Hmmmm….. 1. Company just doesn’t meet prospectus FY21 revenue...

Hmmmm…..
1. Company just doesn’t meet prospectus FY21 revenue numbers on booked $7.7 mill final quarter revenue against $5.6 million cash receipts.
2. First quarter FY22 revenue at $3.7 million revenue versus $5.8 mill cash receipts suggest a lot of revenue was moved into FY21 to make prospectus guidance.
3. Analyst forecast revenue for FY22 is circa $40 mill (100% increase). I know NSW and VIC lockdowns haven’t helped but with three quarters left - need to average $12 mill per quarter to reach consensus
4. Blowout in FY21 sales and marketing from $3.2 mill prospectus forecast to $6.2 mill actual
5. G&A cost blowout of another extra circa $2 mill on FY21 forecast
6. To make EBITDA forecast - $5 mill prospectus cost blowout above was countered by a “Hail Mary” non cash flow revaluation of agave crop using 3.5 years to maturity. Google research shows that pina in Mexico takes 7-14 years to reach maturity and you can’t fast track that as it needs to be harvested at the right sugar content. Revaluation earnings are just pre-booking a portion of sales as it eventually gets transferred to inventory - i.e. cost of sales. Also there is the potential risk of fungal infection in a climate much more humid than the Mexican highlands (where fungus is also a problem), or the risk of a cyclone wiping out the crop.
7. Low gross margins (25%) not helped by excise tax means fixed costs have to be minimised on sales growth to achieve any positive cash flow at the end of the tunnel. 200% increase in sales and marketing FY21 vs FY22 doesn’t suggest the cost control needed.
8. With working capital increases necessary on a two year whisky maturity cycle and other cap ex, I can’t see this company getting cash flow positive until circa $300 mill revenue. Increased percentage gross margins could reduce this. Notwithstanding the difficulty of multiplying FY21 revenue 15 times - I’m not sure equity investors will last that long.
9. One has to tip their hat to entrepreneurs who take big risks and action big ideas versus the passive investor who sits on the fence, but this is a deep hole that has been dug.
10. Looking at enterprise value on a revenue multiple is hazardous when not all company revenues are the same on profitability. Just ask investors how they went the last time this was the rage in the dot com boom in 1999.
10. Best short sale I can find.