So that is what we’re — that’s the next step here, now that we’ve had a nice move to where we are in. By the way, I think these number of days can drop some more as well. Okay. Well, given that Tech Talk, I know I’m — for many of you I’m speaking boring stuff. Let me talk about cash flow breakeven and profitability. Last quarter, $10 million cash limited talked about it. To get back to $25 million quarterly revenue, that’s $100 million run rate. And I’d be happy as heck right now to have $100 million profitable solar company and it’s very doable. We’re going to need about $11.5 million of working capital. Even with fast cycle time, you do have to have stuff you buy and put on their roof and you’re holding, you’re paying for it until you turn it on and then they get the money from the finance company and start paying you back.
Another thing, being cash shy, we’ve piled up $13 million of accounts payable. Some of it’s not okay. Like the lawyer who checked this pitch today for accuracy, so I didn’t mislead anybody. We owe him money, millions. And he did it, because he likes us and he’s trying to help us. But we’ve got there — so there between those two things, there’s $25 million. In my career I raised billions of dollars so I’ve had single offerings that were the old days right this back, but even then I would have $600 million offering. So this offering is not a big deal. Problem is, if you have somebody saying you are in default of your covenants, and we can call it, and then you call their bluff and say great, come on in, run the company, here are the keys for the front door, then of course, they go well, we will let you work on it for a while, hence my statement I made before.
We’ve got to get past that because nobody’s going to give us money in an offering with the hammer hanging over our head. And that’s where we are right now. So, we need Carlyle and Kline Hill to agree to a debt-to-equity swap. And they made profit on us on the debt significant, because the debts high, high coupon debt. They can roll the whole thing over into equity. And I’ll make money for the shareholders if I’m still around and this company still alive, I am quite convinced we can make money for shareholders. Now this — I wrote this data last night. I wrote this thing last night. And eight minutes after I got it done, the lawyers called me up and said, Kline Hill, we’ve got a deal with Kline Hill. That’s one of the two equity firms. They invest in Complete Solaria with a debt-for-equity swap.
So the deal was 9.8 million shares. That’s 19.9%. The largest amount the Board can authorize without a shareholder vote in return for all of their debt. And they also are going to buy 3.7 million shares of Complete Solaria. So, obviously, I was overjoyed on that. I have Mike Bego here. This is going to be ugly. He’s on a cell phone. He’s the President of Kline Hill. He’s in New York. And Mike, I apologize in advance for all the bad things I said and will say in this talk about New York. Why did you do it? And thank you very much.
Mike Bego: Hey, T.J., first of all, thank you so much for including me on this call. I’m very excited about everything that you’re doing, everything going on at the company. For those who don’t know, Kline Hill Partners, we are a $4 billion diversified secondary fund. We typically provide liquidity to investors and private assets, and we only get directly involved in companies when we see there’s a huge potential upside. And we’re super excited about everything going on at Complete Solaria. And it’s like three things. It’s the Complete Solaria platform, the technology, everything going on at the company, the management team led by T.J., and we’re excited about the unlocked cap table. We’ll talk about it a little in a second.
So with regards to the company, the solar space is huge and expected to grow substantially over the years, and we see their technology and what they can offer to the residential market throughout the U.S. as being a very compelling offering with a substantial upside, and it’s a huge opportunity, and right now, Complete Solaria is very small, so there’s a huge amount of upside there. Second is the management team led by T.J. And the thing there is he’s a guy and they’re a team that thinks big and can execute big. So you’ve got this smaller company, huge opportunity, and people that are there that can execute on a huge amount of growth. And, obviously everybody knows T.J. He’s been like, very successful. He’s been fantastic to work with. Same thing with, like, a very high level of quality across the whole management team.
And then the last part where Kline Hill is coming in a little bit right now is what we’re very excited about is unlocking the capital structure. And so that has been a little bit of a noose around the neck of the company, and that probably has been the number one thing holding the company back over the recent past. And we’re very excited to convert our debt into equity, because we see a lot more upside on the equity from an equity standpoint, as we and Carlyle looking to do this jointly together. So we would be doing this as in when Carlyle also agreeing to come alongside with us on this and they are reasonable very smart investors so we’re really expecting that to be coming out shortly as well. And its — it’s a tremendous opportunity for investors.
