Because the free float is so small, it is impossible to buy this...

Because the free float is so small, it is impossible to buy this stock in meaningful volumes, but I think the views expressed here are hard to fault.

I spent a few hours recently looking at this company's market positioning, its products, its revenue model and the people who run it.

While it is a widget makers/seller, I found the story hangs together very well and there is a lot to like.

Based on my crude modelling, even if the company's Cost of Doing Business needs to expand to be 50% higher than it is currently, EBIT breakeven is reached at just 3,500 clinics being on board (and that's with only 1 unit per month being sold through each clinic, which doesn't seem to be all that demanding given some of the customer reference-ability that is being demonstrated):



If they are able to jag just a piece of the elephantine US market (the CEO has gone to live there for 3 months to drive the marketing and branding effort) they should be able to get to 5,000 clinics before too long.

Generating $2.5m of EBIT at that point will certainly see AUA having a market value that is meaningfully higher than the current mere $14m.


And if, instead of selling just one unit per month per clinic, if they sell maybe 3 units every two months, the operating profit numbers go crazy.


The biggest risk, as I see it, is not the product quality, nor demand for it, nor execution, but whether or not the company has sufficient funds for the significant working capital pull that is going to occur to facilitate all the envisaged growth.

There's $3.8m Net Cash today, but cit is being consumed at a rate of around $1.0m per quarter.

They are going to be cutting it fine, but I think that the business is rapidly approaching the point at which it is quite easily bankable, in which case recourse to some debt would be the go (maybe $0.75m or $1.0m, max, should do the job), rather than what would be expensive equity capital, unless the share price is a lot higher than it is today.
.