Note: This article has been disputed by Accelr8. A rebuttal appears here.
The SEC previously alleged "jack of all trades" Chairman/CEO/Secretary/CFO Thomas V. Geimer filed false financial statements and fraudulently misrepresented the company's products.
Accelr8 (AXK) is a company with a history of poor business decisions, squandering $10mil in recent years with little to show for it.
With $372k in cash left on the books, we suspect the company will need to raise a substantial sun in the near future, possibly diluting shareholders significantly.
We find valuation of 20x FY2010 revenue and 74x FY 2010 income extreme, and feel a best-case scenario is more than baked into the stock.
We believe management is unqualified to run a medical technology company seeking FDA approval and see the Novartis evaluation as a last-ditch effort of a desperate company.
Since January 18th of this year, around the time that a penny stock promoter began pumping the stock, Accelr8 Technology Corp. has been “accelr8ting” at an increasing speed with an approximate 780% gain at its peak to a high of $7.80 per share. Despite the recent pullback below $4.00 per share, we fear the stock continues to remain in the nosebleed section in terms of valuation and is more than discounting any potential upside that could come from a possible deal with Novartis (NVS) for their BACcel diagnostic system.
Accelr8 has a long history of questionable business practices, seemingly unqualified management and failed business dealings. During the period of 1999 through 2001 the company and its executives were charged by the SEC and several shareholders alleging SEC violations relating to filing false financial statements and fraudulent misrepresentation of their software products. The list of defendants included its current “jack of all trades” Chairman/CEO/Secretary/CFO Thomas V. Geimer. Accelr8 has also been a revolving door for auditors including Deloitte & Touche, who resigned abruptly in 1999 after discovering the previously alleged accounting violations.
Sporting a nearly $45 million valuation, the company is trading roughly 20x trailing revenue and 74x trailing earnings. There is nothing to indicate revenue or earnings will be substantially higher in the near-term (but could be lower), and with cash of approximately $372k we feel the company will likely need to raise a substantial amount in the near future, possibly significantly diluting shareholders.
Source: SEC Filings and Truth Ignition
Back in 1987, former investment banker and bull semen peddler Thomas V. Geimer formed Accelr8 Technology as a software development firm focused on providing modernizing legacy code residing in Digital Equipment Corporations (DEC) VAX/VMS operating system.
Beginning in about 1997 their press releases began focusing on the use of their software called Navig8 2000 which had been supposedly created to fix the millennium bug. The product was marketed as a general year 2000 remediation tool but had been specifically designed for a computer system manufactured by Digital Equipment Corp. The software allegedly did not work as had been suggested by the company. The stock, trading under the ticker ACLY, at one point had reached $27 per share, but was finally halted by NASDAQ on November 17, 1999 at $1.31 as the company came under suspicion of fraudulent activities.
Legal Troubles Emerge
Back in 1999, when the stock was trading under the symbol ACLY on NASDAQ before being delisted on November 17th of that year, the management team at Accelr8 was battling with shareholders and the SEC over alleged fraudulent accounting. Perhaps the most damning allegation was not the alleged accounting scandal or the abrupt departure of Deloitte & Touche, but the sworn testimony (.pdf) to the SEC by Accelr8 employees Kenneth Haxby, Dr. Franz Huber and Albert Wallace.
According to documents filed in 2000 by the law firm Wolf Haldenstein Adler Freeman & Herz LLP, Kenneth Haxby, who was Accelr8’s Vice President of Engineering and Development had circulated an internal memo (the “Haxby Memo”) where he wrote that:
While Visual BASIC (on Windows/NT) and the C++ engine (on UNIX) are on our list of ‘supported’ tools, they are extremely immature (not even completed), very buggy, and have never been used in real life. Since testing, debugging, and enhancements have been driven by the squeaky-wheel theory, there is currently no testing or development being performed on those engines. The use of Navig8 2000 on applications written for the UNIX or the PC platforms is a crapshoot (.pdf).
Kenneth Haxby had also testified under oath that
the only mature tool [Accelr8] had were the VAX/VMS environment and that anything else, if it did work, was a matter of luck, but it...had not been officially sanctioned by engineering as working in...other environments.
He also testified that “as of March ‘98, we did not have a C++ engine that anyone could use. We did not have a Visual Basic engine that anyone could use.”
