Killer Capex

Facts from market information, once you read past the headlines:

1. Capex for last years has been 9% of Revenue, every year. This resulted in $14.7m in FY16!
2. Depreciation and amortization increased from $3.8m in FY15 to $6.9m in FY16.
3. In February they told the market they would be making a deferred vendor payment of $0.6m in May 2016. This appears to have been deferred again.

In next 12 months they have borrowings of $8.5m to repay. Capex at 9% is $15m. Interest and tax of say $3.5m. They can not generate the EBITDA to cover this, even if Capex is only 5%.

The depreciation must increase in FY17 after all that Capex, say to $8m. This would put EPS at very low single digits.

Is it the Capex that is killing this business? It seems very intensive for an IT stock. Are they building IP that is unique? Does anyone have a broker note as I'd be very interested in some alternative views, as there must be something of value here that I'm missing. How do I value a business with little EPS and negative free cash? It must be an IP play.