Ann: September 2015 Quarterly Report and Appendix 4C, page-29

Hi 101,

I assume the reference to people being concerned about them only spending $950k on raw material and manufacturing is aimed at me so I will expand my thinking.

Payment terms to suppliers is unlikely to change quarter on quarter, let me know if you disagree with this?

The previous quarter they spent roughly $1.4m on raw materials and manufacturing, that is over 50% more than this quarter. The suppliers would have been paid on the same terms in that quarter so it should be like for like.

If sales are doubling and purchase of raw materials are falling then something doesn't add up, if you have an explanation I am keen to hear it (I mean this sincerely). The only explanation I can come to is that they are drawing down inventories, there are reasons to do this, some bad, some good.

Everything I know suggests if you are truely ramping up sales then you should see it come through COGS first, perhaps I am missing something.

KB