Dr. Franz Huber, Accelr8’s Chief Scientist and the chief architect of the Navig8 2000 toolset was responsible for the design and development of the company’s software. On July 6, 1999 Huber testified under oath that Accelr8’s software was only designed to operate on DEC hardware and DEC specified software. Huber testified that “[i]f you want to analyze a FORTRAN program that was written on that Sun machine with the Sun FORTRAN then our product is no good (.pdf).”
Albert Wallace, who had been Accelr8’s Vice President/director of sales at the time, testified under oath that “In the last five years, the state of the art languages that are used are C++ and Visual Basic;” and “C++ and Visual Basic never existed as a product on any platform [for Accelr8].” Wallace had also testified at the time that Accelr8’s claim that the Y2K bug software analyzers (Navig8 2000) supported all languages and platforms was false, stating “it became obvious to me that there were many product capabilities that we were advertising that we did not have... the only mature products the company had, ran on Digital VMS environments.”
Based on our investigation into the company, we found that not only was Thomas V. Geimer charged with SEC violations, accounting fraud and product misrepresentation in 1999, but other executives had also been accused, including Harry J. Fleury, who was the company’s President at the time and controller James Godkin. On July 19, 2001, the SEC ordered a permanent injunction against Mr. Geimer, Mr. Fleury and Mr. Godkin which prohibited the defendants from “making, or aiding and abetting the making of false filings with the Commission.” All three consented to the entry of the orders without admitting or denying the allegations. In addition, Mr. Geimer was ordered to pay a civil penalty of $65,000. Mr. Fleury and Mr. Godkin were ordered to pay civil penalties of $20,000 each.
We found it interesting that in the final bullet point of a website Mr. Fleury apparently launched after leaving Accelr8, his list of accomplishments include “President of a Software Company,” without any mention of what software company that might be. We have a hunch for why he failed to mention the name.
What all of this meant was that the hype of a general use Y2K millennium bug software solution and opportunity for huge revenue, was just that, hype. The company was never able to produce anywhere near the $450mil that CEO Thomas V. Geimer had hoped for and in fact only produced total revenue of $11.85mil from 1997 thru 2000. Following 2000 the company shifted gears and exited the software business. Ultimately, they sold the software assets in July of 2004 for a grand total of $500,000.
Unscrupulous Auditor Replaces Deloitte
Following the departure of auditors Deloitte & Touche, Accelr8 hired auditors Levine, Hughes and Mithuen, Inc. (LHM) on January 3rd, 2000. LHM became responsible for confirming Accelr8’s results for the years 1997-1998 that Deloitte had announced should no longer be relied upon. LHM was also responsible for the 1999 audit that Deloitte refused to complete and remained Accelr8’s auditor until August 28, 2002 when they resigned.
We discovered an SEC document dated July 9, 2004 ordering a cease and desist against LHM “without admitting or denying the findings” in relation to their audit of a company called Sport-Haley, Inc. Sport-Haley was a golf apparel and outerwear company completely unrelated to Accelr8 as far as we can tell with the exception of using the same auditor. However, we feel this is worth noting since LHM was the auditing firm hired directly after Deloitte to sign off on years ‘97-’99 and this raises suspicion for us on how thorough they were in auditing other clients. Sport-Haley dismissed LHM in July of 2000, shortly after they had become Accelr8’s auditor.
The SEC document provides a glimpse into LHM’s auditing practice and describes a series of “reckless” and inappropriate accounting cover-ups designed to mask understatements and overstatements in Sports-Haley’s financials. When asked to produce documentation, LHM went as far as improperly altering some of the original documents and destroyed others. Ultimately, the SEC found that LHM willfully violated SEC regulation and caused Sport-Haley to file false and misleading quarterly and annual reports with the SEC. Ultimately, LHM was “denied the privilege of appearing or practicing before the Commission as an accounting firm.”
Accelr8 Switches Gears
In an attempt to reinvent themselves post the disastrous Y2K software debacle, Accelr8 switched gears and became a medical technology company practically overnight. They purchased a company called OpTest on January 18th, 2001 from DDx Inc. for $500k in cash and 1,813,793 Accelr8 restricted shares at $1.378 per share for a total cost of $3mil. These same assets are now the core business of Accelr8 and are currently being valued at $45mil by the market.
