Jefferson, NY, 56…74 Sunny.
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1. Adding VirnetX (VHC) $6.50, To Watch List.
2. Correction on Biomoda (BMOD) $0.22.
3. Disclaimer.
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Internet Stock Review
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Seemingly a no-brainer, putting aside the weird looking and awful sounding
name. Who comes up with these names ? Was Virnetics taken ?
Nonetheless, we do like the sweet sound of the $200 million sloshing
around the corporate halls of Virnetics, that Microsoft recently agreed to
pay them — as a result of a jury trial in a patent infringement suit that
they settled on May 17, 2010 (or about six weeks ago).
Hmmm, that’s kind of an interesting visual. What if Virenetics took all
$200 million in cash and then just threw it everywhere. Threw it in the
halls, threw it in the conference room, tossed it around the lobby, threw
it on top of the secretaries desks…just literally lined the halls with
cash. It would utterly be the “most-best” place in the world to work.
Imagine going to lunch. You reach down, grab a hundred and go.
Imagine you’re stressed out about whatever. You go to work and you’re
stepping on cash as you walk to your office. It’s got to have a sort of
impenetrable calming affect — like “don’t worry, everything’s going to be
alright.” Net-net, we think it would (could) have a positive affect of
employee productivity, in that the only thing they have to worry about is
making the “best-most” product on the planet. Nothing else matters.
Jaguar on the fritz. So what.
Triplets all got accepted into Harvard. Gee.
Yacht for sale $0.10 on the dollar, but sale terms end today at 3:00. Not
a problem.
And what if you wanted to make an acquisition — for say $10 million. It’s
one thing to send a wire, which is most impersonal. We’ve dealt with large
numbers before and the way the financial and banking markets work these
days — it’s almost like it’s not real money. It’s how we’ve made big
mistakes in the past. It’s just journal entries. $2 million here. Move $5
million there. Send $3 million over there. It’s probably one of the
reasons we’ve had so many “mega-financial mistakes in judgement” these
days. See that $100 million building, let’s buy it. Click, click — it’s
ours. Now what else can we buy, we got $400 million more to spend.
Now imagine you want to make a $10 million acquisition and you have to
pick the money up off the floor ? That’s one hundred thousand, $100 bills.
That’ll make you think twice before completing the acquisition. At
$150,000 (meaning you’ve already picked up and put 1,500 $100 bills in a
nice neat pile) you might be wondering to yourself, ‘You know — do we
really want to go through this acquisition. It sure is an awful lot of
money. $10 million dollars. Geez, we’ll be here all night counting up the
money.”
One final analogy. Imagine the difference between sending a wire transfer
for $5 million to Bernie Maddoff vs. walking into his office and piling $5
million on his desk. In the later, you’d have to give some serious
wonderment, “…should I really be giving this guy so much money?” And
even if you did, when you left his office, imagine how you’d feel walking
out.. We’d just keep looking back and keep wondering, “Mmmm, not so sure
this is such a great idea.”
Basic, basics:
Shares outstanding: 43 million
Market Value: $279 million
Business Description (from 10Q):
Our principal business activities to date are our efforts to commercialize
our patent portfolio.
Although we believe we may derive revenues in the future from our
principal patent portfolio and are currently endeavoring to develop
certain of those patents into marketable products, we have not done so to
date.
As of March 31, 2010, we had 12 issued U.S. and eight issued foreign
technology related patents, in addition to pending U.S. and foreign patent
applications. The terms of our issued U.S. and foreign patents run
through the period 2019 to 2024.
Most of our issued patents were acquired by our principal operating
subsidiary, VirnetX, Inc., from Science Applications International
Corporation, or SAIC, pursuant to an Assignment Agreement dated December
21, 2006
We are required to make payments to SAIC based on the revenue generated
from our ownership or use of the patents assigned to us by SAIC. SAIC is
entitled to receive a portion of the proceeds from revenues, monies or any
form of consideration paid for the acquisition of VirnetX or from the
settlement of certain patent infringement claims of ours.
