RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Loading upGreenWave85 wrote: I attempted to find evidence that would support the claim that the I.P licensing revenue covers or almost covers operating expenses but found nothing from Q1 2020 that could prove or disprove that.
Expenses for the Quarter ended December 31, 2019: | Expense | Amount | | |
| Administrative expenses | $146,015 | | |
| Directors' fees | $17,500 | | |
| Foreign exchange gain | -$32,751 | | |
| Investor relations and advertising | $193,982 | | |
| Management fees | $110,400 | | |
| Professional fees and consulting | $296,692 | | |
| Wages and salaries | $261,664 | | |
| | | | |
| Total Expenses for the Quarter | $993,502.00 | | |
| Expenses per month | $331,167.33 | | |
| Monthly revenues | $350,000 | | |
| Surplus before tax | $18,833 | | |
With only IP revenue they are right around the break even mark on a monthly basis as long as the IP revenue is steady. They will have some one off expenses for the enclosure and probably other setup/commissioning expenses, but the run rate should be quite lean. If the contract revenue they have announced and the IP revenue ($30m combined annually) were received monthly, that would be $2.5m/monthly putting them well into the green.
This is when scale starts to make a difference - adding revenues and earnings without increasing costs.
If they were able to achieve a 60% net margin that would give them earnings of roughly $0.16 per share on the $30m revenue.
The average P(rice)/E(arnings) for the S&P 500 has historically ranged from 13 to 15.
If NL were valued at the standard 15 x earnings, that would put the share price around $2.40. The market may not give the same ratio as the cannabis sector is down, but even at a 5x ratio it would indicate a share price of $0.80.
Some people will wait for financials to prove out these numbers. That is going to be at least August. What may help in the near term is to have some well regarded third party analysts to dig into these numbers and compare them to their peers and project revenues and earnings. If the numbers they come up show the benefits of scale and high margins we should get some buying interest without having to wait for financials which is several months away.