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Ludlow Research Reaffirms $0.02 Target on TXHD Based on Market Potential (NEW YORK) – Ludlow Research reaffirmed its opinion on Textmunication Holdings, Inc. (OTC: TXHD), an online mobile marketing platform service provider, with a valuation target of $0.02 based on rapid growth of SMS operations, Aspire Government IT contracts, and market valuation.
Report Highlights
- Upgrading SMS Capacity to 1 Bill Per Month - Projecting 10x Increase in SMS Volume by Q2 2017 - Retaining Senior Platform Tech Developers - Becoming Emerging Competitor to Twilio - Revenues Growing Quarter over Quarter - Aspire Medicaid IT Contract - Eliminating Toxic Notes/Debt
In the report, Ludlow Research made note of TXHD growing revenues, projected growth of SMS volume on their mobile marketing platform, and Aspire IT Government contract for Medicaid and Medicare programs.
Expanding SMS Capacity
In order to keep up with the demand, the Company announced it was scaling its software platform with the addition of two new Scalability Engineers from one of Silicon Valley's leading technology firms.
On March 10, 2017, the Company announced the addition of Rajeev Varshneya as Technical Advisor, and has more than 20 years with Royal Phillips NV.
Mr. Varshneya roles at Phillips included CEO of Phillips Software Center, VP of Product Strategy, Engineering and Operations and SVP of Technology, Product Development and Strategy. He has also led numerous technology start-ups and is actively involved in government contracting with leading Systems Integrators.
In his role as Technology Advisor, Mr. Varshneya will design a technology roadmap setting Textmunication on a course to be a leading SMS solutions provider. He will bring in his network of technology architects and developers to assist in Textmunication’s technology growth, M&A and market leadership.
The Company is in the final process of delivering a robust and scalable platform capable of sending more than 40 million SMS per day, or capacity of up to 1 billion SMS per month.
For a Company that generates a core of its revenues on a per SMS bases this dramatic upgrade in capacity sets the stage for dramatic growth in revenues for the coming quarters.
Sector Comparison
The Company upgrading of SMS capacity will provide TXHD the necessary software to separate itself from the largest SMS providers, and offer a proprietary solution substantially increasing the value of the company.
What does this mean? This means TXHD could now become one of the emerging competitors to sector leader Twilio, Inc. (NYSE:TWLO), which currently trades at around 5 to 10 times sales.
Recent Earnings
For the three months ended September 30, 2016, the Company reported revenues of $129,943, as compared to $80,289 for the three months ended September 30, 2015. For the nine months ended September 30, 2016, the Company reported revenues of $321,802, as compared to $236,912 for the nine months ended September 30, 2015.
The increase in revenues for the three and nine months ended September 30, 2016 over the prior year periods was due to more customer accounts achieved from a change in their pricing model to become more competitive.
The Company stated they expect to achieve greater revenues for the rest of 2017 as their new SMS capacity could result in a dramatic increase in top line revenue results.
Aspire Government IT Contracts
The Company recently increased its ownership stake to 49% of Aspire Consulting Group LLC, a verified Service Disabled Veteran-Owned Small Business (SDVOSB).
Aspire is headquartered in the business hub of Washington, D.C. and provides IT consulting and solutionbased services to commercial, state, and federal agencies. Aspire is connected to the government procurement community and has advisors who have served in state government cabinet positions and Fortune 500 companies. This network, along with the SDVOSB certification, positions Aspire as a sought after partner for government contracts.
On March 1, 2017, that it was awarded a 10-year government contract as part of a teammate on the CMS SPARC Indefinite Delivery/Indefinite Quantity (IDIQ) contracting vehicle, with a ceiling on the IDIQ at $25 billion, and shared with multiple companies.
The Prime requested Aspire join the team based on its healthcare past performance and powerful SDVOSB certification. Aspire successfully performed on a 2016 Cloud and Big Data healthcare project gaining critical past performance marks.
The remaining teammates come from Fortune 500 companies, and other well-known Federal System Integrators. Strategic teaming is key to winning the numerous task orders delivered under this long-term IDIQ vehicle. The SPARC agreement offers substantial revenue opportunity for Aspire, and once task orders within the IDIQ are won announcements and revenue guidance will be made in public releases.
Task order revenues vary in size, but most are substantial and are multi-year arrangements split amongst the teammates.
There are strict SDVOSB work share mandates required by the U.S. government. The Veterans Benefit Act of 2003 requires each government agency to set aside at least 3% of contracts for SDVOSBs. On the state level, the percentages vary, but in most cases are higher. Aspire is competing for state contracts where the SDVOSB requirement is a minimum 7% of total revenue.
The SPARC agreement also provides Aspire the necessary past performance credentials to compete longterm and be successful with future contracting proposals. Aspire's SDVOSB certification is one of the most coveted in government contracting. The CMS SPARC contract is one of the largest IDIQs in government and carries substantial past performance metrics.
