So AHI my Q1 deadline has come along and it is time for us to part ways. Alongside terrible financials there is nothing of substance in this quarters update that you tried to sneak past me in the late hours last Friday evening.

Decreasing cash receipts, increasing expenses, more forecasts of impending revenue.

Looking back there has been warning signs clearly on the road along the whole journey, which I took a passing glance at and gave a shrug of my shoulders and said she’ll be right there’s sunshine around the corner because there was always the next release of upcoming 1,000,000 user agreements to take your mind off the issues.

I really hope for continuing shareholders that there is some upcoming success with the NASDAQ listing and the Tinjoy deal, however for me until a deal lands that actually generates revenue, I can’t continue to justify holding at P/S of >100 times and it appears that the market has a similar sentiment with a 20% drop in the share price this week.

I’ve managed to escape with a mild loss, however I can add it to the list of lessons I’ve learnt on my investing journey.

Another red flag announcement from AHI released after the bell on Friday afternoon. The NexusVita deal that was first announced in October 2020, delayed multiple times, and most recently targeted for September launch is still in limbo. The tone of the announcement implies that much of the work carried out by NexusVita has resulted in a less than optimal platform and AHI would like to iron out some of the wrinkles prior to release. 

An initial payment of USD$50,000 has been received for the integration, which should provide some minor improvement to Q1 revenue and it is positive to see AHI working to maintain a deal for a guaranteed revenue stream. What is interesting is that the F-1 filing on the Nasdaq states that this payment was going to be USD$100,000, with the remaining paid in the following 30 Days. The ASX announcement on Friday doesn’t state the amount of the second payment due in October.

What I think is the biggest concern from this announcement is that it significantly reduces the confidence level of Nexus Vita actually delivering a service where they can continue to maintain payments to AHI.

So where would that put AHI’s revenue sources at? Back to the F-1 registration statement to the current agreements list

Generating Revenue:

Evolt

Bearn (Repayment of $500,000 marketing loan due & App delayed to Mid October launch) Biomorphik

TV.Fit 

BodyCompositionTechnology (BCT): 54% Ownership

Combined sales of $165,000 for Q4FY21, none of these apps have really taken off yet.

Not Generating Revenue Yet:

Tinjoy (First revenue expected Q2FY22)

Active8me

Jayex (formal agreement scheduled to be finalised September)

NexusVita

WellTeQ

MVMNT (McGregor Fast App launched January - Not Integrated)

Boditrax (No formal agreement) 

JanaCare (No agreement) 

Inter-Psy (No Agreement)

Cubert (No Agreement - Target December) 

BizBaz (No Agreement - Target December)

There are still a few other potential irons in the fire, however, the Tinjoy appears to be the only one that looks like it’s going to be ready anytime soon, so there is a lot riding on the next few months.

Held IRL for now.

Skipping over the headline announcements to look for some more details which might indicate a bit of a light at the end of the tunnel for AHI. TLDR. I didn’t find much.

First thing to note is that the DermaScan application will only be demonstrable this financial year and only able to be used in jurisdictions where medical approvals are in place. Which with my limited experience owning some biotechs means that any commercial implementation of this could be still awhile away.

Primary Revenue was listed at $14,528.00. So it appears that no revenue has been generated from the operational apps and all substantial revenue is through the joint venture partner Body Composition Technologies. My first impressions on this is the price point for use, typically asking for several dollars per scan or for monthly use. Which for a one time / quick use is significantly overpriced from my point of view, particularly when the basic integrations take simple measurements without any further analytics.

No updates were provided on the Mcgregor Fast integration which has been launched since early in the year. @NewbieHK mentioned that there were updates on this in the shareholder call, so I may need to dig a little deeper on that particular deal.

Currently it seems AHI are desperately relying on the income from the Nexus Vita and Tinjoy deals. The problem with this is the Nexus Vita launch has been delayed multiple times, recently announced as an August release which was missed again. The WinScan launch was announced for July, then delayed until August and has also been pushed further, however there are some promising numbers that have been announced with the pre-registration. However without an app launch there is no cash.

Other targets announced for August were the launch of the Bearn Integrated application launch (also previously delayed) and the conclusion of the formal agreements with Inter-Psy. There has been no update on these so it appears both these targets have been missed as well.

AHI are definitely heavy on the shareholder engagement, however if 50% of your announcements are announcements about missing a previous announcement, perhaps management should pull back a bit and learn a lesson from the old adage of under promise and over deliver. The FY21 report further reinforces my Q1 deadline for AHI to actually book some revenue otherwise this one is done for me.

Disclosure: Held

AHI has been a story stock for me from the start, and it feels like we are coming up to a fork in the road. The story so far has been a series of big announcements and partnerships which either have been delayed or failed to deliver anything substantial.

Cash receipts for the quarter were at $165k, down from $654k the prior year. (This has been announced as in increase on an adjusted basis.) Cash outflow remained steady, if accounting for costs of the elusive NASDAQ listing, however with only enough cash for 2 quarters left, AHI need to get some runs on the board or come back to the market hat in hand.

Enter the TinJoy deal, which is scheduled to launch mid-August (delayed), with $5.2 million worth of pre-registrations to date. If this application launch can be executed and continue to grow toward the CY21 target of 1,000,000 users, then this will lay a solid foundation for AHI to continue to develop and build on the CompleteScan platform. The reason I say if, is that this is not the first time there have been forecasts of rivers of cash.

With a current market cap of $157.45 million and receipts from customers of $1.414 million for FY21, growth is very much priced in at this point and the clock is ticking. I will continue to hold, however will consider the thesis on this company broken if there hasn’t been some good news by the end of Q1FY22.

Disclosure: Held