I’m not Joshua but I plan to share some thoughts on the topic anyway...Currently we are playing by “penny stock rules” meaning there are no rules...the price pops on rumors, stagnates on lack of information, falls on a whisper etc. As the company matures (hopefully), the criteria for stock valuation will transition to the more conventional measures like revenue, profitability, growth and stuff like that....our problem....Or maybe our situation is..
Our situation is that we are a royalty company and our royalty is 6% of sales. Many companies would love to be a 6% company. A royalty company has no manufacturing risk, no unions, no supply chains to manage and their cut comes before the profit for the actual manufacturing company ...Because of these features, generally 80-85% of the royalty falls directly to the bottom line. I’m going to digress for a minute.
Anybody remember Robert Schiller, the evangelist from the “Cathedral of Tomorrow” this is his church and he needed $6 million (a long time ago) to build a new cathedral. His thought process went like this...I need one person to give me $6 million or 2 for $3 million or 6,000000 for $1. We are sort of in this situation
$100,000,000 in sales revenues generates $6 million in royalties and that is about 2/3 of a penny per share which perhaps supports a stock price of 10-15 cents using conventional reasoning
Sooo..we need considerably more than $100,000,000 and maybe $500,000,000 or even a billion to support a stock price of $1. Back to Schiller’s problem...how to get the money!
Consumer Electronics is a “chunky” business...lots of pieces parts and all alike...it’s an ideal target but there are legal issues that may or may not have a resolution...this is a big question...if all the other approaches to 5G bomb out, it could really help. Short term manufacturing capacity is a question 90 machines may be an order of magnitude short...
In the automotive area, a couple hundreds thousand door latches a year is nice but at $20/each (a guess) , it’s tough to get to $10 million...I like the tire pressure sensor 4/car at $10 each times 15 million cars is $60 million. Don’t know what happened to the tire pressure sensors. I don’t see volume in trim/logo and it’s non-essential. I don’t see any other obvious short term opportunities here
The medical area is really fragmented and difficult to get multi-million dollar opportunities off the ground. These are smaller opportunities that require long development times for approval and are basically niche products. They are nice but they won’t get us to $500,000,000 of product sales. This really looks like it should be in the US so close-in support and hand holding can be provided. Perhaps this is an opportunity to partner with a broad range supplier (ConMed?) who already has the sales/support staff in place. In Schiller’s world, these are the $50 donations.
To me, it looks like three businesses, each with a different marketing approach...I see CE (if there is one) in China, automotive in the US/Midwest and Medical on one of the coasts.
90 machines sounds like a lot but I have concerns real capacity since long run/lower margin business will crowd out short run opportunities in spite of higher margin percents. From a manufacturing standpoint, they need dual strategies.
Enough for today...I’m sure there are many alternate opinions but the dialog is good.
