After speaking with management, I would conclude that the...

After speaking with management, I would conclude that the company is more likely to take on debt than equity funding at this point in time. [My take is that debt is preferable due to the high cost of capital to raise funding through equity issue at a depressed share price].
I took some other key points away from these conversations also which I will cover below:

Inflation

Spectur's design, manufacturing, deployment and maintenance of it's security solutions is a rather labour-intensive operation which can be supported by a simple analysis of the cost base.

On a cash basis, staff costs typically represent over >50% of [cash] Operating expenditure per quarter. [see below].

Given the condition of Australia's economy and particularly unemployment and the labour market, there is a strong demand for skilled labour to which many businesses are suffering higher wage costs. Spectur employs skilled staff such as data/IT engineers [to code software], tradies/technicians [to deploy/maintain cameras] and salespeople [to sell product]. I'd take a guess and suggest that the company is and will continue to suffer on the cost front from a tight labour market.

A quick check of job ads helps support the above. - https://www.seek.com.au/spectur-jobs




Further on the inflation front, Spectur has flagged that they are experiencing elevated input costs which is putting pressure on margins.



In terms of increasing prices to offset these rises, the company has been engaging in some re-pricing, however this tends to be every 6 months and seemingly will not match the increase in cost inputs in the short-term as management flagged the need to keep health relationships with customers. It would suggest to me that the downward pressure on margins will continue for the time being.

Revenue Growth

Management flagged that the company is on track for $6m in sales for the year. Given that they achieved $2.9m in DH21 it implies a relatively flat figure of $3.1m for JH22.

Management also noted that they are running at 55-58% recurring/subscription revenue which generates a gross margin of some 70%. We can expect a result of $2.5m in gross profit for FY2022 on these assumptions.

I came away from these conversations still envisioning a wide range of outcomes for the company in the medium term. Until it becomes more certain what the companies strategical focuses are, and how Spectur gets to a financially self-sustaining position, I simply cannot be a holder of shares.