Ann: Appendix 4C - quarterly, page-5

I think that is because they built up inventory last quarter for sales this quarter. They say sales expected to take place last quarter were delayed into this quarter.They also spent money developing cheaper products which seems a good idea as it broadens the market. It is a puzzle to me that if the electricity savings are as large as claimed we are not making more sales. It appears the answer is only the big boys will buy the expensive top of the line product and we need these new cheaper versions to expand the market to SME.

The commentary says the potential sales in the current half year are $7.5 million. (I interpret "direct line of sight orders" of $4 million being "realised" this quarter means sales of $4 million this quarter. I wish they would write in English.) The Appendix 4c claims costs this quarter will be $2.6 million. However that is with production/operating costs of only $1.1 million (compared with $1.94 million last quarter and $1.4 million the previous quarter). The production costs for this quarter seem surprisingly low to me if sales are accelerating.  At face value this seems to imply they might get to break even with annualised revenue of around $15 million. That is a much lower revenue for break even than I have calculated previously, so I am dubious. 

One caution is if any of these sales are through Origin the receipts may be delayed. As I understand it with the Origin sales the customer pays over time from electricity savings. So a sale could be made this year, but payments made in future years. We have no indication about whether this revenue is significant.