Todays depth, page-28

In my personal view, based on what I have observed from other micro caps like MXC, JAT, etc the chance of management dumping everything quickly is relatively low. A safer and potentially more lucrative alternative, instead, would be to do a small CR, no matter how inconsequential and/or tenuous the amount may be in the grand scheme of thing. The aim I would say is to just kick the can along a bit longer but the end point, I think, would be to dump all the same. To me a CR is all but guaranteed at this point especially after considering how everything just fits incidentally. If one stop to think about it, more MoU announcement, followed by a convention, that if I am not mistaken was sponsored by SAS and then a jump in SP immediately after. Everything I think is to artifically pump sentiment so an incoming CR would be more palatable.

So how much would they be able to get? My guess is around 10 million including SPP, which again would not be enough for even a batch of 20 pearls. Assuming that each nano sats would only last around 4-5 years each, then to make sure that SAS has 200 pearls at any given time then SAS would have to launch at least 68 satellites per year starting from whenever they have funds. This is to compensate for orbital decay and plan to scrap 25 percent of satellites per year. If calculated at a cost of 750k per satellite then SAS would need, in the upcoming CR, around 51 million dollars NOT INCLUDING OPERATIONAL COSTS. The same operational costs that would probably be in excess of 3 million per quarter and increasing. So realistically SAS would need 65 million per year to be safe for the next 4 years just to launch the pearls. Even then they would still need to start working on their ground network that would add significant cost on top of everything, which would definitely be up for speculation. So all up, my guess is that SAS woukd need North of 70 million per year starting from the next year if they want to maintain 200 pearls up at any given time. That is insane....

So the above is just the capital necessary if everything goes well. What I think needs to be taken into account is the fact that the the commercial viability for the technology is truly untested. I do not think there has been any precedence so it is impossible to do any case study. I also do not think that management has done any economic modelling when they arrived at their claimed potential revenue of 500 million to 1 billion. This is especially compelling to me as evident by the fact that SAS failed to realize:

1. Beeptool agreement on the 3Ds
2. Sat space agreement on 3Ds
3. Ramping up of revenue on existing customers of the 3Ds
4. Global sat agreement
5. Paratus

No commercial activity has been realized ever since the relevant announcements. I also believe that they failed to use the last 15 million they got from the last CR to launch the 20 pearls despite mentioning in the relevant announcement that they were going to do that.

Now I think a dilutive CR maybe possible, for some millions, but my understanding is that SAS would need far more than that in order to succeed in what they say they were going to do.