They are all over the place. The new "contract" site is in northeastern Ontario. I suppose they will need to open a Toronto office to service all of their Canadian business, and then a northeastern Ontario operations center to manage all of their Canadian mining businss -- like this one contract. Great economies of scale. I see this "contract" simply burning more cash.
Also, threeflagsrider, the press release today states BWTR will "provide process design and equipment for mining water treatment at a site in northeastern Ontario, Canada." It appears they won't operate anything, so your math, while fanciful, has no meaning. Further, I doubt that WESA takes any risk on this project, and I would wager that BWTR's sales machine begged for, and got, a bone.
BWTR claims that it will be delivered to the site in Q3. Great -- so when will it operate, and when, if ever, will WESA actually pay BWTR any money? Or maybe BWTR will find some excuse for recognizing revenue from the contract, but will book it into their (IMO) phantom "unbilled receivables" account as their contract will prevent them from billing WESA until the system actually works. Notice how BWTR's unbilled receivables account grew by $1m during 1Q08, to $13.8m, while actual (presumably legitimate and collectible) receivables shrunk during the quarter by $0.7m to $2.1m. Gosh, 86% of their receivables are "unbilled" -- that's pretty funky revenue to me. No wonder they burn so much more cash than they book as revenue.
I'm not trying to defend these guys or inflate what they are claiming, or makes excuses for them, or anything else. Someone asked the value of the contract, and I made an estimate of it. My estimate might be high, because I assumed the equipment would run 24/7 for 7 years. You could make a more realistic assumption that the equipment would only run at a 50% duty cycle. If so, cut the value of the water services agreement in half. Will it be profitable? I have no idea. I don't know what they are being paid. Someone asked the value, though, and I think what I wrote represents a fair assessment of the value.
As far as Basin taking all the risk in designing the equipment, that's usually the standard approach in this industry. Very few water purveyors buy a system and take that risk themselves. That risk goes to the company providing the equipment most of the time. Sometimes the water purveyors go to the absolute bottom feeders in the industry (the consulting houses), and the consultant designs a system that the equipment providers bid to. If the system doesn't work, then the buyer (the water company) gets stuck. The consultants are quite slippery as avoiding responsibility in these situations. I'm amazed that any water utility would ever use any consultant. But that's another story for another day.
Please don't assume that I am defending BWTR. I have traded these guys a few times (always long) and I've made money on them, but in no way I am advising purchasing their stock now. My belief is that they are turning around this battleship-in-a-nose-dive situation that Peter Jensen created. The real question is: Can they get the thing right before they run out of cash? I know the earlier CEO too well and I wouldn't take issue with any of the earlier posters who call him a crook. From what I hear, I think the new guy (Miek Stark) is doing the right things.
Regarding my fancy math; well, I didn't think it was that fancy. But I'll take the compliment.
Chill pill for me is appropriate. Apologies, and your civil tone is appreciated. BUT I do see this as a scam, and I see that investors have lost a lot of money on this one, including institutional investors who normally wouldn't, or shouldn't have been caught by something like this.
My reference to your math was this: there is no operating agreement, and consequently, your estimation of the terms and value of an operating agreement is not applicable. It appears, at best, BWTR will have a one time sale of equipment. No recurring revenue. The value of the contract for BWTR, it appears, will be the sale price of the equipment less the cost to design, build, install, start up and test it. Based on your original comment, you estimate a $350k ticket price for the system. Assuming a miracle case contribution margin of 50% (personally, I expect this will be a negative gross margin project for BWTR, as I believe they will have bent over backwards just to register a sale of anything in order to show they are still in business), then BWTR makes $175k on this project. Assuming no commission payout for sales, and no allocation of overhead or fixed costs, then this profit contribution will cover SG&A expenses for slightly less than 3 1/2 days, based on the 1Q08 run rate.
Needless to say, I don't think there is much here for a long side investor.