<<Mooter, the current annual burn rate is $35 MM, and that is without actual production, how can $40 MM annual sales be break even?>>
Exactly. Lev was asked during the last conference call about whether they will aggressively or conservatively ramp up production. He talked about how they have to be conservative, because the one thing that would cause the company to fail is if they "ship 5,000 bad batteries." In saying this, he said, "as we train second and third shifts, we're gonna be very cautious with them." Present tense used in "as we train." Future tense used in "we're gonna."
Given that the conference call was on November 11, well after the September 27 date of closing the last quarter, I think it is quite reasonable to conclude that the operating costs as reflected in the September quarter (over $9 million) will increase substantially after a 2nd and 3rd shift is added. Obviously, a lot of other costs will increase as production is ramped up in addition to personnel costs.
Personally, I think you are optimistic in your assumption that they will reach break even by this time next year. I also agree with you that it makes no sense to create overly optimistic projections. Unless, of course, you are simply looking for a hype-based spike to sell into. A truly long-term investor should want to see realistic projections made. Which have been pretty rare on this thread. |
