Doing the numbers, page-11

In response to @Rokewa from the media thread:

Rokewa:
Hi Kicks

If you refer to my previous post on the Govt grant, I concur that it is an integral part of the cash inflow / outflow equation.

That said, the R& D spend is generally spread across each quarter. The Govt grant hits the quarterly in one quarter. All I am suggesting is divide the inflow by 4 and redo the nett outflow calc for each quarter. You will quickly see that what appears favourable as per the latest quarterly, is in reality a deterioration vs the Jan to Mar quarter.

Similarly, when we talk parabolic growth, I am simply suggesting that you may condsider it differently if viewed for each product ( IQ Buds vs Boost). Know we don’t get to see the splits. We do however know that a part of the receipts stemmed from a portion of 2500 units of Boosts. We also know that even at the 40 % discount price, the Boosts sales receipt are likely to carry a higher unit price. With this as context, questionable whether we are talking ‘parabolic’.

Be interested to hear your educated guess on how many units sits behind the cash receipts number for the Apr to June QTR.

This picture will be a lot clearer when we receive the FYE result and the accompanying financials.

Rokewa

Response:

With regards the R&D refund of $1.2m I have done even better than you ask and apportioned it quarterly with respect to what was spent in that quarter in the qualifying areas (Research 1.2a and IP 2.1d).

But having done that, I am not clear on what you "quickly see" as "a deterioration vs the Jan to Mar quarter" .
The receipts have clearly increased by 32% - that can not be argued as a deterioration.

If you then define the increase in overall outflows as deterioration, I would have to argue that is far too simplistic.

Why did the outflows increase this most recent quarter? What went up and why?
Research - up from $220k to $473K - would that not be for the two new products - and hence likely to be non-continuing?
IP - up from $1.1m to 1.6m - once again, two new products being developed - also non-continuing?
Product - up from $414K to $881K - two products rather than one one with no prior stock - and how much is inventory still?

So yes - outflows went up from $2.9m to $4.2m (as detailed in the previous paragraph).  This is the increased gap between the two points at time = 6 in the graph above. But you would be hard pressed to make an argument for what constituted these increased outflows as continuing. In fact last quarters outflows increase followed two consecutive quarters of decrease (t = 4 and t = 5) as efficiencies and economies of scale kicked in.

Against this one off, explainable, increase in outflows its not difficult to argue that receipts are on a steady increase - whether you think its linear, parabolic or exponential.

And hence, when you smooth the data for differences in quarterly conditions over the 6 quarters of continuous data you get the situation I've modelled in the OP. One in which faster growing receipts will eventually exceed growing outflows. The models I've used show that happening in about two years. It could be more, it could be less. Given the company is only 2.5 years old and only has 6 quarters of continuous reporting, cash-flow positive in two more years would be an enviable result for a tech start up. What do you think the SP will be when Nuheara reports its first quarter of cash-flow positive?

And finally, I haven't responded to your discussion of separating out products as I think that's a moot point. If there are efficiencies to be made by product control, I will be happy for Nuheara to do that based on their data - we don't have the data. Similar for unit numbers.