Ok, let's have a little look-see at your fictional $24m market cap with price-to-sales ratio.
FY 2020/21 - sales of $1.488m v $24m m/c = 16 : 1 ratio
FY 2021/22 - sales of $0.563m v $24m m/c = 42 : 1 ratio
If this quarter ended sales (of $52k) were extrapolated to a generous $400k for FY 2022/23
FY 2022/23 - sales of $0.4m v $24m m/c = 60 : 1 ratio
So all the while sales are decreasing over the past 2 FYs and all indications from this recent quarter disaster are pointing towards a third FY consecutive decline, we are looking at a management 'team' who are totally inept at growing a business. It's all there in the figures.
In 2019 they were listed at no.5 by Business News Australia with a market cap of $111M
By 2020 they had dropped to no.18 coming in at a m/c of $17m
With half-yr revenue of $900,000 they climbed to a m/c of $34m for 2021 (this would be the 2020/21 FY)
That H1 $900k was 90% generated by the hemp food sales but 'shipping delays' dropped sales by around 60% (to $273k) for the next 3mths. Ok, there were those delays but they also used the excuse of the 'Lunar Holidays' impacting sales....but the final quarter of 2020/21 only had an increase of $25k to $298k.
So even how rampant Covid has/had been it was looking like they could maintain revenue of around $250-$300k quarter on quarter.
They were also sitting comfortably on $10.5M cash.
Then, the 1st quarter for FY 2021/22 ran true to the way the previous 2qtrs had been, with $281k from the food division alone but a respectable total of $484k.
They still went through $500k of the cash (down to $10m) but ya gotta spend a bit to make a bit eh.
Then a bolt from the blue !
The very next day after the release of that quarter's report was the totally unnecessary raising of a further $1.8M at 'give-away' prices issuing a diluting 600m shares !
So, end of Sept '21 qtr had $10m declared in the bank - $1.8m added one month later = $11.8m without allowing for the use of any of the cash.
Side Note :- That wasn't where this kind of problem with dilution actually began though because a short time beforehand (30 Aug) Pnina Feldman resigned wanting 70m shares as her payoff. This ended up being over 150m shares due to various factors - let's not go there..
The following qtr ending 31 Dec 2021....
Revenues have more than halved from the prior quarter as well as even being circa $50k less than when Covid was in it's most rampant and business-restricting phase. Revenue was down to $226k.
Cash in bank has become $10.5m indicating a difference of minus $1.3m from the previous quarter's averaging of cash.
Like I said earlier, I'm all for spending a bit to make a bit but it's not the way business is supposed to work by spending a lot to HALVE your revenues....
Oh, the disaster doesn't stop there because the quarter ended 31 March '22 drags revenue even lower to a grand total of $69K !
A 69% decrease from the previous one as well as cash in bank being reduced by a further $800,000...
Quarter ended 30 June '22 has a few pennies increase to $82k revenue, cash reduced by $490,000...
Latest quarter ending 30 Sept has even less again at $54k revenue, cash reduced by $547,000
Totalling the past 9 months, they used $1,837,000 of the cash to make revenue of $205,000
They've even made a forward projection that this current quarter will have higher admin costs for shareholders' services in planning the AGM ! Sounds like a Grand Gala ! Woohoo...
So there's a run-down of the state of affairs for the past few quarters - the numbers don't lie.
Btw, they even make it a point to mention last year's audit fees were $90k - no idea what the point of that was.
Then for someone to pull out a $24M market cap at a 10c s/p, I've got one word....Hilarious !
Look, they've even got delays with the production of FussPot. If it's not being produced right now, no sales, and no timeline given as to when such sales might hit the bottom line nevermind what action they're taking to rectify the new revenue-generating machine.
They seem to be happy using ten-times more cash from the coffers than the income they're generating to meet this illusion of 'Shareholders Wealth' - do you think if they didn't have any of that cash together with only producing less than $100k per quarter revenue, they'd be able to attract any interest from investors/instos to fund them ?
I'll leave that thought on the table...
AE
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