Thoughts on DickHunt questions 1-Aug.

1. Why is the debt facility announced on Mar 2018 not being drawn down (per July 4C)?

updated...Yes, initial drawdowns were expected late March, but the facility is not even listed in the July 4C, and no notes about it or anything. 

The debt is for ‘capital infrastructure requirements‘, so it looks like they would need the requisite cash to be able to fund the additional COGS upfront, which is a little scarce...not sure

2. Is the increased cash gross margin ($2,181k in June Qtr) sustainable?

Gross Margin is the difference between Revenue (not receipts/cash flow) and COGS (specifically associated with the Revenue for the defined period). The quarterly statement that you are looking at is cash flow.  Receipts recognise cash received which will have been recognised as Revenue in the same period or possibly the prior period.  For the cash flow statement, the COGS will be cash flow for the quarter as opposed to when the associated revenue was booked (ie it could also be associated with prior period revenue).  Adding in the other operating costs the difference is ‘Net operating cash flows’ as per the 4C, which is different to the gross margin, which you will be able to see properly in the annual report.

The business is seasonal (see chart below from a quarterly from a while ago, don't know which one) and it looks like the payments received from the customer take longer than LPE have to pay their power provider. Hence the receipts are higher (from the peak summer period) and relatively the COGS have contracted – Autumn/Winter demand and a shorter payment cycle.  The reverse happens going into summer but is offset by the increasing total

Over time however the Revenue will rise in proportion to the GWh under management, and I understand that gross margin is relatively constant (~19%).

3. What is the company's liquidity and specifically will it need to raise capital.

Depends how fast it decides to ramp up.  If they use some of the $10m for investment then this significantly increases the GWh and will place extra demand due to the cash receipt lag described above.  There are a few inputs here needed to answer the question above that we don't have.  Alternatively they could wait until they have positive cash flow from existing operations to fund this.