The company began developing “proprietary surface chemistry and its quantitative instruments to support rapid assessment of medical diagnostics, food-borne pathogens, water-borne pathogens and bio-warfare agents” based on OpTest technology. OpTest and the OptiChem product were meant to be the future of Accelr8. In a piece from 2001 with The Wall Street Transcript, Mr. Geimer said that “going forward, the most obvious corporate business model of how we intend to proceed is SurModics -- SRDX (NASDAQ). They represent what we would like to emulate. They produce surface chemistry, and license their science to almost every invasive medical device manufacturer in the world.”
Accelr8 has signed licensing agreements in the past for OptiChem coatings with a number of companies like Schott Jenaer Glas GmbH, NanoString Technologies, Inc. and Nanosphere, Inc (NSPH). However, to date these agreements have only produced small amounts of revenue. The company appears to have generated only approximately $3mil in total revenue for OptiChem since 2003. In their 2010 10-K, in relation to OptiChem, the company said “we have received limited revenue from sales based on products using our OptiChem technology.” While the company initially seemed to envision a business that focused on licensing their OptiChem technology, in 2004 they again shifted strategy.
Who Are They Now?
Beginning in 2004, the company began moving away from a business based on licensing the OptiChem product as their main source of revenue and began instead focusing on integrating their existing technology into a new platform called the “BACcelr8r.” The BACcelr8r, now more commonly referred to as the BACcel diagnostic system is a system intended to speed the diagnosis of, and antibiotic resistance to, bacterial based infections within patients. The current standard of care is the use of a culture of the bacteria which can generally take up to 2 or 3 days. Accelr8 is aiming to produce a system that could cut this process down to a period of less than 8 hours.
Accelr8 has keyed in on diagnosis of “super bugs,” which are essentially bugs that are resistant to one or more antibiotics. Perhaps the most well known of these is methicillin-resistant Staphylococcus aureus (MRSA). Increasingly, the medical community is finding strains of the disease that are resistant to more and more antibiotics. For example, earlier this month scientists in Ireland and Germany both confirmed a new type of MRSA infecting humans that they believe is of animal origin. Other variants of the disease include vancomycin-intermediate Staphylococcus aureus (VISA) and heteroresistant vancomycin-intermediate Staphylococcus aureus (hVISA).
hVISA is particularly frustrating for the medical community because while it initially presents itself as susceptible to the antibiotic vancomycin (commonly used for MRSA) at a particular minimum inhibitory concentration (MIC), it later proves to be a more difficult to eradicate version of the bug. The time lost determining exactly what has infected the patient leaves doctors struggling to determine what to subscribe patients. Often they subscribe the wrong drugs or too many. Over time, this may reinforce the bug's resistance to antibiotics. Clearly there is a need within the medical community to better manage this situation. However, as promising as this field may someday be, we feel Accelr8’s stock has gotten well ahead of itself in terms of valuation and based on their history we are not convinced Accelr8 has a solution worthy of consideration.
To begin, we find it extremely concerning that one of the apparently core functions, as we see it, of the BACcel diagnostic system is based on software. A clinical study testing the efficacy of the BACcel system was released by Accelr8 on May 22, 2011 titled Same-Day ID and Resistance Phenotyping Directly from Respiratory Specimens by Automated Microscopy (.pdf). The study aimed to determine the speed and accuracy of multiplexed automated digital microscopy (MADM) “as an alternative to culturing with same-day quantitation, identification and resistance phenotyping.”
Stating the above more simply, the company took respiratory samples from patients and analyzed the growth and resistance of various bacteria to antibiotics using a specialized microscope and custom software. This method contrasts with the current standard of care which analyzes cultures of the bacteria over a period of typically 2-3 days. The company claims the potential advantage to Accelr8’s procedure is the significant time savings physicians will have in diagnosing patients, discovering antibiotic resistance and improving patient treatment.
We are not looking to debate the science of Accelr8’s products or methods. However, under the “Materials & Methods” (.pdf) section of the study the company says the
Customized MADM systems used commercial inverted microscopes with 12-bit monochrome cameras. A PC ran custom image analysis and experiment control software [emphasis added].
They also state that “Identification algorithms applied to each individual immobilized bacterial cell” (emphasis added) and that
the system measured the amount of change in mass over time to compute growth rates. Identification consisted of computing and combining probability scores for morphology, response to selective media, and growth rates to produce a receiver operating characteristic curve (ROC) to derive classification criteria [emphasis added].
