As you stated R&D costs are capitalised anyway and there isn't a need for concern. In a startup/spec business, R&D is one of those things that are difficult to plan. Even if you have an in-house finance person it is difficult to ascertain how much you are going to spend to make something work. Unexpected hurdles will inevitably come up and it can be costly. Remember Apple's iPhone 3? The reception was poor which caused problems to no end, and that's with a massive team of tech heads and limitless cash. I would rather that they overspend on R&D than to have problems after production.
I am new SE1. These guys appear to be developing very cutting edge and good luck to them if they can keep the sales going. Even with an technical IT background I found it a little difficult to understand their product and market space at first.
The potential is huge and the competition is fierce. Nonetheless they have managed to bring in US$ 6.3M thus far. Another $5M this Q4, that's a tough ask unless the orders are already lined up and manufacturing lead times allow.
I completely agree they are going to need additional cash, and they are going to need more in order to sustain manufacturing costs for new orders. The cash burn rate is still going to be high for a while given the stage the business is at.
SE1 Price at posting:
12.0¢ Sentiment: None Disclosure: Not Held
