CAPEX vs. OPEX vs Business Model vs. Blackouts

@Newtron .... hallo....

Vis a vis 'They also haven't had to burn cash at anywhere near the rate as GSW to achieve it'...

...think of it this way... you 'need money to make money'... so it boils down to CAPEX vs. OPEX....go back to late 2017...they needed ~$100M in the bank before any 'foot in the door'... everyone knew that the development of a A.I. platform (CAPEX) would require significant amount of money upfront ...that is probably why they were forced to raise ~$80M...when they already had $20M in the bank... NDA's tend to cause a lot of angst if you are listed... so it was a deemed 'wise' decisions to front load the funding of this development phase .... that is probably why the merits for the lawsuits would probably implode in the very near future...

....so once the platform has been developed & onboarding has been completed, CAPEX would be minimal going forward ... and I know that is the 'big thing' in most deemed venture capital companies ... visibility on CAPEX needs...vs. sustainable revenues & OPEX...which drives the DCF...which drives enterprise value (EV)... what is more important is not to confuse the two....build first (CAPEX)... and then have a business model that could sustain ongoing maintenance (OPEX)...

...Bottom line... we don't know what we don't know...however one could still potentially connect the missing dots...or be jaded .... by selling & moving-on to something with more transparency & with far less risk... something like BIT, PAB & SYR

My personal risk reward assessment & investment thesis is based on:

• Business case: EV only ~$30M at this stage- that equates to the value of only ~22k deliveries/ day perpetually (NPV8%). Let's use Australian Post as an example...2 billion items per year (550k/day)...28% of items are going lost...42% experience delivery issues of some kind...re-directing, re-delivering, reported stolen etc...the real value (staff time, replacement etc) of that equates to? And if you look at the value chain...the biggest problem is during last mile delivery...so business case for say spending say $0.05 per item on a product like Getswift's...the net benefit would work out something in the line of 400% Irr... so roll forward 5 years...most companies would probably expect last mile tracking functionality etc. before sending out any parcels/ registered post items.... $200B delivery problem/ year...7% CAGR.. so there would be huge demand...

https://www.news.com.au/finance/business/retail/damning-report-slams-australia-post-for-common-errors-and-defensive-attitude-to-complaints/news-story/b98e6792440e8276d8b465d1dae3cd2e

• There is still (resources- ~$60M cash/skills/time) significant opportunity to turn this into something potentially amazing- a lot of synergies could be crystallise if they decide to rather sell/merge the platform to they right place;
• The company does not need to fund raise for at least 24 months, if ever again (still assumption)...
• No debt... yes, there is potential contingent liabilities....but they have 'cashed-up' investors that would rather ensure success, than pulling the 'plug'...so limited chance of bankruptcy in the bigger scheme of things - worst case scenario is that they lose the CA (low risk)...which is now less than $5M (based on hearsay)... but all based on questionable merits, especially if the share price is higher than what the CA applicants paid for it- nobody told them to sell at a loss (speculate)...
• giving yourself a 350% salary increase ( $1m compensation) when you are under investigation for 'fraudulent misrepresentation'... is either suicide...or one of the missing dots on the potential 'known unknows'... none of the exec team or board members would touch this with a 'barge pole' if this was a deemed a career suicide mission... yes the board resigned in April...but the required governance was taken over by PWC...so their input was basically redundant (hearsay)...was 'basically ignored'... ZERO value add.... find it still odd that majority of the ex-board members have sold any of their shares if this was destined to go to ZERO- Michael Fricklas still owns >3.5M shares (~2% of company);
• The fact that there has been no share transactions by any of the exec teams since Nov 2017 (post NDA's).... usually a sign of 'insider information' which may have an impact on share price...basically a deemed 'black-out' period... That is probably the only issue with a share buyback at this stage...you are only allowed to trade the shares after full disclosure (ASX rules 3.19A and 3.19B)... which is problematic if you operate under an NDA....
• the fact that they still haven't denied anything pertaining the enterprise onboarding is another dot.... I've had experience in non disclosure agreements (NDA's) before ...they tend to be a pain in the ar@e for listed companies; there is a thin red line between breaching ASX requirements of full disclosure (ASX Listing Rule 3.1) & breaching some of the stipulations that are covered in the NDA's....
• the acquisitions in Feb 2019....another 'riddle wrapped in a mystery inside an enigma'...quid pro quo for the sellers is totally missing if this was based on the current status quo (narrative)....why would you give-up a business for about nothing....?
• Yes, there is last mile A.I.competition... so at least the 'proof of concept' appears to be propitious- there is actually demand for their product...market is slowly waking up to the future of last mile delivery... question is whether they are behind or in front of the herd...and whether any of the contract pipeline with places like Heineken, Pizza Hut, Amazon & NA Williams...would crystallise sustainable returns...

Ergo...there is still plenty of execution risk....that is why it is deemed a venture capital investment in my portfolio... and should be treated accordingly... i.e. don't bet your house on this... but my glass is still half full...at this stage... will give it another year before re-evaluating the investment thesis again...hopefully I would conclude that it probably makes sense to exit at ~ $10/share ...with only <10% of stock in free-float...anything is possible...

...my humble 2 cents...