Floating some thoughts, page-19

The drop in share price almost on a daily basis is so frustrating and depressing to see. The thought of following the herd and selling has come to mind a few times recently but I’ve stuck around because nothing tells me (unless I’m missing something) the business is in trouble.

The updates earlier in the year told us we were tracking $2m in revenue per month and by June were we cash flow neutral. Sales to Pegasus were always slated as starting up in the second half of the calendar year and the company reaffirmed that by saying the cash neutrality in June did not include any sales to Pegasus. From memory, the Pegasus contract was worth upwards of $US10m per year. That’s about $AU13m so that puts us at around $3m per month in revenue and possibly more if there are any new sales or expanded volumes to existing customers. I think the margins for Alexicool are something like 60% so if were cash flow neutral in June and now Pegasus has kicked in at $1m per month at 60% margin, then that looks to me that we should be cash flow positive at around $600K per month.

At the Sydney conference Dirk mentioned the potential of 100 million caps in the pillow market at a value of $1 each to Alexium. So this could be huge and even if nothing else ever eventuates, Alexium only supplying Alexicool to the pillow market is enough to warrant a market cap of many times what it is currently.