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Medical Imaging Corp. (OTC:MEDD) Efficient Roll Up Player – Strong Growth and Quality Management

Summary of Our Research Findings

  • This report offers an analysis of Medical Imaging Corp..
  • Medical Imaging Corp is a rollup play in the fast changing business of diagnostic imaging centers – yet there is also an organic growth aspect to the story.
  • The Company is fully reporting with the SEC and fully audited with a rather simple capital structure that appears to be shareholder friendly.
  • The Company has realized steady and significant growth since producing $1.7 million in revenue in 2009. For full year 2015 it produced $7.1 million and $250,000in positive operating cash flow.
  • The Company’s main imaging center operations are in Pennsylvania and Florida, but we believe several acquisitions are currently being contemplated. Due to the significant changes in this industry, we believe many high value properties are available for acquisition at reasonable prices.
  • Management has been excellent relative to preventing shareholder dilution having issued an amazingly few number of shares relative to the growth the Company has experienced.
  • It is apparent to us this is still a relatively unknown company to most investors and that it is only a matter of time until investors began to understand the likely true worth of these shares.

    Executive Summary

    Every once in a while we happen upon a small-cap company that holds a market valuation that confuses us. Medical Imaging Corp., which trades under the symbol MEDD on the over-the-counter market, is one such company.
  • The Company is involved in the medical imaging diagnostic center business in the United States and is working toward consolidating what is still a fragmented business with only a few companies holding any significant degrees of market share. The business of owning and managing diagnostic centers has been difficult over the past ten years as medical reimbursements have shrunk, regulation and paperwork have increased and as uncertainties relative to the future of Obama Care and possible alternatives persist.
    Through this tumultuous period the management team of Medical Imaging Corp. has been able to grow its business rather substantially. During 2009, the Company produced approximately $1.7 million in revenue. This has grown each year, reaching $7.1 million as of 2015. The Company went EBITDA positive in 2010 and has maintained since that time. It produced $250,000 in operating cash flow in 2015 and the prospects for 2016 appeared to be bright.
    Management has been exceptionally thrifty in handing out common shares. On April 15, 2010, there were 18 million shares outstanding, which rose to 23 million shares outstanding as of May 2013. As of the most recent report with the SEC, which occurred on August 15, 2016, there were only 25.6 million shares outstanding. This means revenues are up by more than 136% while the Company has issued only 7.6 million common shares. With the shares trading at approximately $0.06, all of the common shares are only worth $1.5 million. There are certainly some convertible and promissory notes outstanding on the balance sheet, but the terms of these seem to be reasonable and not particularly damaging to the common shareholder. It is also rather interesting that the CEO and CFO’s major component of compensation is in warrants, which have a strike price of $0.15.
    Certainly these shares should be considered by risk adverse, small-cap investors looking for undiscovered stories within the small-cap space.
    Perhaps investors are frightened by the difficulties the diagnostic imaging center businesses have had over the past ten years. In our opinion, however, the many upheavals in this industry have created some very strong rollup possibilities for companies such as Medical Imaging Corp..
    Release August 15, 2016. Should the Company continued to exhibit relative strength of its balance sheet, accounts receivables that reverse the March quarter’s upward trend and/or continued revenue growth at decent margins, we would certainly consider being buyers of these common shares.
    In our opinion, this Company deserves consideration by investors.

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