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3.0¢ spacetalk ltd

Ann: March QTR Results, COVID-19 and Withdrawal of Guidance, page-27

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Access2020

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1907

08/04/20

12:28

Post #: 43948595
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Originally posted by burner_7: ↑

Cheers for the response mate! I can see you spent a bit of time on it.

The short answer in my mind to is "$7 mill going to be enough" in my eyes is YES!

Simply the company doesn't need to buy all the stock at the same time so its a matter of cash conversion/flow. Looking on the half yearly the company has approx. $685,000 of stock on hand.. in addition to cash and receivables. This in my mind is the amount you need to fund with cash if it increases as its sitting there waiting to be ordered and not converted into cash yet. Obviously it is already factored in for Spacetalk 3G but this number will increase seasonally, as new products are released and probably reduced through times like now.

For example, Spacetalk Seniors is released and they order 10,000 units which cost say $100 each so it cost $1,000,000 of cash payable say in a month. They arrive and send out the 7,500 units to fulfil orders and keep the extra 2500 units in stock selling at a price of say $180 each so they bring in $1,350,000 so there $350,000 up and now have an extra 2500 units ($250,000 worth at cost) sitting there in inventory to replenish stock. In a months time, they then repeat this cycle, selling the old stock and replacing with new and increasing their cash balance.

I would recommend you to go back and look over the SKY agreement as both the watch and app fees are paid upfront. As in they potentially could have the cash in the bank from SKY before they have to pay the manufacturer which is fantastic for cashflow.

If you look back over the years MWR has done so much on so little cash. Just look at their current distribution channels, these sales and agreements take a lot of time and money to create and they did it all on a shoestring budget.

I believe the company is well positioned financially to weather the storm. I've been in contact with Mark (CEO) and he is fully aware of the economic downturn that we are facing and is taking cost-cutting and money conservation seriously and is looking forward the Spacetalk Seniors launch in June.

I am always frightened to be caught on the wrong end of a cap-raise but honestly think your fears aren't justified here atm. Perhaps the expansion into USA next year once the new 4G Spacetalk is released could potentially require extra capital as this is a huge new market but that's the type of capital raise im sure people are happy to be apart of and will be in 2021 if ever.

IMO GLTA

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All valid points and thx for your input. I think we constructively disagree but that’s fine. Good to see other points of view and there’s definitely a chance your view could play out. I’m hoping they don’t need to raise but the main opportunity remains this Christmas with two watches.

As for Sky. It is unclear from the announcement but exclusivity ceases by Sep 20. Whether that means that they need to renegotiate terms I/we don’t know. I couldn’t see them ceasing after a heavy upfront investment but it is still a consideration

MWR Price at posting: 9.4¢ Sentiment: None Disclosure: Held
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