Many start-up companies often look for an “exit” in the form of a buyout or an initial public offering that nets large sums of money to early-stage investors. For publicly-traded micro-cap companies, the “exit” that most early-stage investors seek is a listing on a national stock exchange like the NYSE or NASDAQ. A listing on these exchanges significantly improves liquidity, opens the door to institutional investors, and marks the next stage of a company’s life.
OxySure Systems Inc. (OXYS) is rapidly approaching its “exit” with an up-listing to the NASDAQ stock exchange. After carefully scaling its business and securing stockholder approvals, the company is just a few short steps away from accessing institutional capital and beginning the next stage of its medical device business. Investors may want to re-examine the stock given this near-term catalyst and its promising long-term potential.
Scaling the Business
OxySure Systems has spent the past several months scaling up its business to meet NASDAQ qualifications and attract institutional investors post-uplisting.
The company’s most tangible progress has been made growing its national sales force in an effort to reduce its reliance on distributors. During the second quarter, the company appointed three new territory managers in Minneapolis, Philadelphia, and San Antonia, which added to existing managers in Michigan, Georgia, Colorado, Pennsylvania, Arizona, and Texas. The company has also continued to sign new distributors, including Team Life and Z-Medica.
In an effort to raise awareness of its brands, the company also became the official supplier of medical equipment for the Special Olympics World Games Los Angeles 2015. The OxySure Model 615 was deployed 18 times throughout the games, while the company also provided AEDs, branded pulse oximeters, and other equipment to the games. Management plans to continue these types of sponsorships to build awareness and demonstrate functionality.
The company has also begun to assemble a world-class Strategic Advisory Board in an effort to guide its efforts moving forward. In late-September, Dr. Joseph M. Chalil an executive at the world’s largest privately held pharmaceutical company in Germany, Boehringer Ingelheim, was appointed to OxySure’s Strategic Advisory Board. Boehringer Ingelheim operates globally with 146 affiliates and a total of more than 47,700 employees and in 2014, Boehringer Ingelheim achieved net sales of about 13.3 billion euros. Christopher Kaplan was appointed soon thereafter with experience working for 12 years at Novartis AG (NYSE:NVS) in both the U.S. and Europe in various different executive roles.
Benefits of Uplisting
There are many benefits of uplisting to the NASDAQ from the over-the-counter (OTC) stock exchanges, which makes the move worth watching for investors.
The NASDAQ has several requirements for companies looking to uplist, including a minimum share price, corporate governance adherence, and revenue/earnings requirements. In order to continue trading, companies must not only meet these requirements upon initial uplisting, but also maintain these metrics going forward. These requirements ensure that companies listed on the exchange are reputable for potential investors.
Uplisting to a national exchange, like the NASDAQ, generates advantages in broader visibility, increased liquidity, and accessibility to the deep pockets of institutional investment firms and retail brokers, many of which are not even allowed to invest in companies operating on the OTC exchanges. While not all companies gain in value after an uplisting, the consensus is that the move tends to reduce any valuation discount if it exists. Future corporate news will also be heard more widely, creating the potential for a fairer share price reaction.
Invivo Therapeutics Holdings Corp. (NVIV), a research and clinical-stage biomaterials and biotechnology company, uplisted to the NASDAQ back in April of 2013 and the dramatic improvement in visibility, liquidity, and volume can be clearly seen in Figure 1 above. With OxySure Systems’ uplisting, investors may see the same kind of effect moving forward, as the company simultaneously works to expand its operations. Other recent companies that have been able to make the move from OTC to NASDAQ include; Advaxis, Inc. (ADXS), Cytosorbents Corp (CTSO), and Corbus Pharmaceuticals Holdings Inc. (NASDAQ:CRBP).
The true barometer of OxySure Systems’ long-term success will be what it does with the increased exposure that it will gain from the uplisting.
In addition to its growing its direct sales force, the company has a number of exciting upcoming catalysts that could send shares higher. The company announced plans to add a medical drone to its line-up of emergency medical, resuscitation, and trauma solutions back in June and secured the necessary approvals from the FAA in early September. Management plans to provide drone solutions to a wide array of first responders, yielding a large market opportunity.
The move marks an expansion beyond its core OxySure Model 615 that provides medically-pure oxygen from an inert powder during medical emergencies and follows the launch of complementary products like AEDs and housing cabinet solutions. With its growing sales distribution network, the company has amassed an impressive channel through which it is capable of selling a growing number of innovative medical devices and ancillary products.
The company’s Strategic Advisory Board will be instrumental in guiding these efforts and could pave the way towards becoming a more diversified medical device company, like Medtronic Inc. (NYSE:MDT) or St. Jude Medical Inc. (NYSE:STJ), rather than a pure-play on solely medical oxygen. With new product announcements and partnerships serving as catalysts, the stock could see appreciation over the coming months as the company is able to reach a larger NASDAQ investing audience.
OxySure Solutions represent an attractive opportunity at its current $9 million market capitalization. With trailing 12-month revenue of over $3 million, the company has a rapidly growing top-line with only its existing solutions. These dynamics are likely to continue as the company grows its direct sales force, signs new distributors, and launches new products like its drones that could be higher-value in nature on the top-line.
The bottom line may also be better than it seems with a lot of its expenses being non-cash, meaning that its cash flow situation could be approaching a breakeven point over the coming quarters. Last quarter, the company’s operational cash burn amounted to just $686,000 after removing depreciation, liability changes, and other non-cash items from its $1.25 million net loss – a gap that has narrowed from its $1 million burn during the March quarter.
For more information, visit the company’s website at www.oxysure.com.
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SOURCE: Emerging Growth LLC