Must cut Terrasphere licensing Fees by 50%
I really think that they need to figure out a way to drop prices on their Terrasphere licensing, which is going for a million bucks. That million bucks does not include equipment that the licensee will need to purchase from Terrasphere as well, and Ed talked about embedding the licensing fee within the equipment sales in order to mitigate the up front costs. The problem though is that a million bucks is a million bucks, and none of their licensees are able to get financing right now.
Think about it, you are a mom and pop licensee taking a plunge on a highly speculative technology owned by a start up division of a nearly capital impaired company that only has cash locked in through the end of 2011, what are the chances that you plunk your life savings into this? If you are a lender to a prospective franchisee, how comfortable would you be lending to someone who maybe has 10% equity into this operation, with a vendor who was recently delisted from Nasdaq and is barely clinging to life?
I think that the bottom line is that COIN needs to cut their licensing fee by at least 50% just so that they can get their first facility on line. Licensing, to my understanding, is a 100% profit margin business so there is a lot of room for negotiation.
As an investor I would gladly take 250k up front, hell even 100k at this point, a facility online, and 30 prospects looking at the facility, as opposed to triggering another round of stock dilution via warrant conversions. Are there any other investors in the know out there?
