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COMPANY:
WARP 9
SYMBOL:
WNYN
Summary:NanoCap
Gems is profiling
Warp 9,
symbol
WNYN. The
company's shares currently sell for less
than a penny, and our goal for this
company is over 5 cents a share in the
next 12 months. The company is coming
into historically, its best performing
quarter, and certain factors have
resulted in what we feel makes this a
tremendous value right now.
Description:
Warp 9, Inc. provides e-commerce
platforms and services for the
catalog and retail industry. Its
suite of software platforms are
designed to help online retailers
maximize the Internet channel by
using Warp 9's technologies for
online catalogs, e-mail marketing
campaigns, and interactive visual
merchandising. The company offers
its products on a fully managed
software-as-a-service model. Warp 9
primarily offers two proprietary
software systems, Warp 9 Internet
Commerce System, an enterprise-grade
software system that enables
catalogers and retailers to expand
their operation to the Internet with
customizable features for product
presentation and store management;
and Warp 9 Email Marketing System, a
Web-based email campaign and list
management system. In addition, Warp
9's strategic marketing consultants
develop, deliver, and manage
programs, such as paid search
advertising, search engine
optimization, affiliate marketing,
store optimization, and email
optimization. The company was
founded in 1999 and is based in
Santa Barbara, California. Its CEO
is Harinder Dillon.
Financial
Highlights:
PE: 4
Price to Sales:
.63 Market
Cap: 2 million
Quarterly
Revenue Growth:
40% 52 Week
High: 3 cent
52week low:
.006 cents Cash
Flow: Positive,
Quarter: Sep. 07
Commentary:
We have
followed
this company
for years,
as they have
morphed
their
business
model from a
software
security
company,
called
Roaming
Messenger,
to now an
on-line
catalog/website
enhancer,
through
visual
merchandising.
At one
time, this
company
possess a
“killer app”
in the
security
industry,
and have now
sort of spun
off this
idea, to a
company
called
Zingerang
Software(incidentally,
a startup
company
founded by
Michael
Chuises,
former
Roaming
Messenger
Vice-President
of
Engineering.
This deal
seems pretty
good for
Warp 9,
although
this
replaces an
earlier deal
that was
lucrative as
well. But it
allows WNYN
to share in
future
royalties,
while
keeping the
patents.)
Warp 9 now
competes in
the internet
space with
its
application
software,
and while a
“baby” in
this
industry, it
has some
resilience
to the
economic
slowdown,
with its
pricing
model.
Warp 9
earns fee
income from
its solid
retail base,
a real key
being in
that it
includes
fixed
monthly
charges, and
variable
fees based
on the sales
volume of
their
clients’
e-commerce
websites.
Unlike
traditional
software
companies
that sell
software on
a perpetual
license
where
quarterly
and annual
revenues are
quite
difficult to
predict,
their SaaS
model
spreads the
collection
of contract
revenue over
several
quarters or
years
and makes
the revenues
more
predictable
for a longer
period of
time. With
its most
recent
quarter in
the books,
the company
made over
2.2 million
in revenues
in fiscal
’07 ,
comparing
quite
favorably to
’06, where
the company
made 1.3
million, a
significant
ramp-up.
The most
recent
quarter saw
a jump in
revenues of
40%, from
433,000 to
604,000.
Cash on hand
went from
over
$100,000 to
over
$500,000
this past
quarter.
The company
seemed to
have turned
a corner, as
the company
finished
with a cash
flow
positive
quarter, and
a price to
earnings of
4. Yes….4.
An
aggressive
PE for a
technology
company
could easily
be in the
30’s and
40’s, or
negative in
fact. Cash
flow
positive,
low PE,
revenue
ramp-up,
increasing
cash,
unheard of
in our
opinion for
a company
this size.
Just what
gives here?
Digging
deeper, the
company
consummated
a
convertible
debt
offering
with Cornell
Capital
Partner, LP.
in 2005,
resulting in
dilution of
its shares.
In the
quarter
ending
September 07
for example,
the company
issued over
17 million
shares in
exchange for
Cornell’s
convertibles.
This is
bound to way
on the share
price of the
company as
this goes
on, and this
we feel is
the main
reason for
the price
suppression.
The CEO has
to figure a
solution
here, as
this would
really help
the share
price
maintain
some
stability.
Still, it is
way over
done, in our
opinion,
resulting in
a great
opportunity
for
investors.
NanoCap
Gem's
conclusion:
Warp 9
has a
market
cap of 2
million,
a very
tiny
speck in
the
internet
industry.
And it
sells
for just
.63
time’s
sales,
way, way
undervalued.
With
ramping-up
revenues,
cash
flow
positive,
and a
positive
price to
earnings,
this
company
could
easily
be
selling
for 6 or
7 times
sales,
and a
price to
earnings
of say
40.
This
would
get you
a price
of
nearly 8
cents!
Although
highly
speculative,
we feel
this
company
is
tremendously
undervalued,
and the
word on
the
street
will get
this
company
noticed
eventually
,
helping
the
share
price in
the near
future,
if not
later.
We
placed a
very
doable 5
cent
price
tag on
this
company,
within
12
months.
Historically,
the
winter
quarter
has been
the
highest
for this
company
and
industry,
and
NanoCap
Gems
feel’s
nows the
time to
accumulate
Warp 9’s
shares,
with a
significant
price
increase,
potentially
coming
next
quarter.
We feel
the
price is
near a
bottom,
with
tremendous
upside
in the
next 12
months!
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