If you are to use the $595k spend from Q2FY2021 for your estimates - then you do need to take note that that spend included $170k additional spend on rental fleet:
It also included a sizeable step up on product spend from $385 the previous quarter to $535k (3rd party costs which would probably be growing inventory of components).
Both of these "additional spends" against the Covid affected receipts of just $1.1m.
Hence the figure of $595k looks like it may be a maximum, and as the rental income lag catches up with spend during this calendar year, this spend will fall.
In my projections and modelling, continuing these increased spends for projected quarters, but adding in growing receipts from the proceeds of these extra rental units and growing margins, the spend per quarter is similar for Q3FY2021 but then begins to reduce as of Q4FY2021.
Using the Dec 31st 2020 Cash at bank of $2.224m and mapping projected spends and receipts for the CY2021 quarters gives a low of ~$1.3m at end of Q1FY2022 but a marginally cash flow positive Q2FY2022.
The least reliable of these projections to make are the receipts, and the "extra" spend. But extra spend will only happen if the receipts grow so any errors in overestimating receipt growth would be compensated for by less spend.
We can be 100% sure that the company has completed this type of modelling, much more accurately than any of us could. If the situation arises that cash at bank is looking to fall too low, then they are likely to seek more funds. I wouldn't see that a lot would be required, and if it was it would be on the basis of growth beyond expectations. Not a bad situation to go to market with.
I can't speak for other investors, but I have "fully appreciated" the effects on cashflow of the shift towards a higher rental ratio of receipts. Given rentals raise the margins from ~50% to >70%, I couldn't be happier with the implications.
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SP3 Price at posting:
6.8¢ Sentiment: Buy Disclosure: Held
(20min delay)