Member Info for volmer

Executive Chairman

News soon now that EC is back from America?

I see market makers have widened the spread. Does this mean they have a whiff of news in the pipeline?

Howard, happy New Year and let's hope it will be a prosperous one - well spotted. I suppose they could still issue an RNS during this period from 11th to 16th and have questions fielded by another board member but i doubt it. News has to come soon. Either the third party retracts/some agreement is reached or the lawyers get involved. We will see.

A different take. The fund raise is excellent news. The company now has the funds to progress Hope and Gorob; it has taken one step to derisk this project. There will be a string of announcements in 2025 each of which will further derisk the project further. This project should come on line in Q3/4 2025. The shares is issue are really irrelevant. It is the market cap that counts. It is now only £3.5m after the fundraise.

Interesting points raised. I think you cannot market a product that is under a patent dispute in the relevant market. Recently Apple were unable to provide a feature, under a patent dispute, of the iPhone in the USA but were able to provide it elsewhere. Therefore, I think Marionnaud could prudently not sell products under dispute between two third parties. I have no insight at all into the agreement between Marionnaud and Inca. I wish I had.

If each unit costs £10 then the 100,000 for the original September launch would cost £1m. The 250,000 for later delivery is £2.5m. We don’t know if this order has been paused.

Had a look at the Consolidated interims. Some interesting points. Cash £1m. Inventory £1.2m. Trade and other payables £0.5m (2023 was £0.6m). This says to me that the 100,000 units have been produced and paid for. There is no contingent liability in the interims so that, on the surface, this says the 250,000 units order has been put on hold even if partially manufactured.

If worse came to worse, then the 100,000 units could probably be sold elsewhere outside the geographic area of the patent dispute. I do not think there are any wider financial concerns.

Google says “Shelf life: Most skincare products are made to last 2.5 years or longer on the shelf.“

Thanks for the discussion. I feel slightly more relaxed after looking at the issues raised but we all await the next step in the resolution of the patent dispte. This isi the key issue.

AGBR, I suppose it would depend on how clear cut the case is and If there is a basis for the allegations. The company has said "unfounded allegations" but we need to wait and see.

Looking back at the Report and Accounts for the year end, it sates how unique the formulations are for Marionnaud. As I said the risk/reward at the current share price looks good to me. If worse came to worse the company would still be worth 5p per share after an initial set back. If the outcome is as the company is suggesting, then at least 30p should be seen very quickly, much more if it went to court and damages paid.

Chrisdp86, there is nothing to be investigated by legal authorities. TM is a good willing communicator. Company will have been advised on what to do and say by solicitors, patent lawyers, AQuis financial advisor and by the broker. When there is nothing to report then no RNS. The company cannot give a running report on very step or thought process.

Company will no doubt be trying to resolve with other party by discussion. If this fails then what will happen. Sue them i guess. As Vascular says if allegations proven to be unfounded, then judge could award damages. How much? Loss of sales this year, damage to reputation etc. Up to judge I guess.

I looked up the patent. Cannot see how other party knew formulation of products. If I had to guess, its someone trying it on for money - unlikley. Or a large company fearing the threat to its own skin cosmetic range - more likely. It's the sort of thing that might come from a french cosmetics company. But what do I know, I could be miles away from it. Anyway the risk/reward looks pretty good to me at this share price.

Paul, I think you are right and will get that book once I finish re-reading my current one. It is Seeing Tomorrow and is more than a weeknd read to get the most out of it.

AGBR, That was a bed & breakfast to establish a loss for tax purposes.

Chameleon1, why try to take the seriousness out of a discussion by trying to discredit others. It is effectively saying - I cannot argue against the points made and therefore will try to discredit the messenger. You probably know the Ondo stock is unborrowable and cannot therefore be shorted. Most small company stocks are unborrowable.

A serious discussion helps us all take informed decisions. As already said, the best share price for me makes steady progress without the gyrations possibly influenced by rampers, whether it's this share or others.

Let's try and keep this discussion board a serious one.

Avcti, thanks for your comment. Normally, expansion like Ondo is seeing creates a big strain on working capital. Working capital is the difference between current assets and current liabilities. However, the US pricing model reduces this strain big time. I like this pricing model and have already said I would like to see it used in Europe. Long term it produces tthe larger, more recurring profit.

But the company is going to have to expand to cope with the increased business, a larger number of insurance companies to look after, more customer numbers, more servicing leaks, servicing new markets and so on. This goes beyond what sales cash flow can finance.

As I said before management have to say the company has sufficient funds, as it has at the date of the audit review, otherwise the auditors would not accept the company as a going concern.

In November 2023 my post then predicted a fund raise and that happened. I don’t think I am wrong this time. But the timing is always another matter.

You are right, looking forward is key.

The repeat prepayment model helps to fund further growth once from the renewal in the second year. As you say it's largely self-funding but it depends upon the rate of growth. The higher the rate of growth the less the self-funding and vice versa. In the short term, expanding from 4 states to 16 US states needs investment in the company's infrastructure. In the US a state can be the size of GB. I think we will find additional working capital funding is needed and that a fund raise will come in H1 2025, probably around the financial year end.

I really like Ondo and hope we see a share price that increases steadily over time without the gyrations of many smaller caps. To get this both sides of the coin need to be seen - the potential for the business and the reality of getting there.

It looks like to 10p warrants have already been exercised. R&A 31.3.24 page 78 gives some info but does not state which have been exercised. Yes, if we assume an exercise price of 22p then proceeds were £195,000 to deduct from an estimated trading cash outflow for the 2 months of £700,000 leaving net cash outflow of £505,000, reducing the cash balance to £1.2m, all other things being equal.

Cash is tight and £1.2m is not enough.

You can't factor in warrants to historic results and a past balance sheet. The figures from those are facts.

If you want to try and update the cash position to 30 Nov then you can include proceeds from warrants. The warrants have an exercise price of 10p or 20p, the RNS didn't say which. If we assume an average of 15p then the proceeds were £133,000. But you also have to add the cash outflow from trading to 1 Dec, say 1/3rd of £2.1m of last 6 months = £700,000.

Managements always say no need to seek further funding. That is their view at a point in time. Big growth changes the position.

At 30 September 2024 cash was only £1.7m on sales of £1.2m, net cash outflow was £2.3m after the loss of £2.4m for the 6 months.

Billyboy1969, not really in a completely different position now. Growth is pushing ahead at a faster pace with more to come. This has to be financed and cash flow from operations will not be enough to finance everything.

I think Ondo might well be look to adopt the USA pricing method in Europe for new customers. I know they say the average for water claims in Europe is much less than in the States but this does not mean that insurance companies will not take up LeakBot. Insurers are always looking to get the claims ratio down. They are always looking for a competitive advantage against other companies.

Ondo know cash is not a problem for insurance companies – they take the premium up front and earn it over the following 12 months. Paying a monthly fee per Leakbot fits in well with the cash flows of companies. Also, with Ondo’s sales strength in the USA it can afford to be firmer on European pricing. Monthly fees are worth a try.

Liked the presentation and growth prospects. These growth prospects will be challenging and eventually very rewarding.

Looks like a bed & breakfast, not two sales!