I have looked at the numbers. They do anticipate a slightly negative (no more than C$1-2-mil) net income number, but they are cash flow positive. There are a number of non-cash write-offs --past expenses related to project development etc.
As long as the backlog builds and they continue to add new projects, the profitability will come. Likewise, as I've pointed out in the past, once the ball gets rolling into multiyear deals, the backend/royalty side becomes very significant and is all profit. For instance, the IMAX film supposedly did not cost much at all and was a 50/50 split with IMAX. The backend, according to the analyst report I have, is around C$3mil a year once it rolls out. Now if you do another, double that. So it all builds.
But in once sense your right, it is a very small company still, growing rapidly and they need to reach critical mass in order for the economy of scales to hurdle the fixed costs. They have the cash, the reputation, the partners, the projects. They should be investing to build something much bigger for all our benefit. |
