Ann: June Quarterly Activity and Cashflow Report, page-25

The derma sales increased approximately 9%. It is good to see it is going in this direction and possibly with a full quarter at Harvey Nichols we may see it increase further. However, it is a piddly small amount for the company and the big picture is that it needs to increase revenues to become self sustaining. Derma is not going to achieve this if you reduce spending on advertising up 30%. It is a conundrum that it is not earning enough yet they can’t spend money to earn more because they are focussed on pharma. Here is the reason to sell this side of the business.
Nutraceuticals is confirmed to be available. Revenues can grow from here however without promotion how will it grow? They will need to spend on advertising to make people aware.
Do they have the cash to spend that money? Possible, while they have 9.9 million over half of that is already allotted to Malta. Leaving 4.9 million. Given they are spending 1.4 million each quarter (a good thing that this has remained stable) that is approximately 3 quarters. So expect a cash raise early 2019.
Interestingly operational costs doubled and there seems to be a purchase of $300 000 in relation to that. What that is related to I am unsure however that is a significant investment in some aspect of the business.
They are keeping control of costs, operational costs are down as are staff and admin costs. That’s a double edges sword because you want this kept under control but increase staff costs can mean increased employment due to increased revenue.
This is still two quarter away from revenues increasing significantly. Cannepil will be the first significant revenues available to the company and that is not due until later this year.
Malta will be interesting to see how quickly they are able to construct the facility.
Finally some movement on the RMIT partnership. I know that one of the criteria for the MM license is to have a “secured” facility. I was puzzled as to how they could get a license without announcing where this would be. It seems that it is being finalised. The focus on this in regards to the two cancers is potentially a very big deal.
The app is an interesting development and a little left field. Interesting to see where that goes.
The new Zealand deal is another left field development or maybe I missed it. It is kind of irrelevant until all legislation is sorted.
Varm Cosmo, it is pretty clear that the boards management is running thin however it is better to use a law suit as a last resort. I expect that it may move to some kind of settlement. Varm Cosmo says here is 2 million, lets not go to lawyers and end deal!
Current sell off is an overreaction. It is the next six to nine months were the business will turn into a revenue maker. Sellers are undervaluing the GMP certification and losing patience in Varm Cosmo. Creates a further buying opportunity just where will it bottom??