Updated sentiment on voting, page-23

Cleared my mailbox today and head a read through.  

On page 80 the KPMG payments analysis explains the payments that SFI can expect to receive from Eagleview BEFORE the prepayment deal;

2 X $5M for capture systems

$5 per Sq Mile Royalty on 750,000 sqM + $3.75M  

$5 per sqM captured beyond the initial 750,000  (USA has 9.8 MILLION sqM = $49M of capture) 

5% of first $100 Eagleview  Sales Revenue derived from imaged data

10% of all Eagleview Sales Revenue above the first $100 

This was on an agreed 7 YEAR contract.  

Assuming that Eagleview want to scan images every year, (something that nearview is saying they will do multiple times per year), you can see that potential revenues over the 7 year ageement (assuming that Eagleview did not renew), would be in the order of;

1 x image all continental USA in the 7 year period  = $49M / 7 = $7M per year (this is very conservative)

1 x image of major cities (lets say 750,000 sqM) per month = $3.75M * 12 = $45M per year

5% on Eagleview Sales = ??? who knows, but 2013 Rev was $213M = $10M per year 

We get a conservative revenue stream of $7M + $45M +10M = $62M per year for a minimum of 7 years (excluding any payments for the building of the camera systems) 

The above agreement was then replaced by a pre-payment for the two units and $5M to offset expected royalties.  To be fair the cash enable SFI to deliver the units without borrowing however it also meant that the milestone options share issues were met....hmmm  This one also allowed Eagleview to exit the agreement (oooooo  scary) after the 7 years by not renewing 2 x 5 year extensions.....

It is my belief that with Nearmap in the market and  when Eagleview got hold of the images and  saw what they were, they realised that they were going to produce significant sales and also require constant image capture and processing.  They mmediately realised that SFI woudl receive significant revenue streams and therefore, as private equity does, they figured out a way of taking SFI out of the picture by;

1.  Placing doubt into the management minds by introducing the opt out capability

2.  Introducing doubt into investors minds through the contracts and the drop in Sp

3.  Placing a low ball offer to T/O the coy

The value  is in SFI, why else would Eagleview try to T/O them?  Eagle view will not walk away from the offer as after 7 years they won't be able too, they will be in competition with  Nearmap who does exactly what SI does.  What Eagleview saw was that significant streams of revenue would flow to SFI making SFI a TO target for someone else and also raising SFI price to take them out of cheap TO territory.

KPMG has underestimated the sales and vale becuase;

1.  They have not looked at what would be reasonably expected over teh 7 year sales cycle

2.  They are benchmarking against old school GIS organisations to ascertain value, they should be looking more towards what Google, Apple, Microsoft are doing to mapping 

3.  They have not even counted the effort and  AI/ Smarts that is required to stitch together images into a coherent computerised picture.  This along with certification is the biggest barrier to aerial mapping, SFI have cracked it.  Just remember  what happened to Apple maps when they first launched. 

I will be voting NO, but am small fish.  I just hope someone big sees the potential here.