Newport Networks, another VoIP Gem

By my understanding, there are ~63m shares in issue, so 4m shares represents ~6% of the company. The proposed placing of 103m shares would see the number of shares more than double. No doubt the deep discount to the prevailing price (43.4%) was the only way the company could persuade Evolution to underwrite it.

Assuming cash-burn has remained and will remain (at least in the short term) at a fairly constant ~£1.2m pcm, based on cash of £9m at 31/08/2005, it would seem likely that the company will have ~£4m in the bank at the start of 2006 (hence the emergency share placing). Adding on the ~£14.6m from the placing, that gives total funds of ~£18.6m. With 166m shares in issue, that would mean cash value of ~11p per share. By further extrapolation, at the end of Q1 2006 and subsequent additional cash burn of ~£3.6m, those figures would drop to ~£15m total and 9p per share. This is all finger-in-the-air, back-of-a-fag-packet stuff, but illustrates the point about their desperate need for sales/revenues. And, if they are viewed as financially suspect, they may have problems securing those deals - a vicious circle.

Just my opinions,

Alex