What strikes us is that at its core, what we believe may be the most critical component of the BACcel diagnostic system, the component that is responsible for actually identifying the bacteria and determining antibiotic resistance for sick patients, appears to be based on custom proprietary software technology partially or completely developed by Accelr8. Given what we’ve discovered about their software development history, we find it disturbing to think physicians may some day rely on their software in determining patient treatment.
The company currently estimates the diagnostic testing market that they are targeting as a $1 billion opportunity although it is unclear how much of this market they believe their product(s) will address. In an article from the Rocky Mountain News on March 21st, 2005 regarding the company’s BACcel product (at the time called the BACcelr8r) Mr. Geimer said “Accelr8 has finished the basic research and is working with engineers to create a lab-ready prototype by the end of the year. Howson believes the firm's remaining $7.5 million in cash should be adequate to fund clinical trials and win FDA approval, if it comes to that.” Six years later the company still has not secured a committed partner. Meanwhile, having burned through their cash, the company now has only $372k on their balance sheet.
Novartis Has No Dog In This Fight
We believe that the companies that are most likely to show interest in Accelr8’s technology should be companies that have the most to lose in terms of market share. What BACcel supposedly offers is a quicker solution for screening and treating bacterial infections. In our opinion this means the BACcel system is an attempt to introduce a better mousetrap, not a new mousetrap. If Accelr8 successfully introduced BACcel to the hospital setting, they would be taking market share from their competitors. Therefore the companies that should show the most interest in our opinion are the competitors that could have their technology replaced if BACcel were to succeed, but that’s not what we find.
Accelr8 lists the companies who they consider to be their competitors in their 10-K and the list comprises companies currently deriving revenue based on culturing methods. This list includes Becton Dickinson (BDX), bioMerieux, Dade Behring (acquired by Siemens (SI) in 2007), and Trek Diagnostics (acquired by Magellan Biosciences, private).
In May 2008 they began a technical development project for BACcel with funding from Becton Dickinson (BD). Although according to Accelr8, test results exceeded the milestone criteria, BD decided not to exercise their licensing option and the relationship ended in September 2009. In 2009, BD accounted for $1.2mil, or approximately 95%, of the company’s revenue. Currently, BD contributes no discernible revenue.
Accelr8 has since convinced Novartis (a company noticeably absent from their list of ‘competitors’) to evaluate the same technology with the goal of eventually partnering with them to bring the BACcel diagnostic system to market. While this relationship has potential to be a significant, positive development for the company, it is our opinion that at the current valuation any potential upside has been more than baked-in to the stock.
A closer look into the diagnostic landscape we believe helps explain why Novartis is not considered a competitor to Accelr8. We collected data from SEC filings and company press releases for ten companies including Novartis to determine the size of Novartis’ diagnostic business in relation to other major players in the industry. While the list is not exhaustive and admittedly “diagnostics” encompasses a great many methods and categories unrelated to Accelr8, for comparison purposes we believe it is representative of most of the major diagnostic companies worldwide. The list includes all of Accelr8’s listed competitors with the exception of Magellan Biosciences which is private.
While Novartis is a massive company, with over $14bil in sales in the most recent quarter ended March 31, 2011, the size of their diagnostics business is not as impressive. Novartis’ diagnostic business was $371mil in the first quarter. To put this in perspective it was just 2.6% of their overall revenue (see charts). It’s also worth noting that this division in their filings is listed as vaccines & diagnostics, so the true size of the diagnostic business is unknown but must be smaller than 2.6%.
Comparing this figure to direct competitors Becton Dickinson at 31.5% and bioMerieux at 100% tells us Novartis has far less to lose in the diagnostic space (as a % of their revenue). We are surprised that companies with the most to lose are not currently evaluating BACcel, or have already turned it down. While it is possible Novartis could be looking to increase their diagnostics presence, and the recent acquisition of Genoptix is an example of this, we feel they are most likely to focus their efforts on far larger opportunities.
According to our data, Novartis is the 2nd smallest player in diagnostics amongst the majors, coming in behind only Bio-Rad with $327mil in the first quarter. Our conclusion is that Novartis is a pharmaceutical company with a diagnostics division on the side. Since they are not listed as an Accelr8 competitor and historically appear far less focused on diagnostics vs. the competition, we question their long-term commitment to the space. To put it simply, it would appear Novartis has no dog in this fight.