Our employees include the core development team behind our patent
portfolio, technology and software. This team has worked together for over
ten years and is the same team that invented and developed this technology
while working at Science Application International Corporation, or SAIC.
SAIC is a FORTUNE 500® scientific, engineering, and technology
applications company…
As part of our licensing strategy, in March 2008, we hired ipCapital
Group, a leading advisor on licensing technology and intellectual
property, to initiate discussions with several major potential licensees.
Since its founding in 1998, ipCapital Group has supported the licensing
efforts of clients across a variety of technologies and markets, resulting
in transactions representing several hundred million dollars of value.
On April 27, 2010, we entered into an engagement letter with McKool Smith,
a professional corporation, or McKool, confirming McKool as our lead
counsel in our lawsuit filed in March 2010 against Microsoft, or the March
2010 Litigation. Under the April 2010 engagement letter, McKool has agreed
to represent us in the March 2010 Litigation at McKool’s standard hourly
rates subject to a cap of $7.5 million, plus either (1) a contingency fee
of 8% of the litigation proceeds from the March 2010 Litigation, if the
March 2010 Litigation is settled independently of the February 2007
Litigation, or (2) if the March 2010 Litigation and February 2007
Litigation are settled together, a total of 10% of the settlement proceeds
would be payable to McKool pursuant to the two outstanding engagement
letters that we have entered into with McKool.
Our research and development expenses increased by $300,536 to $522,235
for the three months ended March 31, 2010, from $221,699 for the three
months ended March 31, 2009.
(Read “company overview” on page 11 here:
http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=6941417 )
Chart:
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=vhc&sid=0&o_symb=vhc&freq=1&time=19
(Remember the “win” was March 16th and the “settlement” was May 17th)
=====
You can actually buy it cheaper POST settlement — as speculators took it
up as high as $7.19 even before the win. On Monday, the day before the win
it closed at $5.59. On March 17th, the day after the win, it traded as
high as $7.99.
It actually traded as low as $4.03 in May (the 6th). Keep in mind a “win”
could have meant an appeal by Microsoft. On May 17th the “settlement” for
a one-time payment of $200 million was announced. BTW, the jury had
awarded $105 million. The Friday before the settlement was announced, the
shares closed at $6.13. The day of the news, the shares traded as high as
$7.09 and closed at $6.11.
In sum we think it’s fair to say the traders are long gone…and most
disappointed, with the post settlement trading — though people who got in
at $3 in February should be happy. We think the post settlement trading
was muted because a large part of the “fast money” investment community
was expecting an even larger payday. They didn’t get it so they left.
So why now…?
News of more lawsuits (or licensing agreements).
That’s all folks.
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VirnetX (VHC) Headlines:
http://studio-5.financialcontent.com/demo/?Page=NEWS&Ticker=VHC&ChannelType=PRESSRELEASES
The most interesting “follower” of VirtnetX posted this in February:
IMHO, the MSFT trial is just the tip of the iceberg. This is what so many
just do not understand. VHC in the midst of becoming the Network Solutions
for the evolving 3G – 4G rollout, which is unfolding and ramping up by all
the major carriers, (e.g., Verizon, Sprint, AT&T). Just like Network
Solutions boomed because it owned the rights to doll out the domain
registry for the world wide web, VHC owns the rights (patents) to secure
domain registry for securing 3G and 4G mobile communications. Mobile
phones are becoming more like computers and all smart phones will have
their own domain names, which requires security – this is what VHC
provides. VHC owns the patents that allow for secure data transmission via
these billions of devices without the bandwith limitations and
restrictions that can be problematic. VRSN is in talks to licence VHC’s
tech as we speak relative to its exclusive “no shop” Letter of Intent with
a March 23, 2010 deadline.
