still over priced, page-20

Hi mangione

You've come in too late on all this and are re-asking questions answered long ago. Just to clarify, Sigma roll-out starts July 31. Sept quarter will have a fair chunk of $ but real test will be Dec quarter imo. Spoke with CFO today and many pharmacies have lined up already to get the tests from Sigma.

for mangione, from previous:

12/6/08

1. Test will retail at $199.
2. Vic roll-out commences July 30 and will take 2 months
3. Enough machines for Vic roll-out
4. Tests to be done in IMI rooms - mix of sessional medical clinic rooms of current IMI clinics and other non-IMI clinics - may get additional business out of the "non-IMI" clinics
5. Full roll-out by 12 months
6. Budget is for 1.5 tests per week per pharmacy (average) x 700 by end of roll-out. Some will obviously do a lot more than others. Pharmacies within the chains apparently are very competitive internally as well as externally, therefore expect strong support from retailers.
7. Enough cash to cover initial rollout and marketing with cash flows covering complete roll out expected but not guaranteed
8. Expect further ann. re "throwbacks" from gyms to retail customers through pharmacies in the form of "free trial" gym memberships

Business plan is firmly focussed on retail sector at this point in time.

13/6/08

Source = CFO

Company copped a lot of flack re it's projections back in April 2007 that really were pie in the sky. It's that sort of stuff that drove the price to 7c. Whether it was misguided or a lie, no-one will ever know. Conspiracy theorists and cynicists will always believe it was a pump and dump. Humanitarianists will be more inclined to put it down to poor judgement and the propensity of people to be too optimistic etc. Truth is somewhere in between.

700 outlets X 50 weeks/year x 1.5 tests/week x $199 = ~$10mill at an unknown margin (CIC). Losses for 2007 = $3m. Say it's the same cost structure going forwards. Let's say BH and UAE contribute $400k for 08-09. Picture starts to look like this on a 10% p/e ratio (I use a low number because company has no mature income stream):

50% Margin: $4m profit 3.3c/share
40% margin: $3.1m profit 2.6c/share
30% margin: $2.3m profit 2c/share

My projection was 3c by end April on the basis of the SIGMA announcement being made by then. Revised to 3c by end June assuming SIGMA ann. by then. As it has transpired, 3c on the ann. was on the money. I think the reason it floundered was the lack of hard figures - but they will not do again what they did last year and predict (in writing) something they cannot predict - they are letting the market do that for them until the real hard revenues can be reported after the fact. I am disappointed that it came back, but not overly surprised. I am still optimistic it will settle a bit higher than this IF revenues start to physically appear on the quarterlies. If they don't, well, back under 2c - so be prepared.

Now, one can factor in an "uplift" for commercial potential in terms of growth, but any goodwill in that space has been decimated by the events of last year. Traders are simply playing this for what it is. VERY few long term BIG investors now, as there is a loss of confidence in any "uplift" drivers at the moment imho. I still think there is a lot of potential. If there are further positive announcements re FDA approval, Italy and particularly peer review/acceptance of the CPI by end 3rd-4th quarter, as I believe there will be, 5c is still possible - the "uplift" confidence level will begin to return and people will begin to factor in growth on reality rather than promises.

Global roll-out with full CPI technology will start to get it back up to its previous highs. IMO that is 1-2 years away. Anyone who thinks this is going to 10c within the next 1-2 years is dreaming, unless they pull a rabbit out of the hat.