MD indicated each machine will costs $20,000 - $40,000 to produce depending on level of production. Let’s say $30,000 average. He said they will be rented out at 30 days at a time and that they expect to recoup the cost of a machine in about 2 rental periods. I.e. 60 Days rent = $30,000. As a rough guess sounds like they will rent out each machine at $500 per day.
He wasn’t sure, but was likely they need to raise finance to get the machines. With $1.8 Million in the bank and costs of running the company were about $130K per month = $800K for the rest of the year, leaving $1M for building machines. If that’s not enough as he kind of indicated, let’s say they intend to spend $1.5 Million on the machine production to get scale, or making 50 ($1.5M / 30K per machine). Once built assume that 1 in 2 are rented out at any time??.
Potential revenue 365 days x $500 rent per day x 25 machines rented per day = $4.5 Million in potential annual revenue for the coring thing alone. However he said the Telemetry stuff due for completion soon will result in a “quantum” leap in potential revenue.
Based on this, in the next year there would be $4.5 Million revenue from machine rentals less,$1.5 Million to run the company less $1.5 Million to build the machines leaving $1.5 Million profit.
For a company value at $3 Million, that would be a great return, especially since the machine costs are up front and no return from the Telemetry which should be a big revenue booster.
He even hinted a coring service company like Halliburton could buy out the company “with a big enough cheque” to get exclusivity. Sounds like they are getting ready to rock and roll
CKK Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
