Afternoon All
Lots of comments about the upcoming consolidation. Herewith my take on the situation.
Broadly speaking a 20 : 1 Consolidation will have no immediate impact on existing shareholders. The dilution suffered over the years remains absolutely unaltered. We can speculate on the motivation for this change. Given the track record of the Company, it is natural for the conversation to gravitate to the negative and many such thoughts have been shared on this forum.
I would just like to share my thoughts on how this announcement could (just maybe) suggest that a turning point lies ahead. A reduction in the sharecount from say two billion to 100 million impacts on a single item in the Company's Financials, that being at the point where the Company declare Earnings per share (EPS). If the relentless SPEND continues and we keep bumbling along with a lacklustre level of SALES, then EPS will continue to be irrelevant.
Building an 'improving' trajectory on EPS towards profitability will essentially rely on a lift in Sales Revenue (Scaling) , containment of COGS (Benefits of Scale), a resultant increasing of Gross Margin to the point that Gross Profit exceeds Operating Expenses and the Company is generating Free Cash Flow. Scrutiny of the Company's history (Financials) will have most saying 'Mission Impossible'.
What may change ?
Sales Revenue :
* OTC ....happening. Fact.
* Relevance of Traditional Retail ( In Store & On-Line ) to capitalise on OTC
Continued effort on DTC ( in theory, should deliver highest Gross Profit)
* A revival of HP . An uncontested pathway to scale.
* Sonova. At face value, an uncontested pathway to scale. This is subject to understanding Sonova's motivation and their positioning. (defensive or promotional ie where technology is shared )
* Other OEM arrangments or Partnerships
* Opportunities outside of the USA.
Gross Profit :
* COGS at Scale
* Step Change in Product Gross Margin ( Pro vs Max)
Operating Expenses
* Reduction in Product Development Expenses ( via Partner sharing of cost)
* Reduction in number of Employees ( Opportunity : New Future, New Business Model)
* Reduction in Advertising Costs ( Partner owned / Partner sharing)
Bottom line is, if Nuheara have called the Consolidation with the knowledge of a combination of the some of the above materialising, then it wont take much to significantly close the gap between INCOME and SPEND. The past will be quickly forgotten ( imo 6 to 18 months) and new Investors will buy based on new fundamentals. Growth is not a one year thing, so provided there is 'mass adoption', product value endorsements, Nuheara could like others enjoy some real momentum, benefits of scale and resulting operational leverage. Wouldn't that be nice ?
If Nuheara reach this tipping point, existing shareholders obviously get to share the spoils as well. In some cases, may need a bag or three to get back in the green though.
As far as the General Meeting is concerned, be interested to see if they release the 4 c before or after the meeting. They can hardly argue not ready that late in the month. That alone may tell us something.
Rokewa
(20min delay)