I've done a good read over the threads here. There is a Q I've got for those that have been here for a while. It revolves around gross profit and COGS.
I understand that revenues are in their infancy stages, but there are clearly at the very least cloud hosting costs with AWS. They don't appear to be accounted for in the 4C under 'Product Manufacturing & Operating Costs' or reflected in half year/annual financial statements.
I believe this issue was raised in a thread last year and it was suggested that these costs were being reflected under R&D but given they are now directly relating to revenue generation then shouldn't they be being accounted for?
I am confident that this is a high gross margin business as it scales but would like to get a better grasp on COGS.
For example, how much web/data hosting cost is there associated with a $5000 pcm contract and how does that cost scale as the revenue does in the case of the domestic customer that has moved through to $20k pcm and Precision Hawk that is rapidly scaling to $20K USD.
Haven't made my mind up here. There has been some concern, repetitive commentary that stands out when you read all the 4C's from the last couple of years, one after the other. Constant reference to cash flow breakeven/positive as though it is just over the horizon, a "please stay with us till the next 4C".
In saying that, there does appear to be some genuine traction forming over the last 3-6 month period, with more "real numbers" but by tech company growth standards, still quite slow. I think they are approaching an inflection point, but is it in the next few months or is it still 12 months away? Proof of concept case studies steadily building and converting to real customers. I think the Precision Hawk relationship and various offshoots that can come from it could be company making.
Most importantly now is I believe they really need to look at further expanding their sales/marketing efforts. That needs more staff and obviously more money and I think they need to raise to do it. I agree that they could go on at this rate for another 3/4 quarters. They have the cash to do so (esp factoring in another R&D cash refund), but there is no point just limping your way along to cash flow break even /slight positive. Never going to be able to get enough cash flow in at this rate to then add more staff on and expand at any decent rate.
Now its a matter of how that capital injection occurs. I put myself in managements shoes for a moment. If I'm Olson (and other management/directors etc) and I want to increase my ownership of this business without having to run the SP up buying on market- then I do that very small (relatively) raise of $1mil late last year to just keep things ticking along well enough (with limited dilution to my own holdings) to get through till the June 19 options. I see where I can get the SP up to by June, through some timely announcements and then exercise the options. That will bring in up to $5mil capital injection (that conveniently minimises dilution to management as they are a significant part of the options) and then really ramp up marketing/sales with new staff.
By doing it that way, management will be able to increase their own personal ownership and get the needed capital injection to then truly grow the business now that case study/foundation customers are in place.
That's how I'd be playing it and I suspect this is how Olson is playing it.
Only issue is that as @Kfann mentioned, the rest of the options may well be exercised by loose hands and this may cause some dumping and SP volatility.
Curious about the separation of 4C and ACV announcement. Still unclear how to take that either positively or negatively. May play into the above options strategy in a positive sense (multiple pumpy announcements leading into June) or if I'm wrong on that and there is a CR on the short term horizon are they hoping to just rely on the nice looking cash receipts figure and hide the ACV under the carpet till after a raise? hmm..
(20min delay)