And so if you just like stand back again like Complete Solaria industry-leading company, amazing platform, tons of room to grow into the industry. T.J. and his management company thinking big, executing big and than – capital structural laid out this – this massive entire earlier that through company have to be much more nimble, and in this and converting that we’re also excited to putting capital on the company’s. So thank you. Thanks, T.J. Thank you everyone at Complete Solaria. Very excited about the prospect.
T.J. Rodgers: So 11 o’clock last night having gotten the news. I had to figure out what to say that was true — about Kline Hill. And I said thank you Kline — for your confidence in us. I would like to sincerely thank Mike Bego and his team for working with us literally for years in supporting our company. So thanks. Okay. Conclusion. We’re alive and we’re starting to improve. I won’t claim victory yet but we have a different company than the nine months ago. Our fab is doing a lot better, right now. We’ve had a vigorous but painful reorganization. We don’t need any funding until July. And I had this in last night that we have come to terms with two private deck. We have to come to terms with to private equity groups. And I put this when we got one left and if we get that then the — we can go raise money based on merit.
And my last point was last night if we survive our newly lean and fit company can become profitable and grow. So that yes — that’s for a question in case you ask it. That said, we like to take questions. There are electronic texting kind of things.
A – Brian Wuebbels: Thank you. T.J. and thanks everyone for joining the call. We’re going to now move into the Q&A section. So if you have any questions you can go on the link. That’s on the on the webcast and you can type your question in directly. First question, I’ve got here T.J. is from Derek Soderberg from Cantor Fitzgerald. Its says in the event that Carlyle is refusing to convert their debt, what is the most logical way for the company to solve the working capital from and returns to $100 million annual run rate?
T.J. Rodgers: I have to ask other question if that happens in a way that I — let me tell you something. our contracts with Carlyle we have two of the them. These are debt contracts, right? Give me money, give me interest. Then of course there’s covenants one is 84 pages long and one is 55 pages long. I can’t go to the bathroom without calling New York. That isn’t going to happen. So answer number one is you have that structure – and I use the word the in my neck and in prior communications stays in place, I’m gone and I don’t think the company is going to make it, may be it well. Carlyle is a big company. They’ve got a lot of solar companies. Maybe they got a hotdog, They want to come in, get a lot of socket that at less than a buck.
And that would be fine with me. And I do everything in my power to help the guy out because after all I got a bunch of money in the company its not in my interest to do anything negative. The best way is the debt for equity swap assuming you can agree. And that’s a big assumption. But we’ll talk. What I’ve got to be able to do is run the company. Right now, I can’t raise money with equity. I can’t raise money with debt. I can’t sell an asset unless I get written permission and written permission only says now four clause and then a few more pages. And it can’t work that way. That’s got to end. Other than that we will talk. And we’ve — I leave it there. We’ll talk.
Brian Wuebbels: Yes. Thanks T.J. We had another question here. It says their Solaria — Complete Solaria management, under the assumption that the debt to equity swap with Carlyle complete soon, what would be the approximate breakeven revenue? And there is second question as well. We’ll go first.
T.J. Rodgers: All right. So I read that question, my five minutes before showtime here. It turns out obviously as a question ourselves all the time. That’s the question. So I’ll give you this is a this is a large document and I picked up one page. And what it is three parameters that matter; commission percent, gross margin percent – and this is gross margin on the solar commissions is treated separately; and then OpEx. And our OpEx is headed to $3 million next quarter. $3.6 million and more or less than $3 million after that. So, that’s kind of a given. Then this table defines for a matrix of percentages what is our breakeven revenue? So, this says 30% commission, we’re currently 31% and 47% gross margin. Our breakeven revenue $16.6 million.
And that breakeven revenue could be a lower gross margin and lower commission, lower gross margin, lower commissions. Yet it’s quite possible if we work on getting an indigenous order creation effort in the company and we’re paying for costs orders as opposed to the higher profit that we can get down to these levels. Right now, I just showed you 24%, 25% that that is based on $10 million of revenue. We can see how to get into the 40s pretty well. So, the answer to your question is somewhere between $99 million a quarter and the real numbers are here and $16 million is achievable number within a couple of quarters. I don’t know how long it’s going to take to go back from $10 million. I don’t know how much damage has been done, but right now I know this is a robust market for solar.
Let me — I forgot to show you, let me show you this. Okay, this is the graph I showed you. This is inventory and jobs and then it divides that up by where it is. So, this is preconstruction, think of orders. This is post construct in orange and then up here is pending TTO this part turn on. So, this is the systems in and it’s a — and we’ve already been paid for it and we’re waiting to turn it on. And this is a place where when you get in trouble spokes up. So, you see the good old days turned in the not so good old days when that that one bulked up. Okay. So, here’s the order backlog that peaked up when we were getting orders and we couldn’t — and we wanted to fab to move or we couldn’t put them in the fab because the fab is jammed. Noticed what’s happening here, they’re piling up again and this is because we can’t service them.
