I had the opportunity to speak with Ed last week and he walked me through the rational for calculating the licensing price. I can't recall all the details because it was very product specific stuff having to do with the growing units, the stack of units bought per system, etc., which all sounded to me like equipment sale pricing rather than a licensing but I gave him the benefit of the doubt. I just wanted to hear that there was a rational for pricing, because honestly, until I've been inside one of their facilities and talked with the people involved in construction, and talked to some scientists then I don't really know how to evaluate it.
I'll be honest, I bought this company on a very strong reccomendation from a guy who has given me a lot of very good small cap stocks that have run huge. I got lazy on the due diligence on this one and made the mistake of accumulating more based on the storyline, one that I still continue to love. But a good story line and unproven technology are huge opportunities because of the huge risk involved, and I "shoulda" called their vendors, customers, existing licensees, etc., and taken the failed Woodridge facility as a huge redflag.
To me this is essentially a macro bet. If the company can survive these hard times and grind out some revenue, then the upside absolutely stellar. Think about it, there are 7 billion people in the world. There's food inflation around the globe, food riots, a massive cultural shift in China to middle class urbanization, and humanity continues to destroy the environment. Isn't there a good chance that civilization will have to adopt a new form of water treatment, fertilizer, and most of all farming technique?
Imagine if you could have patented the process of crop rotation. Or, just imagine that other big cap companies are to clumsy to do this kind of R&D and would rather buy up a company who owns the technology. (Monsanto, Scotts Fertilizer)
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