Unfortunately, not as high as you may think or want it to. There is a chance it might pop based on speculation and/or short covering, but this would probably be short lived just like the pop to .20s in March.
The Bahrain deal calls for two initial locations that will pay an upfront fee plus a percentage of royalties.
Being on the aggressive side, let's presume each franchise location brings in $1M (this is way beyond what I'd expect a GIGL franchise to fetch, but why not dream, right?) It also calls for a percentage of sales, this is typically 8% but let's assume it's 10% to be aggressive.
So we're at $1M for the franchise rights and in year 1, if both Bahrain locations bring in $8M in sales combined, that's another $800k. So let's round up to $2M initially, and then $800k each additional year. Best case scenario.
There are 135M+ shares outstanding. I know more have been issued but we'll go with that number.
The simple calculation would be to take the $2M in revenue and divide it by the number of shares; it comes out to about .015/share.
If we go by earnings, however, let's say that the two US locations generate $400k in profit each. The total "profit" Giggles would make would then be $400k +400K + 1M + 800K, or $2.6M.
$2.6M/135M shares = .019 EPS.
Now you have to assign a PE multiple. It's usually anywhere from 5 to 40, but I think RedChip assigned in one valuation scenario a 10.5x PE, so we can use that.
.019 x 10.5 = .195/share.
Best case if you go strictly by the numbers, .20 is about right. But again, the numbers we used here are extremely aggressive. I'd halve it to get a more realistic figure.
.10 should be the new "floor", it will go up beyond that based on speculation but when someone is valuing the company, that would be roughly the price they'd use.
Regarding non-toxic financing, can you be more specific? If a PE firm uses .10/share as a valuation, would that be fair? If so, let's say Giggles wants to raise $30M to expand. That would mean they'd have to issue 300M shares.
If they can open 75 new locations with that $30M, there would be 77 corporate owned locations each bringing in say $300k/year profit.
77 x 300k = $23.1M profit
$23.1/435,000,000 OS = .053 EPS
Assign the same 10.5x PE multiple and each share would be worth around .56.
Hope this helps!
