I disagree with a lot of the analysis above. This is a complex...

I disagree with a lot of the analysis above.

This is a complex risk/reward evaluation. The information here, although marked price sensitive, is insufficient to make a large difference to the current shareprice in my opinion.

The way I look at cashflow negative companies is very much like an option. The time to breakeven ~ the time value of an option.
Proof of model ~ cashflow breakeven (ex growth investment) ~ time when major rerating can occur to recognised multiples.

In RNT's case what we know for a fact now is that there is 4.5m cash. This gives Greg Bader 1 year to REDUCE operating cash outflow. Any meaningful reduction in cash outflow, especially whilst the cash balance is relatively large, adds substantial time. If next quarter the outflow is reduced to 0.9m, there would be a further 1 year added to the time and 3.6m in the bank. At that stage, the likelihood of success is very high, and there should be an according re-rate.

Until this point, the shareprice reflects the markets view of the model being an overall success.

So what we are left with is a complex risk/reward equation. There is no doubt if the model is viable, that 17m is very cheap MC (12m EV) for this company, you can value it however you like but there is a many multiples upside.

The downside is really reflected in the risk of going bust. I would say that the market typically starts getting very negative about ongoing funding when there is 6 months or less runway or cash without external funding, or at current cash burn rates there are 2 quarters or 6 months to significantly improve cash outflows. Please note that even a drop to 900k out is probably enough to make this viable in this timeframe.

In terms of the 4c- if the outflows are due to increased investment in product (247k last Q cf 152k prior) or sales and marketing (massive drop from 767k to 400k last quarter) this is not a problem, in the slightest, in fact I would welcome it. If there is ongoing cost-cutting and revenue slow-down it is a much bigger problem (I think unlikely). At this stage, there is really insufficient information to make meaningful decisions based upon.

On a final note, there is also obviously a difference between revenue recognition and cash receipts, so traction in the smart plans will almost definitely not show up in current cash balance as the money is unlikely received. They did mention that previously there would be a lag until receipt and that a goodwill/honour system has been developed for this.

The way I think of this, I feel like there is limited downside at least until further information comes out demonstrating non-viability of this model (possibly a maximum 50% downside risk, assuming adequate liquidity in the stock- I really think it is much lower than this though), and at least a 5x upside chance within 2 years if this achieves its potential (these are very gross numbers). A large proportion of my investment here is predicated on a trust in management to deliver and a core belief in the underlying product.