what a whole lot of potential crap there steve

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30/07/22

11:29

Post #: 62827331
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Originally posted by steve10: ↑

PMOC went up significantly Q4 FY22 & reduced the GP to 49.28% compared to 60.43% in Q3 FY22.

GP was down -11.15% in Q4 FY22. Possibly due to high fuel prices but they had a 7% fuel levy from mid April. GP in half yearly report was about 57%.

There is no explanation for the $1.095M expense for item 2.2 (d) investments.

This is interesting from the report:

We have also identified that there has been a material amount of GMV leakage where transactions between suppliers and buyers that were introduced by Kaddy have been processed off platform.

After consulting with both suppliers and buyers, we have identified the friction points that have led to this and are in the process of addressing these, starting with the introduction of the new pricing model (which includes separated order processing and payment accelerator fees) along with a range of platform functionality improvements including the development of a much wider set of technology integration tools.

Suppliers didn't want to pay the platform fees. Had to reduce fees. Platform therefore needs to be reworked with features so this cannot occur.

$3.354M cash balance + $576k loan available = $3.93M + $10M CN = $13.93M.

Best case they burn $3M Q1 FY23 + $2.5M Q2 FY23 + $3M Q3 FY23 = $8.5M leaving $5.43M balance by end March 2023 so another CR required. Possibly another $10M via CN or they will acquire/merge with eBev along with a placement/CR/SPP or it will be lights out & CN holder will take control then liquidate the business assets. Maybe investors will be sold a Singapore expansion requiring more funding via CN?

They would have been better off bedding down Parton's acquisition & becoming profitable prior to going all out on the marketplace & Kaddy acquisition with massive dilution. Kaddy would have been stuffed by now & could have been bought for peanuts. Kaddy were bleeding cash in a big way & still are thus would have had difficulty raising funds under the current environment especially with nil YOY growth. Had a business plan with 5-10% marketplace fees which was not feasible. Highlights that they didn't do any market research. Wasted time & millions on Winedepot marketplace.

I didn't think 5-10% fees was feasible but gave them benefit of the doubt. I calculated that suppliers would raise prices by 5-10% as they wouldn't want to lose margin. That's exactly what happened. DT was confident he could take a 10% cut of the 30-40% margins but this proved to be unsuccessful. Will be lucky to take a 1-2% cut with pricing remaining competitive on the platform. Need to target huge volumes with minimal fees similar to financial payment processing companies. eBev free, Provi/SevenFifty minimal if any fees, Spiritrade 2% fees while Winedepot/Kaddy aimed for 5-10%. A year later they realise it's too high & cannot attract big brands even when they were offering warehouse storage for free this time last year. When DT was quizzed about eBev early on he mentioned DW8 was different. Is it? Not really. Fulfilment will not be used by the big brands as they have their own networks. If anything Kaddy/Winedepot were a rip off trying to skim 5-10% fees whereas eBev was free.

Needed an aggressive plan like allowing all big brands onto the platform for free during first 6-12 months then say charge 1% for a year & raise it to 2% after 2 years.

Anyway, we'll wait & see if they can turn things around during next 2 quarters.

US markets green again overnight so appears the rally may have legs.

Morningstar FV is currently 6c = $158.7M MC / $18.14M TTM = x8.75.

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what a whole lot of potential crap there steve

DW8 Price at posting: 1.9¢ Sentiment: None Disclosure: Not Held
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