Ann: Quarterly Activities/Appendix 4C Cash Flow Report, page-8

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Aceboy

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30/01/22

21:43

Post #: 59226663
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Originally posted by LightOnTheHill: ↑

Responding to Aceboy and Farmer Paul’s comments: I’m definitely concerned about their viability. From my quick calculations they need to triple their sales without adding any additional business expenses (except manufacturing) to get in the black. Covid restrictions are probably impacting their business, especially since they sell through agents (Nutrien, Elders, etc). If their reps aren’t ‘front and centre’ with the agent staff, and the agent reps aren’t calling on their clients as frequently, then the agents will default to sell their core product lines (ie, chemical and fertiliser). This is a new product that probably requires significant face time with farmer. They have managed to keep the majority of existing clients and revenue, which is a positive sign. As for the claim of $92 return for each cow, it is insufficient information by itself, because if the farmer has to invest $1000 to get a $92 return it would not be worth their risk. Based on total Mylo sales of $1.666m in the last year, to 61,855 mature cows (the revenue includes calves but they don’t break it out), plus allowing a 33% agent commission, the cost per cow per year is about $40. So a $40 investment by farmer yields a $92 net return (or $130 gross return). That’s more than 3x ROI. It’s a reasonable return but maybe the farmers are struggling to measure it for themselves or the study results are an inflation of real world outcomes. The fact that their customer churn rate isn’t too bad (10%) indicates the current clients are seeing a benefit or strongly suspect there is a benefit. Finally, their cash burn rate without any new product improvements or additional benefits, is relatively high and the SP will require significant discount for a capital raise. I’m tempted to sell only half my stock at a 30% loss so I can keep my toe in the water and hope for a miracle turnaround.

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my biggest concern is the drop in their great land product

it we nt from being their key product to less than $100K in the last quarter

if the business is so dependent on sales staff, then this model is unsustainable

the product should drive repeat business, with or without key personnel

farmers don’t buy because they like you, they buy like every other business owner because it’s a quality product

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