was never going to work, page-4

doom and gloom in every paragraph - nice one Harrison..

I also meant to post this for everyones reading pleasure..........

Market Update – August 2006
The review of the business by the current board has resulted in a number of findings that we
feel are important to disclose to shareholders.
Financials
The Company had available cash at bank of $97,343 as at 30 August 2006. This represents a
$319,000 decline in available cash since the June quarterly report to the market. As
previously advised the Company has secured a draw down facility of up to $500,000, which
has not been used to date.
Revenue (unaudited) invoiced to associate optometrists since production commenced is as
follows;
June 2006 $1,426
July 2006 $11,479
August $24,234
These results are significantly lower than was previously anticipated. These figures do not
include retail revenue from Northbridge Optic Clinic.
The current board has also focused on significantly reducing the operating costs of the
business. As a result the operating costs of the business since the change of board
announced on 7 August have been reduced substantially. These costs reductions are a result
of restructuring staff and management resources (notably the resignation of the 2 executive
directors), removal of administration, marketing, IT, and bookkeeping and accounting costs.
Review of Operations
The current board has decided to sell the Northbridge Optic Clinic. We are currently in
negotiation with several interested parties. The performance of the clinic in the last financial
year was poor, resulting in a loss (unaudited) of $42,000. A number of factors such as reliance
on locum optometrists, and the non core nature of clinic operation contributed to the current
board’s decision.
The Company purchased a number of antique spectacle frames as part of the original
Northbridge Optic Clinic acquisition. There has been considerable effort to sell the frames in
recent months. After investigation it appears that these frames cannot be readily realised for
the current carrying value. It is contemplated to write down the value of these frames to
enable sale at a wholesale value to realise the revenue from these inventories which have
been carried since the initial acquisition of Northbridge Optic.

The previous CEO announced in an update on 1 May 2006 that a deal was being finalised
with a major health fund that would involve a special offer to the health fund customers
through C@ associates and stores, and that this deal would be effective from 1st January
2007. The current board has investigated the proposed arrangement and been informed
that there had been discussion regarding an offer, which had not resulted in a formal
agreement. The board now believes that this agreement will not proceed in the short term.
At the Company’s general meeting in March 2006 the former CEO’s address contained
information that stated the Company would be cashflow positive by August 2006. Based on
a more recent review of the Company’s cashflow, the current board believes that although
significant progress has been made over the last month, this will not be achieved in the short
term.
A detailed review of the associate optometrist model by the current board has resulted in a
number of findings. It is clear that the uptake of the Company’s offer was slower than
expected, and this was compounded by the slower than planned revenue resulting from
associate recruitment. Although the Company currently has 28 associates, revenue has been
slow to materialise (see revenue numbers above). On further review by the current board,
the Company believes it prudent to inform investors the previous announcements stating that
“C@ aimed to have 300 branded affiliates within 5 years” is no longer believed to be
reasonable.
The Company currently operates an advanced optical lens fitting laboratory in Perth. This
represented stage 1 of the proposed manufacturing facility. Previous announcements along
with the CEO’s address at the March 2006 general meeting suggested that stage 2 of the
facility was on order and would be operating late in the 2006 calendar year. An
announcement on 16 March stated that the Company had committed to $2 million worth of
expenditure on completing stage 1 and 2 of the laboratory. The value of this stage 2
equipment was in excess of $1.4 million. In light of significantly slower demand from
associates, the current board has decided not to proceed on the basis that the Company
neither requires such a large investment in capital equipment nor is in a financial position to
fund such an acquisition.
A number of recent announcements made by the Company (including March, June and
July) refer to the progress of a UK pilot program of the C@ associate optometrist model. The
timing of this project was announced as “mid year”. There is currently no UK pilot program
with C@ associates in the UK. The current board does not contemplate using any Company
resources to pursue this endeavor.
The current board is continuing to review the activities of the Company, along with other
opportunities in an effort to restore shareholder value and will continue to keep the market
informed.
Andrew Harrison
Non Executive Director
C@ Limited Board