Hi Guys Many thanks to musky45 to clarify the difference between...

Hi Guys

Many thanks to musky45 to clarify the difference between cash and accrual accounting and its implication for revenue recognition. I would like to add one extra point here. The company did release quarterly "accrured" revenue figure in the current financial year.

In Sep 15 4C: the quarterly accrual revenue was $3.03 million and the cash revenue (receipts) was $2.88 million.
In Dec 15 4C: the quarterly accrual revenue was $3.47 million ($6.5-$3.03 million) and the cash revenue (receipts) was $3.48 million.

Many thanks to Haplo for his table and revenue forecast analysis. The below is my thoughts and analysis.

First, the relationship between Cardiocel revenue and the total number of centres. The following is from company's quarterly 4C for the last 4 quarters.

1. Dec 15: total number of centres are 135 and the estimated quarterly Cardiocel sales is $1.2-$1.3 million.
2. Sep 15: total number of centres are 110 and the estimated quarterly Cardiocel sales is $1-$1.1 million.
3. Jun 15: total number of centres are 90 and the estimated quarterly Cardiocel sales is $0.8-$0.9 million.
4. Mar 15: total number of centres are 60 and the estimated quarterly Cardiocel sales is $0.7-$0.8 million.

The pattern I got: the quarterly Cardiocel revenue will be roughly equal to the total number of centres at the end of that quarter * 10000.

So for Mar 16 quarter, the total number of centres are 145 so the estimated quarterly Cardiocel Revenue will be $1.4-1.5 million. HOWEVER, since the company has said that it has shifted the focus from adding more centres to increasing the per center usage. I will assume that the per centre usage in Mar 16 has increased by 10-20%.That will give us $1.45-1.8 million. Adding another 2-2.2 million from other sales it will give our Mar 16 quarter revenue of $3.45-4 million.

Let's take the median figure of $3.7 million.

Adding sales of new product (Coroneo products) in current June quarter and nature continuing revenue growth of Cardiocel, our June 16 quarter sales should exceed $4 million.

In FY16/17, if the company do launch its new bio-implant product Vascucel in Sep 16 quarter, the whole bio-implant revenue growth will be turbo-charged and we should be able to see $5 million per quarter by Calendar year end.

Secondly, the cash burn issue.

If we turn to page 17 of the half yearly report. The loss associated with bio-implant division is $5.4 million. Let's also allocate at least half of the Corporate loss and whole bio-implant research loss (regenerative R&D cost) to it and what do we get? The bio-implant division loss is close to $9.5 million which is more than 70% of the total loss.

So really, the cash burn issue is caused by non-production related expenses associated with bio-implant division. It had nothing to do with Vaccine division. The cash burn in that division is quite normal.

The cost control measure, thus, in my opinion, will target these costs as well and we shall see the initial result in Mar 16 quarter 4C.

In my opinion, the share price will reach $3 plus by calendar year end if all the following milestones are reached:

1. Quarterly sales revenue reach $5 million.
2. Company do indeed reduce the cash burn rate associated with non-production related cost.
3. The un-blinded phase II data show us the great result (e.g. Vaccine achieve close to 100% viral shredding for HSV-2 infected patients).

If No 3 is achieved, A lucrative partnership deal will be a timing issue only by then.

Cheers.