was never going to work, page-17

Guys, this one is extremely sick. When they say it won't be cashflow positive 'in the short term', that usually means in business parlance that it won't be CF positive for at least 6 months.

Look at the revenues they're generating in August - $25k? That's less than $1k per affiliate. They put this down to the fact that the stores are being slow to clear their existing stock and replace it with the C@ stock, but i doubt such poor figures are fully explained by that. My guess is one or more of the following scenarios is also prevalent:
1) Affiliates are breaching the agreement to take on 50% of their entire stock as C@ stock;
2) C@ haven't been able to deliver the required amount of stock pursuant to the 50% agreement (e.g. they have production issues); or
3) Their range of products is being poorly received by consumers, and therefore turnover and sales is almost non-existent.

When i did the maths off the prospectus, which said that the average optical retailer spends about $111k p.a. on optical stock (and that was in 97-98), i figured, based on that, that C@ would get AT LEAST $40-50k p.a. of sales per store, or about $4k per month, in the affiliate 6 month period. At the moment, they aren't even generating $1k per month per store. And, in my opinion, there's no way such massive underperformance is explained by the fact that the affiliates are taking time to clear out old stock and take on the C@ stock. As mentioned above, i reckon there's 3 obvious scenarios that are happening at the moment that are creating such performance.

Aside from that, another problem is that the health fund deal fell through. That was supposed to be one of the major pieces of impetus to get the affiliates to join as JV partners after the 6-month trial program. So, in 3 months time when the 6 month trial period ends, i hold very grave doubts as to how many of the 28 stores will decide to go on and become JV partners (which requires 80% of their stock be C@ stock). The owners of the 28 stores obviously aren't dummies, and they're going to want the best commercial outcome for their practice, and there's very little to suggest the current agreement they're in with C@ is delivering any benefits at all.

So, even if there is some improvement over the next 3 months, C@ face another massive problem when they try to get the affiliates to renew their licences and become JV partners. This will mean cash flow from January next year is in serious doubt, even if it improves over the next 3 months.

As i said, this one is on life support. A great idea with poor execution is what is going to probably end up sinking this one. I saw over 1/2 a million shares were dumped today as well; i take that as a sign that one of the bigger shareholders has given up. And i can't blame them at all.