Ann: Second Quarter Activity Report, page-17

this is a very interesting and probably one of the most promising quarterly reports with sound fundamentals that I have seen from this company since my first investment back in April 2016. There are so many irons in the fire - new contractors starting to use the product in a whole range of different uses - roads, bridges, buildings, slabs, ports, shotcreting - in large scale and small scale, and across a variety of climates and geographical regions. Trials are starting to produce commercial orders. The table below compares revenue and costs for both quarters of this FY, and the second table projects out over the next 4 quarters.

		Quarter 1 $k	Quarter 2 $k	% difference
1	Revenue	458	1,135	148%
2	Production, operating costs	434	604	39%
3	Marketing	81	76	-6%
4	R&D	429	371	-14%
5	Staff	1325	1,310	-1%
6	Corporate	222	259	17%
7	Financing	82	147	79%

Assuming production and operating costs rise in line with revenue growth, and assuming that all other costs are fixed, and assuming that revenue growth continues at 50% per quarter, then the table below projects cash flows per quarter, and shows break even could be reached within the next 3 quarters, and the cash balance declines to a minimum of just over $2.5m before a cash surplus starts building up our cash reserves. This shows we may never need a capital raising again just to sustain the company on life support. The next capital raising may be in a couple of years to expand our production capacity at something well above 10c.

		Q 2 20/21	Q3 20/21	Q4 20/21	Q1 21/22	Q2 21/22
1	qtr revenue growth		+50%	+50%	+50%	+50%
2	revenue $k	1,135	1,702	2,553	3,830	5,745
3	operating costs $k	604	906	1,359	2,038	3,057
4	fixed costs $k	2,163	2,163	2,163	2,163	2,163
5	surplus/deficit $k	-1,632	-1,366	-968	-371	+525
6	cash balance	5,498	4,131	3,163	2,792	3,317

I don't think that the assumption of revenue growth of 50% qtr on qtr is too heroic at this stage, considering the prospect of more commercial orders coming in from a growing number of smaller contractors in the private building and construction sector in the USA, the prospect of growing public sector expenditure on roads and bridges in Georgia and Colorado at the very least, the prospect of rapidly growing sales in India and Australia, and the pressure in India to adopt cleaner fuel via Optiblend. Those are the fundamentals.

But above all this I believe the real blue sky in Eden lies in its hydrogen technology.

Any comments, criticisms, messages of encouragement and moral support?

Status changed from hold to hold tightly