announcement out, page-63

This is a company going about its business in a positive, strategic way. In conjunction with the strategic review, and in the mid to longer term view, it is very positive.

Thisis my take on the various components of the update:


Revenues

Revenues anticipated to increase 100% in the first half 2008 (up from $296,000 to $600,000) based just on sales growth of existing products (including Oraline in restricted markets).

This is encouraging organic growth and it is important to note that it includes nothing from:

1.Possible substantial contributions (late in the first half) from the probable Mexican schools testing ramp-up (eg after pilot studies)
2.new initiatives under development - new urine product joint venture (Bioscreens), China, Russia. Clearly these have the potential to be substantial – and should see significant growth in the second half.


Product development/innovation
.
1. Bioscreens joint venture – commence 3rd Qtr (with revenues substantially higher than the notional contract figures provided)
2.V isualine re-processing to reposition in the market place (This is completely new to me – and further evidence that the company has a strong innovatory culture)
3. Oraline 8 (interesting to see this ‘sneak’ into the update. No explanation so possibly a mistake. People should take the opportunity now to ask the company what this involves. It is likely to be the biggest thing that SBN ever does as it entails cutting edge technology for roadside testing – and is only a few months from its final form. Possibly linked to the decision to delay the additional studies for Oraline iv FDA clearance)


Oraline iv

Totally irrespective of the delayed studies for FDA clearance (which only affects US workplace markets), Oraline iv should be going gangbusters by the end of this year.

We have, for example, the following EXCITING developments:

1. Certain selection of Oraline as the preferred device for testing in Mexico – which gives it a massive advantage for take-up in the full program ramp-up, expected some time after May,
2. Very nice progress in China – with testing commenced in 15 cities (even ahead of Mexico at this stage!) and commencement of factory fit out/tooling up to begin soon (that sort of commitment says a lot about where the joint venture partner is taking this – and quickly!)
3. Russian joint venture – nothing new here as recently announced – but this is a huge illicit drugs market (including the whole of E Europe as well as Russia) and the Russian Government is already adopting policies to mandate testing (The experience in Mexican schools will give great leverage into these markets).

Shockrounds

Interesting to me that this showed up prominently in the update. Not mentioned at all in the October update. Possibly suggests negotiations are under way to sell the patents. This has the potential to provide the company with a substantial cash injection ($2m??) which could contribute to the mooted production expansion activities in the 2nd half.

Communications

The commitments to quarterly updates and the launch of the new website next month are both positives.

Capital raisings

These are substantially geared to new product development and capacity expansion and are normal and sensible (given the rapidly expanding markets for SBN’s technologies)


We would all wish things to happen a bit more quickly sometimes, but for those who can see the ‘wood for the trees’ SBN is an increasingly exciting prospect.

I am particularly excited about the near-term Oraline iv prospects (in Mexico and China – and later – in Russia) and the further development of Oraline 8 (perhaps the real biggy! – and sooner than many expect – my prediction is a highlight in the next Quarterly or certainly the one after that).

Other initiatives - urine device developments and marketing, the securing of patent integrity (via the Avitar settlement) and the Shockrounds divestment (perhaps close to finalisation) are also interesting and important prospects to follow.

Not to mention the new ‘golden boy’, Jack Kerins, who in just a few months in the job has already generated sufficient sales traction amongst existing products to have the company’s conservative bean counters predict a 100% increase in half-year revenues in the first half 2008 (which is certain to do much more in the 2nd half with China and new urine products (certainly) and Mexico (possibly) generating substantial revenues.

So, in my view, onwards and upwards from here.