icurnonittwo, some very good points.
Ok it appears that PLKC does not break out its revenue by hardware and services rendered so I can only assume that we will continue to see the 38% margin across the board for all future sales (including hardware and service charges). This figure is down slightly from the 44% from the previous year due to higher product costs and lease term agreements.
So using the prices of $500 per unit, $25 activation fee, $100 installation fee, and $40 monthly recurring monitoring fee with a 38% margin that equates to the following equation ($237.50 + $15.20X). X represents the number of months of service that the contract is active.
Assuming that operating expenses continue around $3M per year that means we would need to sell 7145 units in the first year to break even. Now that just accounts for sales through R&R or to Two Men and a Truck Moving or All My Sons Moving. That does not factor in the agreement with Karta or any additional license agreements.
Ok so where are we at right now. Recently R&R has turned in about 40 units per month in sales. I have to assume that they mark up the price of the unit a bit to make more money off of that. Over the past three months I see about 57 units from TM&T Moving. We booked the AMS Moving deal back in August of 2005 for up to 500 trucks but from what I can tell we have only locked in about 20 units. I might be missing something there. Ok so for this 12 months I would expect the following:
R&R 40 x 12 = 480
TM&T 57 x 4 = 228
AMS 20 x 2 = 40
Total = 748 units
Ok, so that is a long way from the 7145 units we need, BUT all three of those segments are in their first year of sales and two of the three are still in their first 6 months. One would think we should begin to see a ramp up in production from these segments as time goes on. The simple fact that R&R had sales the first month after picking up the product indicates we have a solid GPS solution that is somewhat easily marketable.
Going forward I would expect R&R to do more like 500-600 units for the next 12 months, TM&T has over 1200 trucks in its fleet so we should do 300-400 units through them, and AMS has over 500 trucks so we should be able to do 100-200 through them. So with no other agreements that's 900-1200 units. That chunk alone will bring in $164K-219K of monitoring fees (assuming 38% margin) the second year. Within the next twelve months I expect the addition of three more sales segments (either large scale moving companies or companies like R&R). So I would double my expectations the second year (1800-2400 units). Continuing on that kind of growth plan and factoring in long term service contracts plus upcoming license agreements, I am going to go out on a limb and guess that we will be profitable at the end of three years. With all of the PR's including each piece along the way to that point all I can guess is that we will see higher share prices.
