Now with Q2 financials out it was about a 731K loss for the...

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Jazinger24

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03/08/20

21:10

Post #: 46275973
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Originally posted by Jazinger24: ↑

SO at the end of Q1 the cash in the bank was 3.16M which is down from the end of Q4 2019 which was 4.293M or about a loss of 1.07M.

Based on the Quarterly Business Review and 4C they estimate to use another 761K net for Q2. This would include the "temporary" drop in salaries and other cost savings which they expect would save them about 300K based on the Q1 expenses.

Since the end of Q2 was over 2 weeks ago and we have less than 2 weeks to be before they must file the Q2 results one would have to assume that if there were any announcements that would be noteworthy .. they would have been done by now.

If we used the cash remaining at the end of Q1 (3.16M) and take away the estimated NET spend of 761K then there is only about 2.399M left in the bank. This would have been what was left at the end of June 30, 2020.

Based on the last 3 reports ESH seems to report on the last day possible and they have until 31/7/2020 to report Q2 earnings. By then another month worth of expenses has gone by. If we assume that Q3 follows Q2 in terms of NET spend then the 761K per quarter or 254K per month would only leave about 2.14M in the bank come August 1. At this rate that would only leave just under 3 quarters worth of money left in the bank.

One thing to note.
The agreed drop in salary was only supposed to be temporary so you would have to assume at some stage the salaries would have to go back to pre-covid levels if they wanted to keep their employees.

We have just under 2 weeks left before finding out how well this follows suit.

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Now with Q2 financials out it was about a 731K loss for the quarter. If the MS payment was done quarterly or monthly that would make up about 30K from the 61K income. Since we knew the MS AOE agreement was out in March that would mean around 31K income from everything else. While it is an increase on the 26K in December its still not enough to put any kind of dent in slowing the cash burn.

Interestingly enough the last 6 months there has been a change to the way companies need to report as its only estimated outflows for the next quarter. They now just use the value in 1.9 which completely ignores the cost of intellectual property (242K per qtr). So the number of quarters left with money is misleading in this case. The calculation should really be -489 and the -242 which comes up with 731K worth of expenses. If you divide the money left 2,429 by 731 you get 3.3qtrs worth of money left. Last time the CR was done with over 4months worth of money left so i still expect there to be a CR this year.Since

July has already left us divide 731/3 = 243K worth of expenses per month. Take that away from the 2,429M remaining as of the end of Q2. So as of 1st August there is only 2Million left to go.

Last edited by Jazinger24: 03/08/20

ESH Price at posting: 0.8¢ Sentiment: None Disclosure: Not Held
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0 Great analysis

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