So, I infer that this means there’s business out there. Utilities are charging more and more. They’re extremely inefficient businesses. People don’t like them. And all you got to do is go put solar on their house and they appreciate it. And the faster you put it on — we keep tracking Net Promoter Score, the faster you put it on, the more they like you. So, the recipe is pretty simple. This little fab right here is complex and it’s kind of obvious, you say well, silicon fab, it’s got equipment, it’s got science and all that. This one’s got 5,000 jurisdictions with 5,000 different sets of rules in it for the lot of people who really don’t like you or solar. And you got to somehow make it happen. And you’ve got to get funding for 7% world. So, this particular problem, although there’s no big technology in it, from a company point of view, is a significant problem that — by the way any companies you see having survived this little go downturn, I think we’re getting near the end.
I think we’ll have better summer. Those are good companies, those are good companies that are well run.
Brian Wuebbels: Thank you T.J. And you answered my second question. So, the next question comes from Thomas Meric at Janney. Using the fab chart on Page 13, will you discuss the improvements in gross margin you realized over the past 12 months.
T.J. Rodgers: Okay, we got to reaffirm from here. We’ll have to bring inside overhead. We obviously track that. What is the record for gross margin?
Unidentified Company Representative: 49%.
T.J. Rodgers: So, the company and one-time slight made 49%. That’s how we chose a 47% gross margin. Right now we’re looking at operational issues and financing issues that don’t get us into the 40s. We can see easily how to get in the 40s. There’s also a tailwind in gross margin. China Inc. has got this little problem. They use slave labor to make silicon and the world doesn’t like it and they shut them down then they move plants to Malaysia and Vietnam to circumvent the shutdown and now there’s circumvention. So, their panels can go to Europe, can’t come to the United States and there’s been a dump panels and the business is going down. There’s been a dump of panels on the market. So, our costs are going to go down, at least for equipment costs.
We also — one of the things we’re learning from [indiscernible] you star to buy stuff. We’re not very good at that. We kind of pay retail and we kind of do adhoc purchasing. Sometimes we do purchasing on the weight of the job and obviously that’s bad. So now we have a — in Indianapolis we’ve got the rental purchasing group. There are pros and we’re going to start driving our costs down. So we’ve got quite a bit of room there to do better. I believe gross margin will get into the 40% range in a couple of quarters. We will go into that. If you notice a fudge, you can always tell me go back here. You can always, okay see, gross margin was 24 despite higher revenue. Q4 forecast is greater than 30%. That’s because I don’t know if my revenue is going to be.
So that’s a guard band a number on what we think we can do. So we think we can get into the mid 30s, but we don’t know. And then the next step after that is, we got to have to get back a little volume. You have amortization of overhead. We amortize OpEx to make operating income, you amortize manufacturing overhead and you’ve got to be pure manufacturing, got a plant. You’ve got all at the amortized manufacturing overhead with revenue that comes through it. So, we are — we’ll have a natural improvement in gross margin just from running more stuff with the same group of people.
Brian Wuebbels: Thank you T.J. The next question comes from Derek Soderberg at Cantor Fitzgerald. We made some final half the workforce here down to 109. Can you talk about the cadence of OpEx from here? Should we continue to expect OpEx from $3.6 million per quarter?
T.J. Rodgers: New CFO?
Brian Wuebbels: So I think T.J. actually answered this question a little bit earlier. Right now, we’re projecting 3.6 million for this coming quarter, Q2. I think you saw from the breakeven chart kind of where we’re headed. We believe we can get this business under $3 million of OpEx in order to be breakeven and at efficiency level that we think makes sense. So that’s our focus and I think to give away a little bit of how much we’ve been focused on this. If you did notice on that breakeven chart that T.J. said that’s Version 4. And I believe the first version that T.J. shared was during our October call where we talked about the Northstar plan Version 1. We’ll give some updates on it in December and we were still on Version 1.
So we have really started to hone in and I wanted to just think Siddarth and the team and [indiscernible] for their help because they’re helping us think differently every day about what’s possible. So that’s where we’re headed. Thanks Derek. The next question is this one out there. Do you see a reverse split coming up to staying compliant?