Ann: Fluence June 2019 Quarterly Report Business Update, page-118

@sell

This is choosing to look at events of the last 3 months rather than looking at history in context.

Phoslock had been listed since 2002, hit a high of .50 in 2007, then hit a low of 0.03 in both 2014 and 2015. If you had bought in 2015 you would be very happy today, if you had bought in 2007, in 2014 you would have been very unhappy.
Their partnering in China has been very strategic since 2017, but note that they only have 1 significant project in China that has been announced (using Phoslock) that has been in trial since April.
They will be a success, but to date, it has been a very long journey as a listed entity (17 years!)



At the point of merger in mid 2017, EMC were burning around $5 million in cash per quarter (on revenues of $250k), and they had hardly even started building up their Chinese sales and production force. At 30th June 2017, there was $15.3 million AUD in the bank. If they had not merged, this is what the financial situation COULD have looked like (very rough, do not quote).

If cashburn was to stay around $5 mill per quarter:
End Sept 2017 - $10.3 mill
End Dec 2017 - $5.3 mill
Jan 2018 - Dilutive capital raise (say $10m AUD)
End March 2018 - $10.3 mill
End June 2018 - $5.3 mill
July 2018 - Dilutive capital raise (say $10m AUD).
Jinzi projects to date 7900 m3/d = approx $3 mill AUD
End Sept 2018 - $13.3 mill
End Dec 2018 - $8.3 mill
At this point iTEST kicks in with about $10m
End March 2019 - $13.3 mill
End June 2019 - $8.3 mill
Further iTEST sales and potential provincial partnerships.
Further cash raise required?

The above is very rough and does not take everything into account. Would we have won the same amount of projects, would we have hired the same people, would we have gone into different markets. Would Eytan Levy have stayed on as CEO or would we have a completely different leader? Would cashburn have increased with increased staff and production in China? If the company had not merged and had stayed as Emefcy, it would not have been smooth sailing and I would assume that there would have been at least 2 dilutive capital raises. Also there would have been a lack of significant worldwide project wins just looking at MABR and SUBRE. Shareholders would have been very unhappy until up until the point of the iTEST partnership (if that occurred under Emefcy leadership).

With the combination of RWL and Emefcy into Fluence, we are still only forecast to burn $6m USD in Q3. The previous high cashburn of 2018 was down to the PDVSA project in Venezuela being prepaid, so no cash payments were coming in for that work, skewing quarterly reports to have a higher appearance of cashburn than if there had been quarterly payments from PDVSA instead. We have the upside of revenue from custom engineered desalination and waste to energy projects coming in Q3, Q4 and 2020.

Although this quarterly was relatively disappointing, Q4 is shaping up to be very interesting with China appearing to ramp up in MABR opportunities for revenue recognition in 2020. If guidance is met, then 2020 we should see some of the share price momentum that Phoslock have had in recent years. For mine Fluence is still an interesting company to be invested in, for the patient.