Flexpoint Sensor Systems Inc. (OTCBB: FLXT), developer of a groundbreaking sensor solution that is revolutionizing the automotive, safety, medical, and industrial industries, is rapidly approaching a tipping point in the commercialization of its Bend Sensor®. With a number of large-scale contracts moving into production, the company reported second quarter revenue that nearly doubled year-over-year and could see much stronger growth ahead.
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In this article, we will take a closer look at how the company’s long-term agreements have helped drive revenue and why it may be an interesting time for investors to get involved.
Growth & Profitability
Flexpoint reported revenue that increased 92% year-over-year and 165% sequentially to $93,039 during the second quarter, according to its most recent 10-Q SEC filing. At the same time, the company’s net loss decreased by 7% year-over-year and 12% sequentially to $228,792 despite hiring a new VP of Sales & Marketing. Management expects these trends to continue over the coming quarters as long-term production contracts increasingly come online.
On a cash basis, the company reported a cash burn rate of $163,985 – or about $55,000 per month – during the second quarter. Management expects that accelerating revenue will help the company achieve a positive cash flow moving into next year as expenses continue to trend lower as a percentage of revenue. This could provide cash to finance growth rather than relying on debt or equity financing, which could help preserve and grow long-term shareholder value.
Flexpoint has cultivated a number of long-term production and manufacturing agreements over the past several quarters. For example, the company began full-scale production for a number of different toy models in June and anticipates annualized order volumes of between 750,000 and one million units during 2016 and into the first half of 2017. These volumes are expected to increase in 2017 as additional lines/models of toys adopt the sensor technology. In the wearables market segment, Manus VR has selected the company’s Bend Sensor® to power its revolutionary glove targeting the B2B VR and consumer gaming markets, and a number of additional glove-based applications in the medical and toy segments have also adopted the BendSensor®.
Moving forward, the company anticipates a number of other larger-scale deals coming online to drive revenue higher. These deals include the commercialization of the Haemoband colonoscope as well as the Mettis Trainer® that was featured as an Honoree award winner for Innovation in the Health, Fitness and Biotech category at the 2016 Consumer Electronics Show. Management also believes that its automotive sensors will be included in 2018 or 2019 models and will soon move into production.
The company’s Bend Sensor® has numerous applications beyond these markets as well since its single-layer thin-film construction cuts costs and mechanical bulk while introducing a range of functions and stylistic design possibilities that have never before been possible. Management believes that the sensor technology could extend into cutting-edge multi-billion dollar industries like the Internet-of-Things (“IoT”) and Industrial Internet of Things (“IIoT”) markets.
Flexpoint stands at a key tipping point in their corporate history with long-term production contracts coming online and driving revenue higher. While investors have seen some early results from these efforts, the greatest gains could be seen over the coming quarters as more contracts come online and existing contracts scale higher. Higher revenue, lower expenses, and a positive cash flow could drive shareholder value significantly higher.