E Medigus Is Facing Multiple Opportunities But Is Not Without Risk

Medigus (MDGS) is an Israeli tech company that has developed the ScoutCam, a micro camera that claims to be the smallest in the world, just 1mm in diameter including illumination.

We like little companies that have a leading technology with multiple applications in markets with good growth opportunities, but the company has other opportunities than just on the SoutCam, it has multiple business lines, only the first are based on its micro camera technology:

  • ScoutCam (micro camera's and systems, 50.1% stake)
  • The Muse System (non-invasive treatment for GERD)
  • Polyrizon (anti-viral and allergy gels)
  • Algomizer Group and Linkury (internet marketing technology)
  • L-1 Systems (Covid-19 related products)
  • Elbit (LifeCan ventilators)
  • Matomy (ad tech, 24.99% stake)

We'll get to these below in more detail. Basically the company is a sort of mini-conglomerate, with stakes in quite a few diverse businesses. For a company with a $11M market capitalization that could pay-off if one of these opportunities (let alone several) starts to flourish, but we're not there yet.

While present revenues are insignificant still, most of the company's market capitalization is cash, so the company has sufficient cash to see this out a couple of years, in which things could start to move.

ScoutCam

The ScoutCam has many applications, from the May 2020 IR presentation:

Medigus is majority (50.1%) owner of ScoutCam, which is trading under its own ticker symbol: SCTC. The mini cameras are not usually sold as final products but are part of a custom designed product for customers in which ScoutCam earns a non-Recurrent engineering fee. 

It also has the capability for complete turn-key projects where ScoutCam is responsible for the design and production phases of the customer's product. 

According to the 20-F the company has two major customers that generate most of the present and projected revenue (20-F):

One of them is a large international bio-med company. ScoutCam Inc. develops a visualization component for this customer’s invasive surgical device. The other customer is a US based company that develops and markets minimally invasive, surgical devices for skeletal and soft-tissue procedures. The company specializes in orthopedic surgeries of the extremities.

Since we wrote our first article, there are lots of developments:

  • On June 6, 2019, ScoutCam had a $1.1M order backlog.
  • On July 12, 2019, ScoutCam received an $1.6M order for 1400 integrated visualization devices from A.M. Surgical.
  • On July 18, 2019, ScoutCam completed the sale of micro camera systems to the nuclear energy sector and is in talks with several other players in this sector. 
  • On July 19, 2019, ScoutCam sold micro cameras to two leading defense organizations and is in talks with several other defense companies. 
  • On April 28, 2020, ScoutCam received a $500K order from a Fortune 500 medical company.
  • On May 19, 2020, ScoutCam received a $2M investment from Founder and Chairman of Arkin Holdings Moshe Arkin
  • On May 22, 2020, ScoutCam announced a breakthrough with the successful integration of its wireless micro ScoutCam into medical endoscope devices introducing the healthcare industry’s first operating room-ready wireless endoscope (by a privately held orthopedic company).{C} 
  • On June 12, 2020, ScoutCam received a new patent for its endoscope irrigation technology in Canada.

What also happened is that ScoutCam was acquired by Intellisense, in exchange for:

  • 60% of the shares of Intellisense.
  • Intellisense securing $3.3M of external investment which produces a company post-money valuation of $13.3M for ScoutCam. 
  • If ScoutCam sells more than $33M in the three years since the closing of this operation, Medigus gets another 10% of the shares of Intellisense.
  • The merger was closed on January 2, 2020. 

Since June 24, the company has a 50.1% stake in ScoutCam after the $2M investment from Moshe Arkin and the conversion of outstanding credit. 

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Disclosure: This article is part of a new “UnderCovered” series of exclusive articles featuring companies with limited coverage. Authors are compensated by TalkMarkets for their time, and ...

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Kurt Benson 6 days ago Member's comment

I thought this article that just came out today shows some additional potential for $MDGS / $SCTC

talkmarkets.com/.../the-electric-vehicle-space-has-shown-amazing-lockdown-resilience

The comment was deleted!

Shareholders Unite 4 months ago Author's comment

Yes, it's like a mini-conglomerate

Dick Kaplan 4 months ago Member's comment

I'm sure people realize how important the medical implications will be for such a tiny camera. This is pretty significant. $MDGS $SCTC

Kurt Benson 4 months ago Member's comment

What caused $MDGS to jump so high back in May?

Ayelet Wolf 4 months ago Member's comment

Interesting that #Medigus has #ScoutCam as it's own ticker. Why do you suppose that is? And which would be the better investment? $MDGS $SCTC

Stock Picks 4 months ago Member's comment

I love these high risk, high reward stocks like $MDGS! The potential is certainly there.

Shareholders Unite 4 months ago Author's comment

Yep, that's possible Adam, it's interesting tech which does good in medical appliances, but as with much tech, in the wrong hands it can do damage..

Adam Reynolds 4 months ago Member's comment

A 1mm sized camera?? Holy moly how is that even possible?

Ayelet Wolf 4 months ago Member's comment

"Holy Moly? how is that possible?" Easy it comes from the Holy Land ;-) Seriously though, the medical implications here are unimaginable!

Barry Glassman 4 months ago Member's comment

I'm more concerned about the big brother implications of such a small camera. There could be one on you right now and you'd never know!