qrs-connecting the dots??

Hi All,

In an attempt to try and “Connect the Dots” with the bits and pieces that have been fed to us to see what has been driving the SP this last week, I have gone back and re-read and compared the ASX announcement, dated 16/08/2004, and the interview of Kevin Russeth by Professional Security, dated 23/07/2004.

And this also may explain why QRS stated that they had in excess of $2.2 million as at 09/08/2004 in response the ASX Query – Appendix 4C.

KR stated in his Professional Security interview, dated 23/07/2004, that QRS would deliver it’s C3-03 state of the art Quadrupole Resonance (QR) system to the Original Equipment Manufacturers (OEM) marketplace in the third quarter of 2004. And now on the 16/08/2004 QRS announces that its first commercial product is now available to the market.

Now combining these two statements together it could be concluded that QRS is on schedule of delivering it’s C3-03 state of the art Quadrupole Resonance (QR) system to the Original Equipment Manufacturers (OEM) marketplace. See definition of (OEM) below.

Also combining these two documents together it could explain why QRS responded to the ASX Query – Appendix 4C that they had in excess of $2.2 million as at 09/08/2004. It is possible then to conclude from this statement that QRS may have already delivered one or more of these systems to one or more of the Original Equipment Manufacturers (OEM). See my hypothetical cash flow reconciliation between 01/07/2004 and 09/08/2004. See below.

Cheers,
Brantley

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In Kevin Russeth Professional Security interview he states:

http://www.professionalsecurity.co.uk/newsdetails.aspx?NewsArticleID=1999&imgID=1

//”QRSciences says it will deliver its C3-03 state of the art Quadrupole Resonance (QR) system to the Original Equipment Manufacturers (OEM) marketplace in the third quarter of 2004. The C3-03 comprises a fully functional QR assembly including coil, transmit and receive electronics, signal acquisition, signal processing and control subsystems suitable for OEM integration with line scan X-ray baggage scanner units.” //

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QUOTE

And in the ASX announcement 16/08/2004 it states that:

//”QR Sciences Limited, a world leader in advanced explosive detection today announces that its first commercial product is now available to the market. The Company’s product is a state of the art Nuclear Quadrupole Resonance (NQR) system, which scans for a range of previously difficult to detect explosives.

The NQR system comprises a functional QR assembly including coil, transmit and receive electronics, signal acquisition, signal processing and control subsystems and operates as a stand-alone unit with its own user interface. The device is suitable for integration with existing systems and new screening products currently under development.//
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QUOTE

Definition of Original Equipment Manufacturers (OEM):

http://www.webopedia.com/TERM/O/OEM.html

OEM
Last modified: Friday, July 30, 2004

Short for original equipment manufacturer, which is a misleading term for a company that has a special relationship with computer producers. OEMs buy computers in bulk and customize them for a particular application. They then sell the customized computer under their own name. The term is really a misnomer because OEMs are not the original manufacturers -- they are the customizers.
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Hypothetical cash flow reconciliation between 01/07/2004 and 09/08/2004:

Due to the fact that the Company still did not report what subsequent events took place we still do not know what actually happened. All we can do is make some assumptions:

1) They rec'd Revenue;

2) They drew on a Line Of Credit;

3) They issued additional shares that they will get approval on later;

4) and.......Who knows?


What we know:

1) Net operating cash flows as at 30/06/04 Current quarter Cash Burn/Mo. -$574.0k
Year to date Cash Burn/Mo. -$448.6k

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2) Based on number 1 and using 39 days since the Q report that would mean they would have Burned:

a) At a Cash Burn/Mo. of $574.0k ($19.13k/Day) they would have Burned $746.07k

b) At a Cash Burn/Mo. of $448.6k ($14.95k/Day) they would have Burned $583.05k

c) At an Average Cash Burn/Mo. of $511k ($17.03k/Day) they would have Burned $664.30k

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3) Based on number 2 without any cash in-flow their cash account as at 09/08/04 would be approx.:

a) Cash as at 30/06/04 $2.706 million less $746.07k from 2.a above would equal $1.960 million

b) Cash as at 30/06/04 $2.706 million less $583.05k from 2.b above would equal $2.123 million

c) Cash as at 30/06/04 $2.706 million less $664.3k from 2.c above would equal $2.040 million

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4) Now based on number 3 and the Company stating that they have in excess of AUD$2.2 million as at
09/08/04 that would mean that the Company over the last 39 days had a NET and Gross Cash In-Flow of:

a) $2.2 million less 3.a above of $1.960 million would equal NET Cash In-Flow of $240K or

A Gross Cash In-Flow of $986K (2.a $746.07k plus NET Cash In-Flow of $240K = $986k)

b) $2.2 million less 3.b above of $2.123 million would equal NET Cash In-Flow of $77K or

A Gross Cash In-Flow of $660K (2.b $583k plus NET Cash In-Flow of $77K = $660k)

c) $2.2 million less 3.c above of $2.040 million would equal NET Cash In-Flow of $160K or

A Gross Cash In-Flow of $824K (2.c $664k plus NET Cash In-Flow of $160K = $824k)
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