Dr. John L. Faessel
ON THE MARKET
Commentary and Insights
Faessel Publishing L.L.C.
"Trillions of Things Connected by 2015" - Yankee Group
iMetrik M2M Solutions, Inc. (OTC:IMEK) OTCBB
Utterly undiscovered and unknown. Moreover, (OTC:IMEK) barely even trades. But this narrative holds exceptional risk / reward potential. Granted, today there's little as far as balance sheet goes since the company is just now bringing its breakthrough product to market, but this microcap sports a tiny market capitalization of only $15 million and I believe it's soon to become a "player" in a very big tent. Savvy management knows the space and has contracts in hand*, and after over a year in development (OTC:IMEK) is about ready to release its comprehensive new "process" solution into one of the biggest markets on the planet. We're talking about a breakthrough process in a sector as big as the Internet.**
The space is known as M2M, Machine-to-Machine communications: ubiquitous electronic devices that can talk to each other through wireless networks, and through the Internet, and then talk to the people who control them. Dear reader: it's science fiction no more! It is here, and the market is near infinite. From knowing what happened to knowing what is happening - at all times - and then automatically controlling and activating mission critical or asset-protecting systems with this new knowledge. It means, managing virtually any asset from "anywhere-to-anywhere" in the world - in real time...
As more electronic devices become networked and empowered to talk with each other, M2M will multiply exponentially and have a degree of impact on our lives we can't even imagine.
The First Global M2M Wireless Solutions Provider
What (OTC:IMEK) brings to the world-wide market is an "end-to-end" plug and play turnkey solution that involves sensors, gauges, or meters wirelessly linked to a "gateway" (similar to your base phone) and relayed through a world-wide network. Then, any "event" that activates the sensor produces a message that is automatically sent to inform whatever "party" (mobile device, manager, company) needs to know, so that further action can be taken. Thus if it moves, grows, makes noise, leaks, or heats up, (OTC:IMEK)'s cellular-enabled wireless sensing service will provide knowledge of what is happening at all times and then automatically manage that "situation" with this knowledge - and again, in real time.
Here's an example: the (OTC:IMEK) technology enables an asset, such as a heating and air conditioning unit, an elevator, vending machine or any other piece of equipment or machinery, to immediately and pro-actively report faults directly to a service center. The detailed alert informs management of the location and nature of the problem, allowing a quick and efficient fix. Imagine the reductions in downtime and maintenance costs!
Importantly, iMetrik M2M's privileged partnerships with geographically selected carriers allow it to deploy solutions in more than 120 countries.
Industry analysts are estimating that M2M will grow 12-fold by the end of this decade, according to the latest industry report by Machina Research. At the end of 2010, M2M accounted for 2% of cellular connections. By 2020 this will reach 19%, or 2.3 billion connections. According to Harbor Research, the global M2M smart connected device market is expected to reach $500 billion in value added revenues in 2015.
* Last October, Metropolitan Industries Inc., the leading sump pump manufacturer in the US, selected iMetrik M2M's all-wireless, web-based system to monitor its equipment and offer real-time preventive measures to keep its product offering ahead of the pack. Notably, Metropolitan chose (OTC:IMEK)'s solution to monitor all sump pumps it sells in the United States. This order represents hundreds of thousands of installations a year, according to IMEK's 8-K filing filing with the SEC.
Metropolitan sells some 250,000 sump pumps a year that it intends to monitor, so multiply 250,000 by let's say $3 every month for the first year, 500,000 the second year, and so on… The same applies to every system installed.
* In July 2011, (OTC:IMEK) and Monnit Corporation announced a partnership that will enable them to offer the M2M market a plug-and-play, end-to-end, cellular-enabled wireless sensing solution using Monnit's wireless sensors, Monnit's web application, and (OTC:IMEK)'s M2M Cellular Gateway with global connectivity. Users will benefit from a system that eliminates development time and reduces installation to an absolute minimum.
Management's projections are for hundreds of thousands of installations to be deployed over the next two years. So, suppose for example that the monthly income is 200,000 X year one (1), 400,000 X year two (2) and that income is received every month. Even if it is only a few dollars a month the cash flow, because of the multiplier effect, is very striking. This multiplying effect of the recurring revenue model will yield very high and escalating profit margins as we go out further in time.
* A recent SEC 8K filing (12/12/2011) indicates that (OTC:IMEK) has received orders from two customers over the past six-months.
In sum: Unknown and newly trading, this micro cap (market-cap $15 million) has contracts in fist and is shepherded by an allied private company that knows the space intimately. (OTC:IMEK) is launching an innovative M2M total solution disruptive to the existing market and value network, displacing an earlier technology. It enables remote access and control over targeted equipment and services, as well as allowing monitoring, selective enabling, disabling, or any number of other commands. Commercial, industrial and residential consumer applications abound for (OTC:IMEK). Imagine: passively managing and controlling just about "you name it" from anywhere-wirelessly.
Because (OTC:IMEK)'s end-to-end total solution brings a new and compelling broader dimension to the M2M space I would envision that a major player in either the sensor or network sector would acquire them as they make inroads in the market. Most, if not all, major control system manufacturers are fast moving towards developing or buying the technology to be implemented in their offering.
Low churn rates, low acquisition and operational costs, expected long product lifecycles, and a market that needs many additional value added services makes this a compelling market opportunity. And crucially, it's a recurring revenue value proposition with an almost sure-shot exit strategy, and it's guided by savvy experienced management who know the space. Revenues should grow by orders of magnitude as the multiplier effect takes hold.
All things considered and with a tiny $15 million market-cap it's a forceful and compelling story with "multi-bag" potential. Consider taking a pilot position, as ground floor participation could yield exceptional rewards.
More on this exceptional speculation in further reports.
** Clark Nguyen, Ph.D, is Professor, and a Director of the Berkeley Sensor & Actuator Center, in the renowned Department of Electrical Engineering and Computer Sciences at the University of California at Berkeley. Nguyen has told Forbes: "I like to be conservative about things, but in a way [sensor networks] could be bigger than the Internet.''
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