Joel, welcome aboard. Here's my numbers. Compare with yours and let me know what you think.
As you suggest, assume 'Net Sales' of $10M for the fiscal year ending April 30/99. 22,450,000 Shares outstanding (10K in the public float). $.10 EPS => Net Earnings of $2,245,000 for the year. 6 months ending Oct. 31/98 show Net Earnings YTD of $350,263 on Net Sales of $3,318,616.
Doing the math, this leaves us with a second half forecasted 'Net Earnings' of an additional $1,894,737 [5x1H's] and a second half forecasted 'Net Sales' of an additional $6,681,384 [2x1H's]. Are you thinking that Net Earnings as a percent of Net Sales for 2H is hi (it will have to be 28% in 2H vs. 10.6% in 1H) or do you think the forecast for sales is hi, or both?
Here's part of the answer, maybe.
Management says it expects a significant chunk of it's 2H revenues to come from s/w licensing (I'll assume $800K for Jan-Apr 30/99). This comes from the predicted 2 new licensees/month @ $100k each + sliding scale fees after initial set up. On a similar note, management expects to be able to continue to sign new licensees at the rate of 2/month for the next 20 months (Dec. 15th comment from Mark Dolen during the conference call).
Note: these sliding scale fees have margins approaching 100%. This is good. This is why pure information-based internet companies have such hi multiples. Beeeautiful. <<<a la e-bay for example>>>
Regarding the adult business portion of Starnet, management says that for the first time, quarterly revenues (ending Oct. 31/98) for gaming 'outdid' the adult business. The adult business revenues, mind you, helped cover the expense 'burn rate' for the first part of Starnet's existance. Don't want to touch the moral/ethical tones on this one, but will say it was smart from a cash flow perspective. Nonetheless, Mark Dolen suggests that gaming revenues will soon 'dwarf' the adult business revenues.
It'll be interesting to see how the numbers actually come out. Q3 ends Jan 31/99. Stay tuned. Great case study in the new world economy of the information age.
Again, welcome aboard. It'll be interesting to see how they indeed make out. |