Source: SEC Filings, biomerieux.com, roche.com, and Truth Ignition
Source: SEC Filings, biomerieux.com, roche.com, and Truth Ignition
Accelr8 Has No Equal?
In Accelr8’s most recent 10-K under the section headed “Competition” they discuss the lack of any direct competitor within the rapid diagnostic niche where they are focused. They say that, “to the best of management's knowledge, no other company now has a product or is developing a product intended for the same clinical application as the BACcel™ system.” Some may see this as a positive in distinguishing their technology from the rest. We couldn't disagree more. We are concerned that a new diagnostic platform with no “equal” will come under greater scrutiny by the FDA than a solution with technology comparable to other FDA approved devices. Considering BACcel has not been approved by the FDA, we feel its unique position is not a positive, but a potentially huge stumbling block in achieving FDA approval.
We also find it interesting that Accelr8 claims they have no direct competitors and then go on to list several who use the culturing method. They appear to imply that the rapid nature of their diagnostic system means they have no equal in comparison to standard culturing methods which can take two days or more for results. In our opinion, if the standard culturing methods eventually achieve the same end result, than these are direct competitors who are likely to protect market share against more rapid solutions.
Since many of Accelr8’s potential competitors are far larger than Accelr8, we think it unwise to assume they are not or will not look to produce rapid diagnostic solutions in a similar vein to the BACcel system. In fact, Becton Dickinson received FDA approval for their BD GeneOhm StaphSR assay back in January of 2008. This is a two-hour test to identify Staphylococcus aureus (“Staph”) and MRSA. Of course, as already mentioned, Becton Dickinson evaluated Accelr8’s technology and ultimately declined to pursue a relationship in September 2009.
In addition, bioMerieux who is also listed as a competitor has a screen for hVISA called the Etest GRD and while it is true that this test takes 48 hours to confirm, it does appear to us to be the only screen available on the market today with any degree of clinical confirmation for hVISA. We expect bioMerieux, Becton Dickinson and other direct competitors to aggressively defend market share loss to more rapid solutions. We would like to know why management has been unsuccessful in convincing any direct competitor to adopt development of the BACcel platform.
Lastly, given the recent large move in the stock that we believe may have been partially based on Accelr8’s study (.pdf) released May 22, 2011 in relation to detecting hVISA, we thought it was worth noting that Accelr8 doesn’t appear to be the only research team focused on this issue. According to an extensive review by the American Society for Microbiology from January 2010 regarding hVISA and VISA, in the section titled “screening methods” they had this to say: “given the turnaround time for hVISA detection in the routine laboratory, some research groups have been attempting to develop more rapid assays for hVISA and VISA detection.”
They go on to describe a rapid hVISA screen that uses a “chemiluminescence assay induced by active oxygen species to measure bacterial metabolic activity upon exposure to vancomycin or teicoplanin in an assay with aturnaround time of 4 to 6 h[ours]” (emphasis added). We are fairly sure this is not a reference to Accelr8’s BACcel since this study was conducted at the Juntendo University, Tokyo, Japan in 2007. This leads us to conclude that while the method of analysis may be very different between research teams, there is likely more direct competition to BACcel than Accelr8 is aware of, or willing to admit.
Thomas V. Geimer, Chairman/CEO/Secretary/CFO, left
David C. Howson, President, right
Source: Rachel Brand, Rocky Mountain News, March 21, 2005
Is Management Qualified?
In small/micro cap land, one of the most important components of a successful company in our opinion is the depth of experience, knowledge and business acumen of the senior executives of the company. Particularly with small companies with so little room for error this seems to be the case. Although it is quite common for small companies to combine positions to save money, we are troubled by the number of roles that “jack of all trades” Chairman/CEO/Secretary/CFO Thomas V. Geimer has taken upon himself and find it hard to believe that Accelr8’s board could be considered, under any circumstances, independent of senior management. We feel this alone puts the shareholders in the unenviable position of lacking any real representation on their behalf at the board level. Digging a little deeper into the bench does not ease our concern on the executives & board.
We started off by taking a look at Accelr8’s very own website to see what they considered the be the strengths of the core executive team. After all, this is prime real estate for any medical technology based company to shine regarding the deep breadth and knowledge of their executives.
