"Even though their cash flow may not be that desirable for a...

"Even though their cash flow may not be that desirable for a Takeover Offer to come their way, KNO's product/solutions/tech itself is quite valuable."

On the contrary, with some of the medicine having been taken in terms of better-sizing the cost base, the resulting free cash flow generation (2.2m in FY2023) would be very attractive to an acquirer.

Heck, even if FY2023's FCF is normalised for unusual timing cash receipts (i.e., to a conservative $1.5m instead of $2.2m), a corporate acquirer of the company could strip easily out $1.0m of duplicated fixed overheads (for context, even apart from stuff such as ASX listing fees, office rents, etc., the KNO Board, CEO and CFO cost the business $1.3m.)

So, assuming a generous one-off implementation cost (restructuring, redundancies etc) of say, $2.0m, the FCF of the business could become $2.5m pa which, if capitalised at just 5x EV/FCF (i.e., a conservative 20% FCF Yield) would imply a takeover EV of $12.5m, or an Equity Value of around $14.7m (assuming $2m of the current $4.2m cash balance is used for the implementation expenses).

$14.7m equates to around 9.9 cents per share (say 10cps for easy maths).

So an acquiring entity could pay a 100% premium to the current market value (even after today's share price rise) and still end up with a business yielding 20% FCF on the invested capital.

But it would have to be a hostile arrangement, I think, because I very much doubt that KNO's current Board and management are of a mind to hang a For Sale poster outside the company front window.

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