While true the MSFT case could bring VHC billions, and while true many
other companies already are in VHC’s crosshairs for similar patent
infringements (namely CSCO, Avaya, etc.), by far the biggest story is the
coming 3G & 4G rollout and the patents owned by VHC (which were originally
designed and created for the U.S. Central Intelligence Agency [CIA]) that
allow for impenetrably secure data transfer – – the likes of which none of
us has ever enjoyed.
VHC’s current market cap is actually very tiny. Assuming VHC can avoid a
buyout, this stock could well generate billions of revenues from these
patents and trade north of $100. Yes, billions….. Go to:
http://www.askwebhosting.com/story/14856...
And then there’s the specter of Qualcomm. Will Qualcomm become VirnetX
chip patner to imbed VHC’s patented technologies in its mobile chipsets
and chipsets for all communicating devices as Dawson James Securities has
suggested? Go to: http://phx.corporate-ir.net/External.Fil...
QCOM sold over 4 million mobile chipsets last year and has now forged new
relationships with Apple, AT&T, Spint, Verizon, and Microsoft (relative to
MSFT’s new mobile platform). Mmmm…..
The next few months – – the next few weeks, could prove to be very
exciting for VHC shareholders.
All his (hers) posts can be found here: http://tinyurl.com/2arnj6l
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2. Correction on Biomoda (BMOD) $0.22.
Biotech Stock Review.
http://www.biotechstockreview.com
Wow, you guys are quick to point out errors. Five return emails in under
one minute.
$45 x one million or $45 million.
Or if two million people; $90 million.
Or if three million; $270 million.
Or if ten million — and so on and so on…
Should say:
$45 x one million or $45 million.
Or if two million people; $90 million.
Or if three million; $135 million.
Or if ten million — and so on and so on…
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Disclaimer: This press release (and letter) contains forward-looking
statements within the meaning of the Private Securities Litigation Reform
Act of 1995. Forward-looking statements are based on estimates,
projections, beliefs and assumptions of Biomoda management at the time of
such statements and are not guarantees of future performance.
Forward-looking statements involve risks and uncertainties in predicting
future results and conditions. Actual results could differ materially from
those projected in these forward-looking statements due to a variety of
factors, including, without limitation, the acceptance by customers of our
products, our ability to develop new products cost-effectively, our
ability to raise capital in the future, the development by competitors of
products using improved or alternative technology, the retention of key
employees and general economic conditions. The forward-looking statements
contained herein are also subject generally to other risks and
uncertainties that are described from time to time in the Company’s
reports and registration statements filed with the Securities and Exchange
Commission, including those under the heading “Risk Factors” in the
Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2009.
Forward-looking statements are made as of the date of this press release
and are subject to change without notice. Not a client.
VHC: Statements in this press release that are not statements of
historical or current fact constitute “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties
and other unknown factors that could cause the actual results of the
Company to be materially different from the historical results or from any
future results expressed or implied by such forward-looking statements. In
addition to statements which explicitly describe such risks and
uncertainties, readers are urged to consider statements labeled with the
terms “believes,” “belief,” “expects,” “intends,” “anticipates,” or
“plans” to be uncertain and forward-looking. The forward-looking
statements contained herein are also subject generally to other risks and
uncertainties that are described from time to time in the Company’s
reports and registration statements filed with the Securities and Exchange
Commission, including those under the heading “Risk Factors” in Company’s
Annual Report on Form 10-K filed with the SEC on March 31, 2010 and
Quarterly Report on Form 10-Q filed on May 7, 2010. Not a client.
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Going Concern Statements.
We would like to point out that the majority of companies listed on the
OTC Bulletin Board have factors which create an
uncertainty about the their ability to continue as a going concern. These
concerns are typically related to financing (or lack of), competitive
environments, lack of operating history and operating at loss levels which
is typical of most start-ups.
These statement can usually be found in their most recent 10Q filings and
typically you don’t have to dig to far down past the financial tables. We
like to use http://www.pinksheets.com for quick and easy access to SEC
filings. We think it would be wise for most investors to assume that all
companies listed on the OTC Bulletin Board (and many on NASDAQ) have going
concern issues.
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