Innovative Model Offers Great Opportunity |
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We are initiating coverage of a stock that has the unusual advantage of replicating the innovative model of its sister company in the U.K., which has already resulted in success in the U.S. The company operates in the multi-billion mail management segment but its new targeted security products serve an unmet need and should drive sales this year. Look for the stock to catch fire in conjunction with sales growth and future product implementations.
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COMPANY OVERVIEWEverlert, Inc. primarily operates through its subsidiary Totalpost Services, Inc. which manufactures and sells postage meter ink cartridges, various remanufactured postage ink and toner products, x-ray screening security systems, digital forensic screening systems and other postal related goods and services. The Company was founded in 1998 and is headquartered in Monrovia, CA. Totalpost primarily conducts business through the wholesale retailer and distributor channel. Everlert, via its wholly owned subsidiary (Totalpost) has already achieved top-line success and growth by leveraging the success of the model and brand of its sister company in Europe. The European entity provides high quality offerings and business processes which are critical to Everlert’s success and has enabled the Company to replicate the already successful model which generates meaningful sales abroad. Moreover, given the size of the market, and the strong domestic demand for its products, Everlert could soon exceed the success of its U.K.-based sister company. MARKET OVERVIEWEven with the advent and growth of the internet and digital business communication, the need for postal and related meter services and other traditional auxiliary products remains as vibrant and as strong as ever. For example, the U.S. Postal Service is the core of the $1 trillion dollar mailing industry that employs more than 8 million people. In 2012, its revenue was $65 billion dollars. Virtually all U.S. based businesses use a postage meter cartridge on a daily basis to fulfill their mailing needs. The postal meter industry is a $4 billion industry globally, and nearly all U.S. businesses use postage meter cartridges on a daily basis to fulfill their mailing needs, creating a large demand for cartridges. Figure 1 illustrates the leading OEMs that supply this industry for which Totalpost provides ink cartridges. Everlert provides cartridges compatible with all of the machines produced by these and other key players.  Other markets the Company serves include the mailroom consumables and security services, the postal letter market, Disaster Recovery Services, and digital screening and services.
Via its newly launched Totalpost Security Systems segment, Everlert plans to enter the x-ray security market for mailroom, high profile offices, and medical examiners’ equipment. With strong leadership, a diverse offering and an opportunistic approach the Company is set to penetrate these robust industries beginning in 2014.
EVERLERT OFFERINGSFigure 2 provides a detailed snapshot of the products and services offered by Everlert through Totalpost.  In addition to the products and services listed above, the Company currently has a joint venture with Registered Express (OTC: RGTX) and offers express online secure digital delivery and backup. Everlert/Totalpost is a leader in this emerging technology solution in a market which is estimated to be about $25 billion globally per year. The customers utilize these services for Mailroom Disaster Planning, Management, and Recovery and include Fortune 500 companies, financial institutions, healthcare providers, colleges and universities, government agencies, and small businesses. Totalpost Cartridges and Consumables
The Company’s Totalpost Security Systems segment provides a complete range of cabinet X-ray security screening equipment designed to give the highest levels of x-ray screening technology within a small cabinet, as seen in the image above. These units are sold in three sizes with embedded or separate screens as required and fit neatly on a desk or for use within a small, freestanding space freestanding. Management believes that these x-ray screening cabinets provide the highest levels of image penetration and the clearest imagery available on the cabinet screening market and are in heavy demand by mailrooms, government buildings high profile office buildings, prisons, etc. These units are used to screen and inspect parcels, letters, baggage, mobile phones etc. FLATSCAN Forensic Screener While it is easy to see why the x-ray device is a great addition to the Company’s product line, the FLATSCAN Forensic Screener is a targeted and opportunistic market play with limited competition as it provides fast, high penetration digital forensic screening at a fraction of the cost of comparable CT scanning equivalents. The FLATSCAN is a non-invasive, efficient and extremely safe digital forensic screening device for creating medical coroners reports, establishing cause of death in a non-intrusive manner, and gathering evidence in criminology.  The device is a completely sealed X-Ray unit for added safety and to allow extended usage and the speed and accuracy provided by the FLATSCAN results in extremely accurate and swiftly conducted autopsies. Moreover, detailed and precise imagery is produced from the very clear scans leading to more accurate autopsy outcomes. The images are captured through the acquisition of Digital Flat Panel High resolution technology. THE EVERLET EXECUTIVE TEAMThe top brass at Everlert includes two seasoned and proven leaders with many decades of experience in related industries from postal metering, corporate finance, accounting, real estate, software development, technology, health care and venture capital. Development of the critical skills of public company management, product development, services development, distribution, postal technology, and mass marketing have been acquired and honed by management.
