Sly,
IMO, math does not support your argument, plain and simple.
Bear has a better argument, about the still marginal (I believe) development cost helping to create a sufficient critical mass to justify a higher p/e multiple. This is the crux of why RD's PEG theory is wholly inappropriate for this company now.
Bear is right, no doubt, on this point in direction. So, I hope he keeps posting: he's highlighted the most important issues about the company, and the arguments are valid, on both sides, imo. A better understanding would only help all of us.
Unfortunately -- in a sense -- in my view, the critical mass will come regardless of the marginal investment. And if that investment comes at the cost of 30% dilution, it's not worth it. And, I don't think this is even close. The size reaching a critical mass is no doubt important, but so are the eps. And I would not sacrifice the later for the first, unless it were very substantial, and very fast.
Solomon seems to use NTA as a favorite measure of critical mass. How is an extra $15M investment going to make that much difference, especially while the sacrifice to eps is clear, AND, the acceleration of capex is only delayed a year, when the funds don't have to come from new shares?
Again, I'd back off this, if the "marginal" argument is disproved by means of some inherent built in commitment that eliminates financing discretion.
For instance, why couldn't Solomon build one FF without retaining the right to 75% equity? He'd still have 25% equity, and all of the construction and consulting profits would be discretionary cash. He'd "lose" the future profits on the 50% equity he would later buy, but:
he would retain -- read gain -- 30% more profit on all the fish farms by virtue of dividing the profits by 100 rather than 130! Admittedly, this assumes $15M profit, and a share price of $.50, both not far off current situation.
How would this $15M cash not eliminate the need to issue $15M worth of new shares?