Starting with President David C. Howson the profile initially looked very encouraging with mention of prior business experience and reference to the Neurobiology Doctoral Program at Cornell University, but something felt out of place. After reading back through the profile we realized David C. Howson has been consistently referred to as Mr. Howson as opposed to Dr. Howson. We also became aware that while his profile notes he was enrolled in the Neurobiology Doctoral Program at Cornell from 1966 through 1970 it does not say that he actually graduated from the program.
This left us wondering if this was an unlikely error or if he is in fact a dropout. Assuming for a moment that he is a dropout, we find it odd that the company would highlight this fact as a positive, but we are more disappointed for shareholders who could truly have benefited from a President with such a degree running a medical technology company.
We found the other two individuals listed on the company's website, Charles E. Gerretson, and John D. Kucera equally unimpressive. Mr. Gerretson is the President of Gerretson Realty Inc., a Denver based real estate company. While he does have a useful background for his role in heading the Audit Committee, considering there are only four total individuals listed (two executives and two directors) on the company’s website we are hard pressed to see how his experience is relevant to a medical technology company.
Lastly we have John D. Kucera as a Director. Mr. Kucera has been a self-employed private investor since 2000. Prior to that he was an institutional equity salesman and portfolio manager. Again, we found his profile less than impressive and irrelevant in relation to a firm entirely focused on medical technology.
Stock and Volume Rocket
Accelr8 began making its unlikely ascent on a heavy increase in volume in January of this year, shortly after Max Bowser of The Bowser Report recommended the stock to the followers of his newsletter. Whether the timing is luck or heavy promotion we can not say. Mr. Bowser is a retired lieutenant colonel who decided back in 1975 he would start writing exclusively about stocks under $3 per share. Based on what little we could find on him he does not appear to have had an extensive career in equities before starting his newsletter. His educational background consists of two associate degrees from Thomas Nelson Community College and he’s the author of Guaranteed Profits With Small Stocks. We’ll pause for a moment to allow you to draw your own conclusions.
The recent spike in Accelr8’s stock price and more importantly volume do appear to be unusual. In fact, the recent high of $7.80 per share is a level not seen by Accelr8 since the boom days of the tech bubble when they were a Y2K software company with $10mil in cash on the books. In recent months the NYSE also took notice and has twice inquired about the activity. We suspect the recent move has been due to a combination of timely study releases, the impending Novartis decision and perhaps most importantly the particularly virulent E. Coli outbreak towards the end of May in Europe. We believe all three of these drivers to the stock will ultimately be short lived as the company is, even in a best-case scenario, likely years away from meaningful revenue. Even if Accelr8 is able to either extend the evaluation contract with Novartis or is able to get a development commitment from Novartis, we believe they will likely need to raise cash to continue development of the BACcel system and for FDA approval. In any case, it's our opinion that the stock has long overshot any potential upside from a contract with Novartis.
If Accelr8 is not able to secure a substantial commitment from Novartis regarding the development of the BACcel system we fear the stock may rapidly descend to book value of approximately 46c per share. We should have better clarity around June 30th when the Novartis evaluation period is set to expire. We justify our price target based on what we consider to be a series of failures by the company in executing their business model, a long history of unstable revenue and earnings, a lack of cash funding for future development, and an unqualified management team.
Even in a best case scenario we feel the stock is likely overvalued at this time. The company has very few bargaining chips on the table at this point based on the limited amount of cash on the balance sheet ($372k) and the fact that the BACcel diagnostic system was already evaluated and rejected by Becton Dickinson who we feel was a far better potential suitor. This implies to us that any potential deal with Novartis will weigh heavily in favor of Novartis.
Even assuming a partnership with Novartis were to commence, we feel the company will likely need FDA approval for BACcel use in the hospital setting and this process could take years. There would also be a period of adoption by the medical community to a completely new and different process. Often times it is difficult to convince the medical community to change to a new method and we feel this may also be a process measured in years. In their very own press release (.pdf) from February 22nd of this year, the company said “alpha” systems would be available in about a year. The alpha stage is typically a referral to a software term implying the beginning or testing stage. This implies to us that there is still a significant amount of development that needs completing before shareholders can hope for any kind of sustainably growing profitable revenue.
It is also quite possible that Accelr8 will be forced to go to the capital markets for a substantial equity raise, thus diluting shareholders. We in fact recommend the company do just that and take this opportunity, perhaps their last, of extreme overvaluation to raise capital in the form of equity.
Disclosure: I am short AXK.