Howdy FHC,BTW - I don't disagree that we have an issue here,...

Howdy FHC,

BTW - I don't disagree that we have an issue here, with revenue.

The company presentation (which along with the 1st MoU) was actually only 6 business days ago, so a bit has happended.

But this post is mainly just my musings about the revenue, or if you like, 'going concern' issue.

So, following the 4C, the CEO presents the company report (a week ago). In the company report it is clearly stated that no material revenue from sales or servicing will arrive for at least 18 months. The company has indicated that not until June next year (end of FY 24) will the company commence significant (not from servicing) revenue generation as follows:

Incorporation of AnteoX into partners’ ecosystem and commencement
of revenues for AnteoX.

• KPI - Commencement of sales to minimum of 1 business partner by

end of FY24.

Entry into a joint development program with one partner for new
product offerings.

• KPI - Commercial agreement with fees for development and

on-going licencing for new product offerings by end FY24.

So, the company roadmap does suggest (as you do) that there is some time to wait for significant revenue.

However, the 4C reflected a 'concern' that ADO incurred a half year loss of $3.5M, and we have $6.5M in the bank. In rough terms, gives us 6 months or so of runway (have not included conversion of ADOA, servicing fees, but also assumed same ATO R&D income / rebate)

The company itself (and auditors) state in the 4C that - "Nevertheless, after taking into account the current financial position of the Group, the Group’s ability to raise further capital, the ability to control costs, and the progress made on exploiting its intellectual property, the Directors have a reasonable expectation that the Group will have adequate resources to fund its future operational requirements and for these reasons they continue to adopt the going concern basis in preparing the financial report".

It is good the Directors are confident, but I guess a combination of all the above statements does raise a legitimate question - "How do we intend to remain a going concern?"

The auditor statement above indicates 3 avenues for us to remain a going concern - (1) CR; (2) Reduce costs; (3) Exploit / sell our IP.

However, we are employng more people (not reducing), buildng a pilot plant, and we have stated we are not commercialising / generating substantial revenue from our IP for around 18 months.

This leads to a reasonable question (as you and many are asking) - 'Where's the money coming from??'.

It appears to most of us there are only really two options - third party funding or a CR.

In short, if it's not a CR, then we require funding from the Government (State or Federal) to just remain a 'going concern'.

In my view, this is a big deal.

It's a big deal (imo) because the level of risk to Government is much greater. As someone who managed funding agreements for Government over a number of years, public servants don't like recommending funding for organisations that, without it, can't be confident of being able to "stand on their own two legs" (so to speak). Because if it fails, and you as a public servant recommended it, that often is career limiting!

Personally -
I am not sure how the options can be in the money if we don't get word of a significant Government grant prior to end of March.
The risk of coverting options for a company that by its own admission has less than 9 months to run (currently) seems high and I would have thought puts mass conversion of options in some jeopardy, in light of what could be quickly followed by a CR.
So I wonder, will a series of non-binding MoU's get us over the line with the public servants who often recommend such funding / grants??.....or will a Minister make a 'captains call' in regard to this current 'Clean Energy' investment stream?

If ADO was in a 'traditional' industry, in its current financial circumstance, I believe we would be shown the door when it comes to Government investment. But we are not in a traditional industry, we are in a fledgling, yet to be defined, industry.
In this context, Governments all over the world, including our own, appear desperate to invest in order to give their country a future footprint in a fledgling industry, which is likely to be the next 'economic / industrial revolution'. All countries see having a role in this next 'revolution' as critical to a country's future economic and social well-being.

So my judgement (which may well turn out to be wrong) is that this Government funding will be treated differently. It is geared to investment in fledgling company's, that by defintiion struggle to generate revenue and are inherently more risky, because that is the stage this industry is currently at.
I think this will be more a political decision, not relying as heavily on the 'traditional' criteria or processes for investment decisions. If Governments want to play in this space at this time, they have to appreciate they need to take on more risk.

If the pendulum does tilt our way (as I'm suggesting) and we recieve the funding soon, it will of course be due to lots of hard work over many years, but more recently I would suggest you could put any success down to the new board, the product awards and these MoU's, which combined...with a sprinkle of luck and good timing......may just get us there.

Just to share my musings and opinion (only)....and because if we don't get the Government funding, and we end up relying on a CR.......... well!!!!..........I best leave that for a future post.

Good luck!

EB