Quarterly loss, page-17

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Keffola

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25/10/19

16:37

Post #: 41071447
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Originally posted by Blommer: ↑

the holder of the 10mil shares who was selling should hold off if the sp gets too low.

I'm expecting CFN of at least $1mil average for next two 4Cs, going by:

-their stated expected manufacturing expenditure in the last two 4Cs of ~ $1.0mil and $1.7mil, respectively
-i'm using their last two 4Cs because their asset turnover multiples aren't particularly fast at around ~1.7x meaning they only cycle through their working capital around 1.7 times per year. I'm actually allowing for them to speed up a little bit here to 2x.
-their stated current expected cash outflows of $3.2 mil from the last 4C
-their most recent gross margin was 30% from annual report
-this gives me expected revenues of around $1.4 mil and $2.4 mil for the next two Qs
-and a net cash outflow of $1.8mil and $0.8mil for the next two Qs

if they are going to become profitable ever, they will need to spend significantly more in the FY20Q2 and subsequent periods coming on manufacturing, but they can't generate their own funds still and cash reserves are going to be as good as dried up by end of year according to the basic analysis, maybe a mil or so left, unless they go to market for CR.

The $45 mil potential product pipeline is really shown here to be the pipedream most should recognise it to be. Where are they going to get the cash for the working capital to pay for these production costs? They barely have the capital available to generate even $4million in sales for the next half.

Even if they do get all the cash they need, whoever provides it will be the new owners.

Expand

Will find out in a few days with the 4C.

Think they'll do significantly better than a net cash outflow of $1.8mil.

AJX Price at posting: 10.5¢ Sentiment: Buy Disclosure: Held
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