@Boroboy,Thanks for the analysis and do appreciate checking the...

@Boroboy,

Thanks for the analysis and do appreciate checking the accounts over.

I think you are quite right to point out that according the that accounts, the cash out flow from operating and investing activities is about $9.8m and if we add the out flow on lease payment, the cash flow loss is about $11.4m. This compares to the accounting losses of $16.3m or if we includes the exchange differences on translation of foreign operation of a net loss of $18.5m, I can conclude that quite a bit of the losses are non cash expenses.

Still on cash requirements, I think this year's cash reserve needs is roughly this formula:

EBITDA - Research and development expenses - Finance cost - Other losses = Cash requirement outside EBITDA operations

While R&D and Finance expenses would be cash items in general, the Other losses may have some non cash items. So yes, with a forecasted EBITDA of $4m, that takes care of the Finance expenses, this year's cash flow deficit is somewhere around the R&D expenses plus the Other losses, and in my very rough estimate, we may burn $6-7m of cash.

On the topic of Deferred revenue, my rough take on the PVDSA portion is roughly (Deferred revenue - Long-term deposits - an estimation of deposit by our customers on our equipment sales). From memory, the PVDSA item was a Venezuelan project that RWL had received a payment of the US$95m through our Argentinean office. The ongoing sanction by USA on Venezuela made the project unable to proceed, the deferred revenue stayed in our books, though in current liability section, it is still not as current as what it appears.

So with that in perspective, our balance sheet is not quite overstretched yet. With that $31m cash available, we should be able to meet the cash shortfall this year. If we are able to achieve a EBITDA of $10m in hopefully 2024, we will be breathing easily. By then, even if Venezuela and USA become friends again, the deferred revenue will not be a big issue.

What I think that may happen, is not a share issue for cash, but a share issue for acquisition. Because of forecasted EBITDA of $4m, we may still be experiencing a net loss of $5-9m. Our total equity of $2.9m will turn negative when it happens. So the way to mitigate it is to boost assets and boost contributed equity. If it is to issue shares for acquisition, it make sense for us to issue when the price is at a much higher level. A CR will be subjected to the bloodsucker institutions pressing the sp down for a quick trade.

All in my opinion.