They suggested pipeline that could turn into A$9m revenues over 3-5 years (2018-2020) in a best case scenario, so the dilution from the earn-out incentive may be a lot less than I originally thought (dilution of 42% if hit A$10m revenues in 2016) , although I would be quite happy if they hit say a A$5.0m revenue target in 2016 in exchange for 7.5m management earn-out shares, or a reasonable 6.9% dilution.
And yes, the 450 b/e indication is great, meaning that possibly in 2017 they can slow the cash burn to near zero. Looking at the A$2.81m operating ebitda in FY15 vs. the current cash A$2.68 may mean one more capital raise early next year, hopefully at issue price good level above the A$0.22/sh in the last placement.
Stock should be trading in the A$0.20-0.22 range, a valuation indicated by the pricing of earn-out shares and the last placement.
SKF Price at posting:
17.5¢ Sentiment: Hold Disclosure: Held
