People new to the penny stock world are often flooded with information -- and subsequently misinformation -- about companies trading on the Over-the-Counter exchange. While it cannot be contested that the poor judgment and actions of some companies have tainted the flavor of many micro and small-capitalized companies and the exchange itself, there is still plenty of good to be found when both rose-colored and pessimistic glasses are removed and realistic vision is used.
In short, the visions of "this is going to be the next Microsoft or Google" as well as "every company is a sham" must be checked at the door when entering into the house of investment.
Business models can be a slow-moving vehicle -- much to the dismay of many investors -- but such is the nature of any business. Companies that are actually seeing their strategies manifest into bone fide operations are the companies that investors should flock to in due diligence to assess the progression of the policies and see how they are translating to revenues.
News Wednesday hit on Viking Systems, Inc. (OTCBB:VKNG), a Westborough, Massachussets-based developer, manufacturer and marketer of 3D and 2D visualization solutions for complex minimally invasive surgery. The Company announced that it expects to report sales for the second quarter of 2011 of roughly $2.5 million U.S., representing an increase of 25% as compared to the same quarter in 2010.
What is interesting about this news is the chain of events led by the Viking management to build a solid revenue stream that, while still in its infancy, is growing substantially. Three years ago, the Company changed its management team, restructured its business model to accommodate tighter expenses and increase cash flow and did some refinancing to simplify its cash structure.
The move paid off as shown through improved profit and loss figures and cash flow in 2009 which allowed for financing in 2010 to develop their 3DHD technology with the Next Generation 3D system launched in the fourth quarter of 2010. The actions of the management proved astute as the systems are now selling with the bank account getting an additional boost from a $3-million U.S. equity financing completed in May 2011.
According to the press release, Viking Systems reported that as of June 30, it had shipped a cumulative total of 50 3DHD systems, 28 demonstration units, 18 customer systems, two "Center of Excellence" systems for which there was no charge, and two market development systems to third parties, since initial shipments of the 3DHD systems began in December 2010.
All of the customer system sales in 2011 have been in markets outside the United States. While the Company believes that a majority of its 3DHD sales in 2011 will be from markets outside the USA, it expects to receive orders from US customers during the third quarter. Demonstrations in the USA of salable product began in January 2011.
Once again, it looks as Viking is methodically going about expansion and growing their business model. Remember, corporate development is not done through magic beans that take the company and its shareholders to the sky in a day. Success is the product of calculated moves.
Now granted, there are plenty of the more than 8,000 OTC companies out there that don’t run their operations in the succinct, fine-tuned manner that Viking outwardly appears to be running theirs, but it is a bit surprising that volume remains low on a company generating over $2 million U.S. in revs in a quarter and a substantial opportunity for growth in the second half of 2011.
However, often times the non-squeaky wheel doesn’t get any grease, which just may be happening with this company that is just quietly going about their business. But, with a market cap still under $20 million U.S. and the possibility that domestic sales will start accompanying the international units being sold in the near-term, the number of Viking shareholders just may start to stack up soon.
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