Ann: Suspension from Official Quotation - Continued, page-148

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McKhenry

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25/05/21

09:14

Post #: 53390092
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Originally posted by Holdtight: ↑

Why would it open at 2c or 1c? $60m- $30m market cap? Account receivable of $6m, and inventory of $14m. Prior to this hiccup, the coy was on target to be EBITDA positive. IMHO, that will still occur in 2021. Demand remains strong and growing.

What has really happened?

They double accounted for the March quarter. That meant the guidance was wrong for the 6 months. The $4m in expected sales for March turned into extra inventory. Not a good look but not exactly a catastrophic event!!!
It does mean however, that the expected reorders from that $4m in the June quarter, will not occur.
Therefore, the March and June quarters will be lower than forecast. The extra $4m inventory is being sold direct online ( so that cash comes in faster than through retailers), but it will still leave a cash mismatch from their forecasts. They will need to address that mismatch. Again, not a good look but not a disaster.
Then they announced a difficulty in accessing chips for some of their SKUs. This is a global phenomenon. Some SKUs require 6-8 chips and others 1-2. They need to prop and adjust the manufacturing to maximize $$ from the chips they do have access to. There is also a replacement that required 2 months to test. No short cut here as the lights need to burn for say 500-1000 hours.
This event will set them back a few months. BUT, switch ( not affected by chip shortage) is due for launch in June. Light demand have never been higher. The Second manufacturer must be almost tooled up and ready to commence manufacturing.

IMO, the delay in returning to trading is based on the fact they will need to address the cash mismatch, and therefore need all the information checked and locked in.

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It won't matter if the second manufacturer is ready to go, if they cannot build lights.

They won't come out of suspension without a resolution on the chips, as that goes hand in hand with guidance.

Not that they are that great at predicting the future

BUD Price at posting: 4.3¢ Sentiment: Hold Disclosure: Held
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Ann: Suspension from Official Quotation - Continued, page-148

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