Aspire just submitted a proposal for the Veterans Affairs (VA) VECTOR SDVOSB contract. This is a $25 billion IDIQ centered on Management, Analysis, Training, Outreach, Supply Chain and Human Resource staffing. Aspire's team on VECTOR now awaits the award of this contract. Two other contracts are pending, with one for system modernization of a state's Motor Vehicle Administration (MVA) infrastructure, and other as a subcontractor on a key federal agency.
Aspire has teaming agreements with Northrop Grumman - the #2 federal systems integrator, Tech Mahindra - one of the largest business transformation firms in the world and a Direct hiring agreement with Phase One Consulting Group on its Department of Transportation (DOT) and Commodity Futures Trading Commission (CFTC) programs. The SDVOSB certification helps these companies hit specific government goals as it relates to veteran-owned business credits.
Textmunication acquired a minority-stake in Aspire gaining government contracting access. The partnership also allows Aspire's management team to open new SMS verticals in the government sector.
Share Structure
As of March 2017, the Company had roughly 2.4 billion common shares issued and outstanding. The Company made a strategic move recently by issuing 2 billion shares to the company CEO, which of course under SEC and insider rules is restricted and locked up from being sold into the public market.
Even with the 2.4 billion shares outstanding, upscale in SMS capacity, and pending government IT contracts, a price of $0.02 per share could still be justifiable on their low float inventory, and continued elimination of toxic notes off their balance sheet.
Now, with that said, what could become a real wild card for TXHD could be the potential retirement of those 2 billion shares back into treasury. From our take the 2 billion was issued to maintain control within the company executive hands, while at same time using the increased share structure to wipe out their toxic notes once and for all.
With notes now being retired off the balance sheet, and revenues set to increase in coming quarters, a real wild card could be that those 2 billion shares get retired back into treasury, or into some sort of Series preferred shares, thus decreasing current common shares outstanding back to say 400 million, which of course could have an explosive effect to upside potential to current prices.
Conclusion
Based on TXHD current and projected growth in revenues, increasing SMS capacity to become a major player in text marketing industry, pending Government health IT contracts through their Aspire division, market valuation compared to leader within sector, and possible major reduction in shares outstanding Ludlow Research has reaffirmed its ‘speculative’ valuation target of $0.02 per share based on current share structure, with potential for higher upgrade on any reduction of common shares outstanding in the near future.
About Textmunication Holdings, Inc.
Textmunication Holdings, Inc. is developer in the mobile marketing and loyalty industry, providing cutting-edge mobile marketing solutions, rewards and loyalty to our clients. With a powerful yet intuitive suite of services, clients are able to reach more customers faster and reward them for repeat business through SMS technology. We help clients reach their marketing and revenue goals by educating clients with the most effective tools in mobile marketing, rewards, paperless redemption and loyalty. www.textmunication.com
Follow the Company on Twitter for updates: http://twitter.com/Textmunication
About Ludlow Research
Ludlow Research is a New York based equity research firm that focuses on providing research coverage and investor awareness services to emerging small-cap companies. For over 14 years we have worked to provide our readers with a simple way of evaluating the current and potential value of small-cap companies, while garnering these clients greater market awareness to new investors. For more information on us please visit www.ludlowresearch.com
Disclaimer:
This is NOT a solicitation to Buy or Sell any security, but rather is for informational purposes only. Content contained herein includes facts, views, opinions and recommendations of individuals and organizations deemed of interest. Ludlow Capital, Inc ("Ludlow" does not guarantee the accuracy, completeness or timeliness of, or otherwise endorse these views, opinions or recommendations, or give investment advice. Ludlow, its affiliates, or directors, may or may not hold a position in the above security from time to time, and investors are encourage to consider this as a possible conflict of interest when reviewing this information. In Compliance with SEC Rule 17B Ludlow was compensated three million restricted common shares for ongoing media consulting services, and thus should be considered a possible conflict of interest when reviewing this report and information. Ludlow, or its affiliates, may hold a position in above securities from time to time, and thus should be considered a possible conflict of interest when reviewing this report and information. These investments may involve a high degree of risk, thus investors are highly encouraged to consult with a financial advisor before any and all investments.
Safe Harbor Statements:
This website includes statements that may constitute forward-looking statements made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Although the Company believes that the expectations reflected in such forwardlooking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected.
Forward-Looking Statements This news release contains certain statements that may be deemed "forward-looking" statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements. Forward looking statements are based on the beliefs, estimates and opinions of the Company’s management on the date the statements are made. Except as required by law, the Company undertakes no obligation to update these forward-looking statements in the event that management’s beliefs, estimates or opinions, or other factors, should change.
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