It’s a growing sector, both in size and in importance.
And when I say importance, I mean personal importance to every American.
Mikros Systems (OTC: MKRS) has been a successful U.S. Navy small business innovator for decades; its primary business is the design and manufacture of hardware and software products for functionality maintenance of complex systems in defense, industrial, and commercial applications.
Over the last 30 years, Mikros has developed, delivered, and installed military-grade equipment for federal customers.
The company’s capabilities include technology and logistics management, software and systems engineering, and systems integration.
Mikros is experienced in radar systems engineering, combat/C4I systems engineering, and communications engineering.
The Opportunity
With the Navy as a primary client, and technological complexity constantly increasing the need for sophisticated diagnostic and maintenance processes, Mikros stands as a small, efficient, yet well-established provider.
Share structure and trading obscurity make this an ideal candidate as a quick momentum trade.
Vital Statistics:
Ticker Symbol: (OTC: MKRS)
Share Price: $0.13
52-Week Range: $0.07–$0.18
Shares Outstanding: 32.03 million
Market Capitalization: $5.04 million
12-Month Target: $0.20
Product Line
The Company offers systems for maintenance of radars and combat systems, which include the Adaptive Diagnostic Electronic Portable Testset (ADEPT) and ADEPT Distance Support Sensor Suite (ADSSS).
Its other products include the Diagnostic Profiler and Prognostics Framework.
ADEPT is a personal computer-based maintenance automation workstation used to maintain AN/SPY-1 phased array radar on cruisers and destroyers.
ADSSS is a Condition-Based Maintenance (CBM) system used to monitor Combat System Elements (CSEs) onboard the U.S. Navy’s state-of-the-art Littoral Combat Ship (LCS).
(USS Freedom pictured below on 2013 sea trials)
MAINTENANCE AUTOMATION WORKSTATIONS
ADEPT products are used by the U.S. Navy to maintain radars and other combat system elements — over 150 systems delivered and in daily use.
CONDITION BASED MAINTENANCE
The ADSSS line of products includes Smart Sensors for acquisition of “leading indicator” maintenance data, and network-enabled core systems for data reduction and archiving.
ADSSS will be used by the Navy’s new Littoral Combat Ship to monitor and maintain radars and other key combat system elements.
HEALTH MANAGEMENT SOFTWARE
Mikros provides the Diagnostic Profiler and Prognostics Framework applications for processing maintenance data, detecting trends, and predicting failures.
Recent News
May 3, 2016:
Mikros announces today the U.S. Navy and several of its commercial customers have recently signed new contracts and orders for continued support of Mikros hardware and software products.
To date over 200 ADEPT systems, produced at the Company’s Manufacturing and Depot Center in Largo, FL, have been delivered to the Navy and are in daily use for performance optimization of advanced radar systems.
This established production program continues to generate recurring revenues for logistics support of ADEPT, and the Navy has recently issued new Task Orders to Mikros to provide ongoing calibration, repair, training, and engineering support services for the ADEPT systems deployed on Navy destroyers and cruisers.
Tom Meaney, Mikros President and CEO, commented:
Together these orders for ongoing support of our products total just over $600,000, but their significance extends far beyond the immediate revenues. First, they represent a major vote of confidence from both our established Navy customer and our new commercial customers. Second, they indicate that there is significant potential for recurring revenue streams as we support both hardware and software products in real world applications. We thank our current customers for their continuing support, and believe that life-cycle support of our product lines will continue to be a successful and profitable enterprise.
Conclusion
Small and unknown, this company is nevertheless a preferred supplier of an essential technology to the world’s biggest, most sophisticated navy.
With the recent technological overhaul of the fleet and the addition of several types of new vessel classes, Mikros products are set to become more relevant with each and every year.
Recent dips in share prices are the result of the most recent earnings report, which showed a decline for the quarter over Q1 last year.
The reason? Mikros earnings occur irregularly, based more on added contracts and less on recurring fees — for now, at least.
Q1 2015 was especially strong, so by comparison, Q1 2016 seemed weak.
That said, recent contract extensions with the Navy will prop the company up for the second half of 2016.
Shares are up recently on very thin volume, but 52-week highs remain elusive — and should be expected to return before year’s end.
We’re buying at or under $0.20.