Never a good sign, when you see companies funding their loss...

Never a good sign, when you see companies funding their loss making operations with loans, just a ticking time bomb until the receivers get appointed and the equity holders get wiped out. Is this going to be the next SVB or Milkrun or Wiluna Mining? This will be lucky to be solvent by December 2023. Already torching $57m of shareholder cash to get to this point, investors would be looking back and going what has this company got to show for that sort of capital invested - yep, absolute donuts. Operating a Loss making business at rate of $22m over the last two years, ouch.


24 October 2022 - $5m loan with Westpac to fund Nvidia cloud gaming capex. Because westpac dont really trust their client, Westpac demanded this be secured by $2.5m of cash, so really this is only a $2.5m loan. But headline marketing figures of "$5m" look more snazzier.

16 November 2022 - page8, state they need $6m of capex for June 30 2023 to fund Nvidia Cloud Gaming , 5G network, on net installations. Company was looking for "alternative financing" for these items.

6 March 2023 - murky $6m loan from a supplier to help pay for the monthly opex on the 5G network. Interest rate of 13.3%, which is at mezzanine finance rates, so suggests this is junk bond territory. No mention of Westpac interest rate.... Red flag to be getting this supplier-financing, they must be both desperate to manipulate their balance sheets and revenue lines...

So its all looking like the $6m Capex has been found for the 30 June 2023 budget, that is, "no need to equity raise".

And then out of nowhere 13 April 2023 come out with an equity raise for line items which supposedly had already been represented to be funded by these debt agreeements. Does this company regularly intend to mislead investors? Or does management and the board have such a poor handle on their cashflow forecast budget?
Use of funds for Equity raise is
- Telecomunications Infrastructure (this definition is so vague, really could be anything, as it is a telco business after all. Isn't this meant to be funded by the $6m Cambium loan? )
- 5G spectrum (the $1.6m have to pay every year for five years to the governemnt after the company paid overs in an auction. Wasnt this meant to be funded by the cambium $6m loan?)
- Working capital (lollllll, this is more like "Fund Operating Losses", which are in the cumulative $30 millions year on year)

Using "capacity" in the presentations as a key metric is the oldest trick in the book. These guys could build the biggest and fastest network all over Australia, but only thing that matters is the number of customer sign ups and churn as this translates into REVENUE. Goes to show managements mind set is more interested in blowing shareholders cash on fancy capex projects, without making smart nor efficient capital allocation decisions. No value add.

The optus collab for nvidia was purely a liquidity event to get escrow holders out, a pump and dump for one day. The optus agreement doesnt add value, as the optus customers already had access to GeForce now, in fact even telstra and TPG and iinet customers have access to GeForce now, but no one in australia values geforce enough to pay for it, so the thing bleeds cash.

Once these placement shares get issued, going to be alot of the new holders dumping on market from lack of newsflow, and because the dilution has blown the shares on issue out to 400m, so now theres a ceiling on how high the share price can track.

The brokers were even forecasting an equity raise in their research reports but not until FY24, to stem the losses, so the losses must be worse than previously thought if the company needed to fast track an equity raise, Wiluna Mining 2.0?And euroz even gone so far as to DELAY issueing their updated share price target since end January- all the smart money long gone from this one.

havent seen management nor directors put their hands in their pocket to buy shares on market, must be over valued?? Chairman has bought a token amount, but nothing material in dollars. Zero faith from the top about the future to this company.