Actually, Zeev, my first post on SI criticized you for using $0.03 as your statement of what ATg would "charge". I do not have time to go back through other posts to see if you ever used $0.04, but several others with "short" intent have used $0.04 on this Board, incorrectly. And in my book, $0.03 per share (which is what they collect from buyer and seller) is "a few cents per share".
Here is my down and dirty model (back of napkin only) for this fiscal year (which is 4/1-3/31 for ATG). I caveat the estimates are inherently speculative because earnings will be a function of (i) volumes generated using the VTS system, (ii) how many other UTS modules are introduced between now and the end of Fiscal 2000 (3/31/01), and (iii) the capital costs associated with implementing new modules (ePLOB, eAS, eMC, eOX, Croix and NextExchange) and how they go about paying for it (new capital, debt, etc.) But let me take a stab based on what we know about VTS alone.
1st quarter of FY99 (4/1/99 - 6/30/99) - $5-6 Million Loss (based on history).
2nd quarter of FY99 (7/1/99 - 9/30/99) - At an average of 10,000,000 shares per trading day at $.02 per share (not >03 because I want to refelct discounting very conservatively) as they ramp up to FR's current prediction of 20M per day, or $1,000,000 per week (approximately $13 Million in income against a 6 million quarterly burn rate, for a 7 million profit for the quarter).
3rd Quarter of FY99 (10/1/99 - 12/31/99) - At an average of 15,000,000 shares per trading day at $.02 per share (as they continue ramp up to FR's prediction of 20M shares per day), $1,500,000 per week or almost $19.5 Million in income against an $8 million quarterly burn rate (increased due to increased system activity, capital expenses on other modules, etc.), or a profit of $11.5 million per quarter.
4rd Quarter of FY99 (1/1/00 - 3/31/00) - At an average of 20,000,000 shares per trading day at $.02 per share (as they meet FR's prediction of 20M shares per day), $2,000,000 per week or almost $26 Million in income against a $10 million quarterly burn rate (increased ativity, you know), or a profit of $16 million for the quarter.
Year end synopsis/FY 1999 - 27 Million in net profits, or just over $1.00 per fully diluted share. I count 25 Million shares fully diluted, but more on that down the road (a later post)
Holes: First, there will be non-recurring costs in ramping up the newer modules, which presumably will eat into the operating profits. But the Street tends to look at operating income in this type of development stage company. Second, I have no idea if my "burn rate" numbers are fair or accurate - they are historical but have been adjusted upward to reflect at least a healthy cost of operations factor, certainly conservative for a computer system with relatively thin employee and/or hardware related costs. Third, I am not sure if the $.02 per share charge will hold. The stated rate is $0.03, but we know they will be discounting substantially, and there are royalties they will have to pay to the PHLX (LOL), etc. Fourth, the volume is a at best a stab (I suspect FR's prediction was conservative, but who knows for sure). Fifth - this does not account for the other subsidiaries, such as Gomez - they appear to be wholly self-sufficient as far as capital goes, and may even generate positive net income down the road (O/T: Zeev - last year's revenue from Gomez exceeded $1,000,000 according to the Company, not 500,000 as you state) and I doubt that any other subs will contribute much to the burn rate before they are seeking capital independently (through private placements, etc.) so it may have little impact on earnings, but who knows.
If the VTS daily volumes are higher than the $20M per day predicted by FR, the numbers get dramatically better, because, on the margin, extra income from shares traded do not cost that much in terms of extra costs. If the numbers are lower, obviously everything changes. And FY 2000 should be aggressively better for a large number of reasons - most significantly, all 4 quarters should be profitable, not just the last 3.
All of this (ALL OF IT) is just a back of the napkin guesstimate -- everybody should evaluate this one on their own and make their investments accordingly.
MST |
