Rather than estimating the figures when expressing an opinion using the actual numbers would be a lot better to inject some much needed objectivity. At the end of June 2020 the SP was 2c, which is reasonably close to the current 2.2-2.3c. From June 2020 to now fully diluted SOI has increased by a factor of 1.8 from 1.545B to 2.812B -- not nearly tripled as you claimed.
Yes, the market cap back then was approximately $30m vs a little over $60m today (fully diluted), but valuations at each time are different and against a substantially different fundamental (micro) backdrop: Today the firm's valued at 4.3X TTM sales at SP 2.2c (fully diluted) while back in mid 2020 it was trading at 57.5X. (Seriously, 57X ain't cheap even if you're Apple when you just launched the iPhone 5). Today's TTM revenue is 26.5 times what it was in mid 2020 -- not sure if that qualifies that the firm has gone nowhere in that time at a top line level. So technically speaking using valuations it's actually cheaper than before and if the firm can deliver a 15% QoQ top line growth this quarter then the valuation multiple will drop to around 3.1x in the coming month (ceteris paribus). If that's still too high or too low over either the short and long-term time frame only time will tell, but it does offer some context on where we are vs. where we've come from relatively speaking. (Time frame dependency also matters a lot which has been completely tossed aside with most comments lately as there's too much focus on the headline items alone.)
Not sure against which period you compare cash burn to come up with the conclusion that it's been tripling as -- just to make the argument for you -- the total op ex cash flow has gone from -$426k (June 2020) to -$2.9m this past quarter which is nearly 7X...if you really wanted to drive home that point. But not considering the composition of that cost structure vis a vis the revenue base and fundamentally different business in terms of infrastructure, absolute volume of business in terms of cases shipped or revenue generated, staff levels, in/outsourcing of core functionalities, as well as the operational efficiency changes over time is being extremely selective.
Since June 2020 the operational cost to service $1 of sales has decreased from 2.86 to 1.61 which is expected to further decrease to 1.46 if simply the target $750k quarterly cost savings the firm is aiming at are accomplished at an aggregate op ex cash flow level. If that cost saving isn't applied at the general level, but instead at the PMOC level as I suspect by bringing more of the logistics volume in-house rather than relying on 3rd parties, then there will be a 'leveraged impact' on op ex cash flows as revenue grows. And that's before looking at other op ex cash flow line items that are going to hit maximum dollar level spend ceilings and won't indefinitely increase at a rate relative to the increase in revenue the firm will book. And that's most likely not been correctly modeled by most as only the guys inside the tent have best possible idea of how much they have to play with.
Simply saying that the business has become too difficult to analyze and there's too much going on with the integration of an only 'marginally profitable generic business acquired' is taking either a lazy approach to going through the 4Cs to identify potential levers and outcome scenarios that could be probability weighted to assess what may reasonably happen, or its simply not done more than headline analysis at all. I agree that this is a harder business to analyze at this stage vs 2 years ago as there's a lot going on at different levels and I also agree that total amount of currently negative op ex cash flow as dramatically increased which obviously like for like more quickly drains cash levels. But let's not forget the reasons for that and how that's impacted all components of the cash flow statements to make a truly relative and relevant assessment. And for that the rate of change on some items needs to be put into context to model potential outcomes under certain circumstances going forward as the past in the bigger scheme of things is simply the past, especially when things are undergoing significant changes. What matters more is the present and future.
I think anyone who's run the numbers and played around with a handful of realistic assumptions would by now have figured out what levers the firm should prioritize and assumptions to be realized for the understandable concern re its operational burn rate to dissipate. Not matter how much we model though there's one truth we cannot escape: we have a) incomplete information re the dynamic changes the firm is implementing that is expected to impact cash flow statement line items from last quarter to this (and going forward), and b) have even less insight into the firm's probability weighted revenue pipeline and growth assumptions. Without applying some assumptions though and evaluating the impact if these were to be changed on the CF statement and cash balance over time there's very limited contextual understanding to discuss burn rates. And in this specific case straight up linear extrapolation isn't appropriate in opinion.
All of the above is but one way to look at things as the SP bottom isn't going to be determined by fundamentals and valuations per se but by either an arrest in the SP falling as buyers and sellers exhaust themselves with liquidity nearly grinding to a halt, or a trend reversal as investors' psychological concerns shift from "Good God, we will all die holding on to this stock" to "Oh, c**p, I didn't think about that one and things are actually not as bad as I thought they were". Now the time to get to either of these scenarios could be impacted by both endogenous and exogenous factors and I'm not going to call how long it will take to get there. People can either continue to bitch at another or determine if there's an investment case or not and then act accordingly. Don't let hope or biased perspective wanting to be right drive your investment decisions, but probability weighted objective assessments. No one gets them all right, at least look at all the information to shift the edge a little in your favor when placing you bet on a specific outcome. As for the business' continuity as as going concern as well as the SP's wild ride -- it ain't over 'til the f&t lady sings and we aint there yet.
(20min delay)