AGM Notes

Hey team

For the benefit of anyone who didn’t dial in to this morning’s AGM, a couple of quick takeaways:

- CLB has only 15 employees. TBH I didn’t realise they were this lean. To be generating ~AU$3m in quarterly revenue with 15 employees is quite remarkable. Keith the CEO mentioned they are looking to add a salesperson for the grocery channel, but aside from that it doesn’t sound like they need to add more bodies / bulk up their salesforce significantly to continue to grow sales. This should mean a relatively fixed employee cost base translating to significant operating leverage as they scale.

- JB mentioned that CLB’s founder and CEO Keith Cohen literally sold his family home to invest in and grow the business. That is what I call alignment.

- Recent placement conducted was 1/3 existing investors, 2/3 new investors. JB mentioned that many of the new guys coming in were fund managers etc investing PA. The way I read this is it gives them an early look at the business with potential to come in at the fund level if/when the business reaches sufficient to scale to fall within their investment universe/mandate.

- Keith mentioned that the “Main Street” retailers (Nordstrom, Macy’s etc) stopped ordering as soon as Covid hit in March, and are only just coming back online submitting POs now. Therefore, the significant growth they achieved in June all came from small speciality retailers etc. Subject to ongoing COVID developments in the US, it sounds like we should expect to see an uplift in sales in the September quarter as the “Main Street” comes back online.

- No individual customer accounts for more than 5%.
ie no customer concentration = minimal risk of an revenue/earnings air bubble from the loss of a large customer account.

- Andrew Clark new NED has been working closely with Keith and together they have managed to increase product pricing despite COVID headwinds. Nice.

- Guidance reaffirmed ie they remain on track yo achieve EBITDA break even in the December 2020 quarter.

I’m sure there’s plenty more I’ve missed but all-in-all a very positive update.

Kudos to management and the board - very content share and option holder here.

Cheers