Hi, Looking more closely at the figures, it turns out that the...

Hi,

Looking more closely at the figures, it turns out that the delay in shifting manufacturing to China has really hurt them this half year.

On sales of $10.58 million, the gross margin was only 36% i.e. $3.8088 million.

If they had been able to transition to China and achieve the stated 55% gross margin then
it would have been $10.58 *0.55= $5.819 million

i.e. approx. $2 million difference.

This would have put them almost cash flow neutral at operational level (operational level cash outflow was - $2.43 million after taking on more staff and sales staff for the future).

So apart from sales revenue, the company has to keep an eye on the manufacturing costs to bring the company into cash flow +ve status.

Their prediction of cash flow positive in Q4 will ring a bell when they officially announce the transition to China for manufacturing (along with Gross margin achievements).