Analytica chairman defends cash position

The ASX has issued a 'please explain' to Brisbane-based Analytica (ASX:ALT), querying whether the company will have enough cash to last it past the next quarter.

Analytica CEO Stephen Goodall stepped down in January, for health reasons. "At the end of late last year, I came down with a health condition that needed an amount of care and rest and it was inappropriate for me to continue charging flat chat with the Analytica stuff," he explained.

Meanwhile, Analytica's deputy chairman, Michael Monsour, is temporarily taking over the management of the company.

Asked if the company was looking for a new CEO, Analytica chairman Stephen Jones said "not at this time".

"Michael Monsour is doing a champion job at the present point in time, and should Steve recover and feel as though he wants to step back into the commercial foray then we'll have a chat with him," said Jones.

Cash position

Analytica's second quarter results show that the company had net negative cash flows for the quarter of AUD$416,000 and $976,000 for the year to date. The company had only $450,000 cash in the bank.

Analytica's white knight, the Australian Technology Innovation Fund (ATIF), has stepped in to provide an unsecured interest free loan to the company, which it said is not expected to exceed $400,000 in the next 12 months.

"ATIF, of which I'm chairman, has agreed to provide whatever funding maybe necessary for Analytica over the next six to nine months and that will be mainly to finance working capital, stock and debtors, because we're in the final stages of taking a product to market," said Jones.

Analytica also told the ASX that cash expenditure for March and June quarters are expected to be significantly reduced because of the changes to the company's organisational structure and virtually completing its prototyping of product development.

Product to market

The company's lead product is an auto-burette, or what it calls a 'constant flow device'. "It automatically fills the burette and allows nurses not to have to constantly check the flow of products," said Jones.

Jones said that the product would be on the market in the second half of the year, and the company is hoping that its retracting needle, which fits to any syringe converting it into a safety syringe, will also be on the market then. The company therefore expects to receive product revenue in the second half of 2006.

Analytica is also expecting to receive about AUD$100,000 from the 2005 sale of its diagnostic business. "We sold the diagnostics division and the terms and conditions of that sale are that we receive certain moneys plus a royalty. Those moneys are the crystallisation of that agreement," said Jones.

Jones said a joint venture agreement with Chinese manufacturer Analytica Lingyang was being drafted and the company expects to sign it this month. "They'll manufacture and distribute in China and we'll distribute in Australia," he said.

Psiron link

Jones is also CEO of Sydney-based Psiron (ASX:PSX), whose CEO, Julie Nutting, also stepped down earlier this month, after disagreeing with the board about the best way to develop the company's technology. Jones has taken over Psiron's day-to-day management, and has no plans to appoint a new CEO in the near future.

ATIF has also stepped in to provide Psiron with a $5 million convertible note facility, subject to shareholder approval. Psiron made a loss of nearly $5.9 million in 2004/05 and at the end of the second quarter of 2005/06 had just $966,000 in the bank.