costs per sign

The lumacom product has only recently being launched into the market place and with it uniqueness and benefits it has to offer, management of this would be very foolish not to take advantage of this and ensure that after tax margins are not as high as possible.

Working on the basis of annual revenue per sign of $800,000. Management should be trying to achieve an after tax return of between 30 and 40% at least.

Therefore at 30% the after tax cash flow would be $240,000 / sign

Add the tax back onto this at 30% we would then come to a pretax profit of $342,857

This leaves us with $457,143 to account for the expenses and depreciation incurred in operating each sign.

Now assuming that 2 people will be required to maintain, service and do whatever else is required by the company to keep the sign and its equipment operational I have applied $75,000 per person, so in total staff will cost $150,000.

I have then applied $200,000 per sign for its maintenance each year. Kind of like cost of revenue. This also includes the power bill.

This then leaves us with $107,143 for costs such as insurance, office rent and expense contribution (assuming that a centralized office structure is being used in each continent or country).

So working on the after tax margins of this size to begin with management would then have the ability to compete should any competition arise in the future and still provide good returns to the shareholders.

On the other hand with a worldwide patent on this technology future competition should be scarce and thus the management are taking advantage of a worldwide monopoly.

In all I believe that the company will very quickly increase revenue and profits and make the lumettes very wealthy