railbird wrote: If they do need further financing it should not be very large( unless they were spectacularly off in their estimates) and with any kind of significant announcement over the next 7 months any dilution should be at a much higher price
Pokerchamp wrote:
All I know is that they're going to have to raise some money and this ocmes from Sean. The beginning of the 4th quarter is Sept. 1 which is now less than six months away, so it's not that far off and they've probably started working on it already. Sean did say that S7 is looking at monetizing some IP that they are not usingk such as those related to RF as an example. There was no indication if that'll be sufficient to carry them for six months or so which is likely what's needed to take them to break even (the six months for break even is just my opion).
Prospectus
General Corporate Expenses
The S&M and G&A costs for the six month period ending June 30, 2016 were US$2,824,276 or US$470,712 per
month. For the three months ended September 30, 2016, as a result of cost cutting initiatives by the Corporation,
such costs were reduced to approximately US$1,116,000 or US$372,000 per month. The Corporation is confident
that the level of such costs will be maintained for the 12 month period and on an annualized basis, the total
anticipated S&M and G&A costs are approximately US$4,464,000.
Based on the above calculations and the intended uses of the net proceeds from the Offering, the Corporation
expects that its cash expenses for the 12 month period following the closing of the Offering, before any margin
contribution from revenues and without additional spending on R&D beyond $3,500,000, will be approximately
US$10,410,000.
The revenues of the Corporation for the nine month period ended September 30, 2016 are estimated to be
approximately $6,246,000 or $8,328,000 on an annualized basis. Based on a 59% gross margin achieved by the
Corporation for such period, such annualized revenues would contribute approximately US$4,913,000 for the 12
month period. As a result, based on the Corporation’s anticipated costs of approximately US$10,410,000 less such
estimated gross contribution from revenues of approximately US$4,913,000, the Corporation’s cash burn for the
twelve month period following the closing of the Offering would be approximately US$5,497,000.
Working Capital and Sufficiency of Proceeds
The Corporation’s cash balance as of September 30, 2016 was approximately US$725,000 and as of the date hereof
is approximately US$280,150. The working capital balance of the Corporation as of September 30, 2016 is
approximately negative US$3,590,000. However, such working capital balance includes the full amount of the
principal owing under the Loan Facility as a current liability given that the Corporation was in breach of certain of
the covenants as at September 30, 2016. As the covenant breaches have been waived as of the current date, subject
to fulfilling the terms of the Conditional Amendment, the adjusted working capital balance assuming the exclusion
of the non-current portion of the principal of the Loan Facility (US$4,717,542) is a positive US$1,127,000. After
adjusting the working capital balance to remove all liabilities associated with the Loan Facility and a non-cash
derivate liability (approximately US$98,000), the working capital balance as of September 30, 2016 is estimated to
be a positive US$2,547,000.
The adjusted estimated working capital balance of US$2,547,000, together with expected net proceeds of the
Offering (before the exercise of the Over-Allotment option) of US$4,548,000, totals US$7,095,000. This amount
positively exceeds the Company’s estimated cash burn based on the above calculations for the next 12 month period
by US$1,598,000.
As a result, the Corporation expects its current available resources together with the net proceeds of the Offering will allow the Corporation to continue operations for at least the next 12 month period before factoring in any additional anticipated cost savings or revenue growth for the Corporation.