From the subsequent quarterlies, The R&D cost has gone down by 400K and if Merchant did take control then that could be slashed completely as I believe they would be laying off or making other arrangements. Perhaps some tax rebate that could be claimed back as well.So assuming Merchant are really motivated, they can bring the quarterly down to 1.5M or less.
They also have some form of a revenue. For an example 353K in last quarterly. So if the revenue remains same, the YTD will be close to 800K.
Assuming Cashburn remains same until March 2017 and then they slash everything, the run away cost would probably be close to 2 MIL per quarter as you will ( CB (3.7) - R&D (1.5) - revenue (350)) .
It may be worthwhile also considering that 19 Million can get you a lot more bacon than your 3-4 mil. They can acquire a revenue generating business as well and this will mean that Mcap could get a bit of jump from the start. Since they are acquiring a substantial interest at around 18 cents, they would avoid CR (perhaps do a soph placement only) ?
There may be some opportunity costs here for retail as timing to acquire another business is uncertain.
This is the biggest risk and one needs to wait to see what happens. Add potential litigation from former employees or even management who knows ?
I agree.
I think a less than 10 cents will give us an effective shell with a good cash pile. The question is would you trust these people to do another good deal ? What are their credentials as it seems the first business they acquired has failed miserably.
1PG Price at posting:
20.0¢ Sentiment: None Disclosure: Not Held
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