Cash sales drop again. 195k in 3 months, very disappointing. Previous quarters sales 448K. 2019 pcp sales $1,150,000. I still find it difficult to comprehend why sales have fallen so far with the type of product that CIO offers. Work from home and USA approach to ignore the virus and keep businesses open does not gel with slowing sales of internet based products.
Bankruptcy in USA of course does not mean cessation of business just a reset.
On a positive note at least Grande Communications seems genuinely viable Grande Communications is available to an estimated 1.1 million people, making it the 16th largest provider of cable broadband in the U.S. by coverage area. ref Wikipedia
Also on a positive note is CIO moving into the mainstream of offering SIM based mobile backup solutions. I personally had this with Telstra for the last 2 years and is a great idea working seamlessly to keep the internet connected. During the quarter, Connected IO entered into an agreement with Grande Communications and its parent company RCN Corporation to begin offering SIM based mobile back-up solution to Grande’s cable customers. The mobile back-up solution will be billed as a monthly subscription with a 1-year or 2-year service agreement. Grande and Connected IO are currently working with several other cable operators and internet service providers on similar offerings and expect to begin field trials with at least two of them in Q3 FY2021.
With the ongoing uncertainty around the continuing impact of the COVID-19 pandemic on the US economy and in particular key CIO customers, the board has commenced a strategic review to investigate opportunities to develop compatible Internet of Things businesses and markets outside of the USA. I am doubtful that the company has the recourses or expertise to be traipsing around the world searching for possible better outcomes than the ones they have been trying to achieve in the USA for the last 5 years or so. This is a speculative move that could prove costly. Tho obviously management sees it as a viable option.
So now we wait for the next 6-12 months hoping that the Saas and mobile backup solutions will grow quickly and change the companies fortunes.
Quarterly Cash Flow Summary 30th June 2020 At the end of the quarter the Company held cash of $710,000. The Company received $448,000 from customers and $254,000 in US Federal Government loan funds. Operating cash outflows for the quarter were mainly associated with product manufacturing and operating costs ($142,000), staff costs ($270,000) and administration and corporate costs ($132,000). The related party payments reported in Item 6.1 of the Appendix 4C relate to executive director remuneration ($29,000) paid during the period.
Quarterly Cash Flow Summary 30th September 2020 At the end of the quarter the Company held cash of $229,000, with $195,000 received from customers. Operating cash outflows for the quarter were mainly associated with product manufacturing and operating costs ($110,000), staff costs ($205,000) and administration and corporate costs ($135,000). The related party payments reported in Item 6.1 of the Appendix 4C relate to executive director remuneration ($40,000) paid during the period.
Going to need some money from somewhere in Q3. Quarterly corporate costs at around $135k and Staff costs of around $200k say on average 250k per quarter for a total of around 350k per qtr total fixed expenses. Sales at a 30% GP margin means CIO needs approx 1200k sales per quarter to break even, thats ignoring the fact expenses will always grow with turnover.
The aim is not necessarily for CIO to be profitable tho as this is a growth company and sales growth is paramount atm. CIO did grow impressively before Covid and has implemented many changes since Mar 2020 to better position the company and its products. 2021 could be a big year for the company if these new directions prove successful.
CIO Price at posting:
2.1¢ Sentiment: Hold Disclosure: Held
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