1 quarter's cashflow = $45k
Add in the $95k they wasted on the assumption that they won't waste any more money (which I don't believe)
You have $130k per quarter. Let's just pretend this entire operating cashflow is Free Cash Flow (it isn't).
Let's be uber generous and say that the next 4 quarters see 100% FCF growth on average vs the $130k from this quarter. I also don't believe that, but lets just say it's the case...
Then you have FCF of $130k x 2 x 4 = $1.04 million.
Now let's also just pretend this is a high growth stock (it's not) with really competent management (they are not), and say it deserves a multiple of 15 x estimated FCF for FY 2015.
I could find many many many better stocks trading at 15x optimistic FY 2015 Free Cashflow. This isn't cheap. It might deserve a higher share price if management were super-focussed on generating returns for shareholders, but they just wasted two thirds of a quarter's cashflow doing due dilligence on a company that they share a director with! Apparently he was unable to give them a head's up that it wasn't worth it. And they pay his salary too!
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