Ann: Appendix 4E and Annual Report, page-7

Well, August sure is a great month - the numbers come out and there's nowhere to hide.

Some interesting things in this report, and I don't mean the words:

• Tony took home almost $360,000 this year, or over 5x as much revenue as the company generated. Last year he got almost $450,000. Nice gig if you can get it.
• FY21 Revenue of just under $70,000. There's lots of talk of "potential revenue" on these threads, but that "potential" doesn't pay the bills.
• Net income loss of ($6,774,495)
• Cash on hand at 30 June of $6,587,434
• Operating cash expenses of ($5,664,212) and even that is being offset by R&D grants etc - without that, actual cash paid to suppliers and employees was over ($7,000,000).

Seriously, how are companies like this (and I include their immediate peer Respiri here) even operating? Simple answer: other people's money. RAP raised capital of $5,500,000 and a further $1,525,000 came from options. I always enjoy reading the 'going concern' part of the report. This one was insightful:

Whilst the Group continues to generate operating losses and net cash out flows from operations, the Group’s viability is dependent on cash inflows from commercialisation of its products, capital raising or other funding arrangement. The Directors believe that the Group has been successful in building a long-term business founded on strong technology. If the Group is unable to manage cash inflows and outflows at amounts as necessary to meet future operating plans, there is a material uncertainty whether the Group will be able to continue as a going concern. The Directors are confident that they will be able to generate cash flows that will provide sufficient funding to enable the group to continue to be able to pay its liabilities as and when it falls due for a period in excess of 12months from the date the financial report has been signed. Based on the cash flow forecasts and other factors referred to above, the directors are satisfied that the going concern basis of preparation is appropriate.

Just to be clear on the highlighted part, are the directors actually suggesting that they will be generating cash flows from something other than going cap-in-hand to shareholders again? This year they raised $7,025,000 in cap raises and options, and spent almost all of it on payments to suppliers and employees. If they run exactly the same business model again, they need a 10,000% improvement on FY21 revenue.

OK, credit to RAP for releasing their report before the market opened (not something that RSH seem able to manage these days). Plus, no change to the SP today - so the market is already anticipating the inevitable capital raise. But still - would you want to be giving them your hard-earned capital, so they can burn through it for another year? This thing needs revenue, and fast. I can't understand how there's any competition between holders of RAP and RSH - reading their reports, they're both as bad as each other. The only difference is RSH is somehow worth $26m more. Both of them, for their relative size, are cash-burning machines. One wonders how long it will last.