Startlifter, in addition to the 346M shares outstanding Elis mentioned you need to add the approximate 18.5M of options issued and unexercised (see p 15 of the 10K). That leaves about 30M of remaining authorization. MZEI has been selling PPL shares for +/- 50% of market price, so today, that 30M would raise about $1.2M. MZEI’s 2014 expenses were $1.97M and its cash burn rate was $1.4M (the difference being expenses paid for with stock) – see pages 33-35 of the 10K. My guess is that if the company has been accruing expenses [likely given the year-end cash balance of $140K, $23K of PPL raised in January, $470K of A/P at year-end plus Q1 expenses] there are fewer than 30M shares effectively available for future expenses.
IMO, if the long-awaited EPA approval comes through by or near mid-year, the share price should rise and Ed buys a little more time; i.e. remaining PPLs can be sold for more than $0.04 each. The company also has 6 AS machines in inventory that have already been expensed. If sold for $125K each, that would raise another $750K of cash.
In other words, the company has a year-and-a-half + of cash runway left, even at these low prices; more if the share price rises. But make no mistake, I don’t see MZEI having enough cash generating capacity to ramp the company significantly should the EPA act affirmatively. The best they could hope for would be to garner order deposits to produce machines and hope to live off the margin and that would necessitate the sale of 40+ machines annually. They don’t have the millions needed to build inventory, hire staff, etc.
It’s for these reasons I think the BOD should be looking to sell MZEI shortly after gaining EPA approval. This also makes sense in that I don’t anticipate potential suitors giving a tinkers darn about what MZEI can do with the approved technology – they won’t be buying MZEI’s income statement or balance sheet, and it makes zero sense, after EPA approval, to give Ed years to try to market AS and burn up more patent time. While any very large order (KSA as an example) may buy some more time, I don’t think it changes the need to sell the company; we’ll just gain some incremental value given some level of perceived ‘market acceptance’.
If the EPA approval is additionally deferred and/or sales don’t materialize, then, Ed likely has about 8-9 months of cash available. Before running out of cash, he’ll need to call for a shareholder meeting to seek further authorization. Per the bylaws, shareholders would then have the right to seek adjustments to the BOD. Whether Ed and some of the other BOD members could survive a confidence vote is anyone’s guess [it’s my sense that Ed wouldn’t survive and if so, the current BOD isn’t motivated to do the dirty work, and if the BOD controls the negotiations on the sale of the company post EPA approval, and a sale occurs shortly thereafter, what’s the point of kicking Ed out at this time and bringing in a new guy to supervise the sale, not to mention that the BOD would need to issue a boatload of incentive shares to a new guy and further truncate its clock – all of this could have been done a couple of years ago with effect, but not now]. What is almost certain is that shareholders would authorize additional shares; not to do so would be cutting off one’s nose to spite the face. Given the several month lead-time necessary to process a notice and proxy for a shareholder meeting, I would expect that if the EPA is delayed beyond June and sales don’t materialize, the BOD would need to initiate the process for a shareholder meeting shortly thereafter.
