There were two issue that I needed to get resolved in my mind before deciding to buy more ADOO's:
1. I had concern over the capital needs of the company and whether there was a risk that more shares would be issued onto the market at a discount. The company raised about $1.2m from the entitlement issue at 0.6 cents (seems ridiculous now but they had no choice but to go to the market last year when cash reserves were at critical levels) and at the same time issued options exercisable at 1.2 cents. That raising combined with funds from the exercisiong of options should be enough to see the company through to a self sustaining cash flow. Box ticked.
2. Slide 25 of last year's AGM presentation (See ASX announcement 23rd of November, 2009) provides some indications as to the revenue potential for the company. Just to clarify these figures represent the total market and as such ADO hopes to achieve a significant share of this target. What I would say is that if the technology is "game changing" for the industry, as I believe it is, then once a few participants start using Mix&Gro, there will be little but for other players to act also. What is of significance is that all major players are evaluating the technology with the first move having been made by Bang. I look forward to hearing more on that front soon.
Anyway one more commercial agreement and I'll be seriously considering addign ADO onto my strategic investment list which doesn't contain many companies. I'll post more over coming weeks.