RISK FACTORSIn our view, much of the potential risks to the Company’s success are mitigated by the Everlert/Totalpost model and structure, which has a history of success abroad and has been replicated early on in the U.S. As a result, we believe that the biggest risk factor in Everlert’s success is merely the execution risk associated with emerging growth companies that offer high-quality, and solidly branded products. Other risks include the possible delays or difficulties in penetrating new, non-traditional markets for the company such as those in the security space. Penetration may take time and education may have to be borne by the Company and customers alike. This risk is common with new initiatives regardless of a company’s size or experience. Although competition from larger firms or even from newer entrants with similar approaches could become serious threats, the lead time it has versus others plus its existing model should largely insulate Everlert from its rivals. VALUATION AND CONCLUSIONLeveraging the success of the model and brand of its sister company in Europe, newly traded Everlert, Inc. is poised to emerge as a leading player in the multi-billion dollar mail management and digital delivery industry. Given the strong domestic demand for its products, Everlert has already proven that the Totalpost model is replicable throughout the U.S. via Everlert and could exceed the success of its U.K.-based sister company. Everlert primarily sells and distributes products produced by its sister company Totalpost™, one of the only manufacturers and suppliers of high quality remanufactured and compatible postage ink cartridges and ribbons that are US Postal Services approved. Looking at the big picture, the Company’s innovative and diverse product offerings provide a unique edge compared with other suppliers. These offerings range from typical mailroom equipment and services to critical functions such as disaster planning and recovery and even x-ray cabinet security screening for mailroom and high profile commercial buildings. Separately, seeing an opportunity in the screening space, Everlert will soon market a flat x-ray digital forensic screening device targeting the medical examiner market to increase the efficiency and effectiveness of autopsies. With an inherent advantage due to the Totalpost structure, brand and model, Everlert could generate tens of millions in revenue in the next 2-3 years. Continued market penetration and the introduction of new products should drive these shares toward its 52-week high of $2.00. For the near term, we rate shares Speculative Buy with a $1.15 price target. Recent Trading History For EVLI (Source: Stockta.com) 
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SENIOR ANALYST: ROBERT GOLDMAN Rob Goldman founded Goldman Small Cap Research in 2009 and has over 20 years of investment and company research experience as a senior research analyst and as a portfolio and mutual fund manager. During his tenure as a sell side analyst, Rob was a senior member of Piper Jaffray's Technology and Communications teams. Prior to joining Piper, Rob led Josephthal & Co.'s Washington-based Emerging Growth Research Group. In addition to his sell-side experience Rob served as Chief Investment Officer of a boutique investment management firm and Blue and White Investment Management, where he managed Small Cap Growth portfolios and The Blue and White Fund. Analyst Certification I, Robert Goldman, hereby certify that the view expressed in this research report accurately reflect my personal views about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the recommendations or views expressed in this research report. Disclaimer This Opportunity Research report was prepared for informational purposes only. Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research and Goldman Opportunity Research. The Select format reflects the Firm’s internally generated stock ideas along with economic and stock market outlooks. Opportunity Research reports, updates and Microcap Hot Topics articles reflect sponsored (paid) research but can also include non-sponsored micro cap research ideas that typically carry greater risks than those stocks covered in the Select Research category. It is important to note that while we may track performance separately, we utilize many of the same coverage criteria in determining coverage of all stocks in both research formats. Research reports on profiled stocks in the Opportunity Research format typically have a higher risk profile, and may offer greater upside. Goldman Small Cap Research was compensated by a third party in the amount of $5000 for a research subscription service. All information contained in this report was provided by the Company via filings, press releases or its website, or through our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations. Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co. The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research report or note is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed. This report does not take into account the investment objectives, financial situation, or particular needs of any particular person. This report does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA, the U.S. Securities and Exchange Commission or with any state securities regulatory authority. ALL INFORMATION IN THIS REPORT IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.
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We should note that the Company’s compatible mailroom market is a relatively new and emerging one that has serious potential. Totalpost has invested considerable capital to differentiate itself in this market and developed a six-tiered marketing strategy that includes the following:
Totalpost Security Systems