DISCETING the $5 or $5.5 PP fundsLet’s assume the company is operating on fumes by the time the PP is funded and where will the fresh funds be allocated?
1. Closing date estimated end of September
2. Current monthly operating burn of about $1 million per month
3. Estimated 3rd qtr sales of $1..2 million (ceo stat sequential increase???) that would generate about $550 in Gross Profit for the quarter
4. Accounts Receivable ( funds owed to the company from previous sales) I don’t know this figure , but on $800,00 in the previous quarter sales it’s about $440,000. They would also have an additional Account Receivable on any products shipped in Q3 that has not been paid for yet.
Additionally, whatever is in their pipelinee as production orders and not shipped yet would be considered another asset of the company.
5. AP Accounts payable, what they owe their chip supplier. Do t know this number. Roughly half of their order backlog.
I believe the company is debt free and has chose to raise funds recently rather than tying a loan to their patent portfolio. They used the raise earlier in the year to remove this loan and free up the patents used as collateral I believe.
Okay, looking forward let’s say Q4 as to what FINANCIAL picture might look like and use of the fresh funds.
Operating expenses for three months $3 million ( based on most recent quarter Q2)
Depending on the sales they generate in either sector VR and Data Center, they will need to purchase the chip sets required to produce the orders. My guess is their partners probably pay 50% deposit on the orders placed and possibly the balance upon delivery of the products. It is possible they are only carrying about half of the costs to produce the chips.
Here is the tricky part, we don’t know what their revenue is going to look like in Q4!
It could be anywhere from $1.5 -3 million if they have book any significant VR sales and managed to announce a decent data center order. I think $1-5 would be a low number and $3 million could be a high figure.
If we chose $2 million just for fun and used that to project how much money they would have at years end in operating funds.
$2 million would yield about gross about $1.1 million in operating revenue.
Some quick math for Q4
$5 million starting funds
$3 million in operating funds leaves $2 million to fund chip set purchases for customer orders and another $1.1 million in gross profit from $2 million in sales
If someone once to pick up the ball from here and finish the projections, please feel free.
What we know if they make about $5 per VR Headset order and conservatively $10-15 on a potential data center cable order.
This was just an attempt to draw to response from the board and anticipate on the low side what the company’s cash burn might look like after Q4.
Again, I am in a completely unrelated business sector and only trying to assemble some figures for discussion purposes only.
We simply just don’t have enough information to project any kind of solid expectations for the company.
I think the company is in a bit of a wait and see position also as they cannot predict with certainty either who is going to step up and actually place solid purchase orders for their cables!!
Q4 will probably be the most important for the company since their existence!!!