Paul, I like your analysis. Let's take it a little further. I am assuming that a portable computer battery would be sold by VLNC around $75 per unit (I am taking your $2.5/ W-hr and assuming 30 W-hr capacity). So, at one shift rate they will have annual sales of $45 MM and if demand is great, they could go to around twice as much, or close to $100 MM sales rate. Visibility of this sales rate within, let say two years, could definitely justify the current market valuation of the company of $200 MM (and thus my comment earlier of "fair value to possibly over valued"). To go beyond this sales rate, the company will have to expand manufacturing facilities, once again, with positive cash flow, not too big a problem. Remember also that to have sales of $100 MM you will typically need working capital to support receivable and inventories of at least 30% of the annual increase in sales. This will require additional equity or convertible debt financing and thus an appropriate increase in shares.
The main issue for an investor looking at entering here is to assess the possibility of failure to meet the January 27 dead line. Not only you'll have a company short of cash, but you will have the impact of the floorless securities.
Someone mentioned before that my recent posting here is due to my being short on this stock. I am not, but the readers of this thread should know that I have made it my business to post warning whenever a floorless is brought to my attention, like VLNC was. People at CTYS which listened to my warning exited at $7, when I warned first, the stock is now dead. People at IELSF listening to the same warning exited at $4 (where I exited as well) the sock is now 1/16. Other stock where I have in the last two years warned about floorless were, AIPN (at $3, it went all the way to $7 just to drop under $1), CHTL (at $2 now a penny or two), EXSO at $1 (now a penny or two), RNTK (at $3 now around $1), TTRIF at $3 (now 1/8) and a number of others. Invariably, I was painted by the bulls (or in some cases the local pump and dump artist) a "short". All I am saying is that people should use the knowledge of the presence of a potential floorless security as part of their assessment of this stock. That is about as much as I am going to comment on this.
Good luck to you.
Zeev |
