At this time, the stock is trading at 3x NCAV.
For a while now, the company has been operating at a continuing loss, no questions there. As we have seen many times in the past, revenue has jumped up recently. With only 6-8 million in revenue annually, this shouldn't be a surprise... volatility on a short term basis should be expected.
The reason to invest though is that the CEO, CFO, and two of the board members bought 990,000 shares from a private investor. With 34 million shares outstanding, that's approximately 3% of ownership being transferred back to the executives. In addition, the political/economic environment has strengthened demand for software solutions to make healthcare more efficient, which is the primary business of Authentidate. In addition, they received FDA approval for an in home monitor device to communicate vitals.
The insider buying and economic demand from our political leaders are two strong reasons to buy. Individual reasons that have not proven themselves yet include the Nortel contract for patient discharge solutions as well as an increase in the pay that non-exec directors can take in the form of company stock being moved up to 100%, as well as the CEO taking a pay cut and received more stock options based on certain contingencies.
Those last two reasons aren't complete on their own though, because it's very possible that they were to simply decrease negative cash flow. The director stock options are voluntary though, and so if it were for decreasing the negative cash flow, we might have seen that become a requirement.
On the negative side, this kind of price volatility has been seen in the past on slight changes in revenue, however we have not seen the kind of insider buying as we have this time. Authentidate has seen lots of changes over time as well, and so it's natural to question whether this will happen again, however I believe this is an independent situation because the executives and business goals are very different than in the past.
Overall, this is a very speculative play, and if a decision were to be made, it should be made on the basis of insider buying. The price at which insider buying occurred is something to keep in mind (27-28 cents) as well, however the executives and directors have lots of unexercised stock options, which could be worth much more potential to them than what they bought.
