My take on the margins, and has been highlighted by the company, are that customer orders are running at 30% margins but they are not including trials in this margin calculation. As per the news letters, they have been conducting large scale trials (at cost or gratis). Alexicool only had its first commercial order in October and is now in 9 different mattress brands, included in that is a tent trial, all the other scale up trials and I am also assuming that any licence deals that are currently being negotiated would also need some expenditure on the chemistry and scale up to prove it is worth while for the licensee. If you take into account the time lag from purchase of raw materials to invoicing the client, the massive ramp up of Alexicool from $0 in sep to $1.5M in the last quarter (so $6Mpa on bedding alone and expanding) 900% increase this half of FR & auxiliary chemistry, this all takes trials, I can easily see why the cost of sales and revenues are running at the same level for this half. I am not saying it has been an easy ride, compounded with IMO excessive salary packages for the fundamentals being released by the company and the SP getting away from itself early on, but now there is proof the company has traction and will hopefully convert to the SP very soon.
Add to My Watchlist
What is My Watchlist?
