On analysis of the income statement, MTT owners have invested £50K as initial seed capital for the company. They had managed to secure £400K loan from bank for the long-term. Apart from this they have managed to obtain £300K using crowd funding techniques. It is very difficult for start-up ventures to survive in the first year. The company has managed to survive in the first year. This is an encouraging factor for the company. For the fiscal year 2015, MTT did achieve revenue of £936K in the first year of trading through sales of their flagship product. However in spite of the sales the company posted it has posted a net loss of £674K. In the income statement, company has stated they will post profits and increase income for the next few years.
In 2016, MTT has planned to develop a new product. Bring in more production in house and establish global marketing campaigns. They plan to massively expand operations throughout the spectrum and become strong market players. VCI should question MTT about the funds that they would require for future. In the cash flow statement there is only mention of how the company will manage money for supply chain, distribution and the sales of the product. There is only mention of cash flow and income statement. The company should request about how the equity change will affect the process of the company. The company has a solid innovative idea and a market base for the product. Nevertheless the company should also factor in other costs involved for this process. This makes investing in the company a high risk.
This process of VCI investing in MTT is a high risk/high investment situation. MTT needs to address a number of inherent issues. Nevertheless it should not be forgotten that the product has a number of positive factors that will ensure that there will be sales and market for the product. It can be forecasted that the company has a high probability of success in the future.