Parenting is no cakewalk. Over 30% of new Aussie parents worry about their child developing an internet addiction. What’s more, they find parenting all the more challenging if their child has complex issues. Melbourne-based medical device company TALi Digital (ASX: TD1) provides parents with virtual games, like Ready, Attention, Go (which won a Red Dot Design award in FY23), that help kids improve numeracy, socialising, self-esteem and concentration skills. Essentially, it tries to make screen time productive.
The digital therapeutics company has built a patented tech platform with initial programs targeting cognitive attention skills during early childhood. It utilises an evidence‐based cognitive screening tool called DETECT and incorporates it into training modules, like TRAIN, Ready, Attention, Go! and AttentionTime!
As of Q1 FY24, the Company had a closing cash balance of $2.5 million. It reported a net operating cash inflow of $100k, contrasting Q4 FY23’s cash outflows of $800k. The inflow was boosted by Government tax incentives worth $667k. Operating cashflows included $600k spent on staff, administration and corporate costs and $700k inflow for the FY23 Research and Development Tax Incentive refund.
Moreover, the Company undertook a strategic review to optimise its costs further. For one, it decided to expand its partnership with early education and care provider Genius Learning, resulting in annual cost savings of around $1.9 million. This revised strategic partnership arrangement will be in effect for three years with an automatic two-year extension unless either party decides against it.
As part of the partnership, Genius will become the exclusive distributor of TALi’s products in the education sector and non-exclusively across the healthcare sector. It will develop TALi’s products in consultation with TALi and take over TALi’s product development and maintenance activities, as well as its sales and marketing functions. Finally, Genius will build relationships with TALi’s customers and partners.
Ultimately, the Company will retain 20% of all revenue from TALi products generated through the strategic partnership with Genius.
Secondly, TALi’s agreement with digital medicine company Akili Interactive Labs was mutually terminated after Akili changed its business model from a prescription-based to a non-prescription one. The termination relieves both parties of commitments to future research and development activities.
Finally, TALi received about $670k for its FY23 Research and Development Tax Incentive (RDTI) refund, allowing it to repay the $500k RDTI loan held with Treasury Corporate Victoria.
Since it generated cost savings and strong cash reserves over the year, the Company is receiving several M&A opportunities from various parties. With expansion on its mind, TALi is looking forward to undertaking merger and acquisition opportunities to expand its base.
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