RNT is falling, page-7

This release shows that management have addressed shareholders (me) concerns about the information accompanying the rent resume announcement. Having said that I am not sure that this information paints a compelling picture.

1) ARPU: The 230% increase in 12 months is excellent but has flat lined in over the last 3 months. Currently generating ~ $1m p.a from product sales. Not bad but not enough. Assuming this grows at at RR rate 45k Qtr and ARPU $ grows at 10% QoQ this product revenue will grow to ~ $5m over the next 10 years. Not enough to make a really generate significant EBITDA and FCF.

So what else to have coming down line is a really important question that management needs to answer quickly.

2) Cash will run out in Q3 or Q4. Again assuming overall 10% growth rates for all income and no change to current expenses company will need > $8.5m of capital to get it through to a cash flow positive position. If Raised at $0.05 per share this will dilute existing shares by ~ 46% or put another you will have to cough up an additional 46% on top of your current holdings just for your equity position to stand still.

3) Running all this though my valuation models spits out $0.02 per share after raise. I must stress this is not a some mindless prediction. It just a model and in my experience all models are wrong. It does however point to some downside risk building up in this stock.

Positives: Management

Negatives: Revenue Growth