Ann: Quarterly Report and Appendix 4C, page-11

Well of course it looks bad if you completely ignore revenue. Let's do some rough math. Based on previous quarters they've made about 30-40% more revenue than operating costs. Applying that to this quarter, we should have got around $14.5m (instead of $8m). So we're $6.5m short, likely just due to unsold inventory waiting for a change in supply contracts. Looking to the next quarter, based on that 30-40% markup, we could expect about $13.5m revenue. Plus what we were missing this quarter, assuming the sales were just delayed, that's $20m revenue. Balanced with the $25m expenditure that's $5m, leaving us with a cash position of around $22m. That's a cash burn of about $10m a quarter. Plenty for Q3 (and Q4).

The $5m of capital expenditure and $3m of marketing per quarter (along with increasing staff costs) are there to expand the business. Without those extra costs the underlying business remains roughly break even. They have enough cash for the rest of the year, which is plenty of time for all these extra expenses to start delivering to the bottom line.

These are all just rough estimates, but the point is the cash position is fine. If sales have fallen off (if that inventory is stuff that just can't be sold) or if all these business expanding expenses end up doing nothing, then things might be tricky. They'll need to raise capital and change things up. But for now, everything seems to be progressing exactly as planned. Which is more than I can say of any other speculative stock I've bought...