They are going to have to cut back savagely. If you look at their balance sheet, much of the idea that they are not underwater already comes from them listing "capitalized technology costs" as a $2.6M non-current asset, relative to a net positive position of $3.3M (note their non-current liabilities are much more serious, like 'borrowings' and 'employee benefits'). As far as I understand it, this is saying "our developers built a big pile of software and it cost us quite a bit, and is quite useful, so lets put a big chunk of that in our assets". Probably basically OK but perhaps a bit exaggerated (would it really cost $2.6M to rebuild?).
So without a big pile of software, they are $700K net position 2.3 months ago - and this is a company that burned $4M in 6 months.
To paraphrase Anton Chigurh from No Country for Old Men, "If the software you developed brought you to this, of what use was the software?".
The numbers they mentioned in their update aren't bad, given the circumstances, but they are presumably only going to go down. In any case, the increases over PCP are pretty much in line with the increases they got from 6 months ending Dec 31 2018 to 6 months ending Dec 31 2019 - and that was a half year where they still lost $4.1M in 6 months. That's the after picture. Even if they manage to hold performance steady, in 20 days they will have a net asset position of around $1.3M, of which $2.6M are, like I said, "capitalized technology costs".
They are going to have to do a savage restructure - pretty much firing everyone in a suit and a fair few others. They could come back from this but IMO they have been counting on easy equity raises or borrowing way too long.
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