m&partners, page-4

Why the anger? Its a nothing announcement. You didn't marry your wife without asking for a date. They are exploring options.

Doesn't the terms and the conditions of the appointment determine the significance of this?

If its success based then it does not add to cash flow burn rate.

If it is on some consulting/retainer didn't Pat Volpe just gave himself a pay haircut, or we hope he did to pay for this thing?

The sales will come - the concern for me has to be with the margins at present. To the seasoned holders has there been any talk of Gross Margins?

In the 2011 Annual Report sales figures were $1.65 mil over $1.524 costs of goods sold providing a gross margin of 7.5%, which is an improvement of the 2010 gross margin 3.9%. If we are to hit this so called $5million in sales, and we have similar incremental improvement of gross margin to 10%, we’ll generate a gross profit of $500k or a revised burn rate of $3.5mill.

Notes of Sales
The sales to the end of 3rd quarter were - $3.34 million
There was a new Sealed Air contract announced which should assist the $5million target.

Considering the revised burn rate of $3.5 mill a year, the cash in the bank at 31st March of $1.9 million, the end of quarter cash at bank should be north of $1 million mark. My question to the more seasoned holders is – what talk has there been on gross margin?

*Gross Margin 50% on $5 million equals monthly gross profit of $250k versus operating cost burn rate of $333k = $125k p.m
*Gross Margin 35% on $5 million equals monthly gross profit of $145k versus operating cost burn rate of $333k = $187k p.m
*Gross Margin 15% on $5 million equals monthly gross profit of $62k versus operating cost burn rate of $333k = $270k p.m
*Gross Margin 12.5% on $5 million equals monthly gross profit of $52k versus operating cost burn rate of $333k = $280k p.m
*Gross Margin 10% on $5million equals monthly gross profit of $41.6k versus operating cost burn rate of $333k = $293k p.m
*Gross Margin 7.5% on $5million equals monthly gross profit of $31k versus operating cost burn rate of $333k = $300k p.m