keep it in perspective
for this company to be "worth" or valued in the hundreds of millions - they need to be way, way further ahead of where they are now.
at 122.5MM shares outstanding and more than likely to grow by 5-10% with that last financing deal depending on how fast the company can mitigate the conversinon - at $2/share share price would value the company at $250MM - or "hundreds of millions."
to get there using a growth multiple of 48 for a PE - the company would need to generate around $5.1MM in net income which would equate to around $20-25MM in revenues depending on where their GMs and expenses shake out. they did $1.2MM in 2012 and 1/3 of that in 2013. if they start producing product again, fill the backorders, and expound upon existing supply agreements - they should be looking at $2.5-$5MM in revenues for 2014. They have $1MM committed in Japan for 2014 and assuming 2012 revenues are still available - that puts them at $2.5MM with no new growth/expansion.
company has yet to provide a clear signal on whether or not they will be able to succeed. $58K is enough to generate some initial product but it does not appear to be enough to get to cash flow positive where existing business is paying for future orders. the terms were very negative for existing shareholders. the only "positive" of the funding was the cap on conversion. however, if not paid back within a month or two - the lenders could still theoretically increase the sharecount by another 5-10MM shares and flood the market. more than likely - if they do that - they will be shorting the hell out before hand and then convert on the way back up to double dip which is what the article someone else posted describes. that is why it is a death spiral. if the company does not stop that very quickly, it will be tough to recover from.
the amount is very curious. why $58K? for that amount -why didnt the owners just pony up the capital rather than dilute their holdings by potentially 10%? they know all of the risks and the potential rewards? if it was a bridge loan - again - why take the risk? on the flip side, if this was a legitimate bridge and they intend on repaying quickly - there should be a follow up announcement very shortly on sustainable, long term financing.
AI
