Hmm...that balance sheet..,.

Hi all,

First...a big thumbs up to Brett and Psalty for uploading their AGM snippets.
Second...a big apology for whats likely to be a retired corporate analyst's long rant. Ive been off-grid sailing the Pacific since March so I'm out of touch and just catching up.
Thirdly, Ian and I used to talk as I have 3.17 million reasons left, but the comms line has been muted for about 18 months.
Fourth, I think this is a great product..it is a very timely product/service coming into a new and huge demand curve yet we have fallen somewhat into the trap of prematurely thinking professional technical services take up new technolgy easily/readily. (As an ex mining and petroleum engineer, I know large coys love new tech but usually shiver and/or struggle with workflow change/implimentation...and also associated governance issues).

I would be interested in any feedback or inuendo from the AGM floor concerning their cash/balance sheet state and specifically their strategy until CF+. Because....
I'm concerned for the short term and am sure that short term corporate financing is a crtical agenda item for IO.

4 reasons:

a) The AR stated $1.832m trade receivables at June 30...3DP stated in the June qrtrly that they received $1.8m in July. This doesnt make sense as no company collects all their recievables in one hit like that. Yet you can see how keen they were to call in receivables as they also reduced them by $0.87m during FY23 (ie collected the money in). On the basis it did happen...their receivable closet is now empty/critically low. (also not thrilled they wrote off $0.217m of bad receivables)
b) (a) above is compounded by the contract liability (revenue recogition for other types) that widened $1.45m to $2.71m. This means they took in an additional $1.45m cash for pre-paid work that had yet to be contractually fulfilled.
c) Payables were stretched out an extra $0.384m to $2.615m which would catch the attention of creditors and most likely require some re-negotiation for some of it.
d) and....The $2.87m cash at the end of 1Q23 will not go far with these Payables speaking for and wanting most of it.

Basically, all this means is that 3DP can no longer use the BS to (meaningfully) assist their short term corporate cash flow requirements. I've seen situations much tighter than this in my corporate/VC life...but it is a predicament. "Financially puckerable" was a phrase we use to walk out in younger days.

So with the new big hires and louder creditors, IO must have some very sizable and 'bankable' term sheets with some very understanding and very bankable clients to attract and keep these people and creditors on side. To assist this, IO also made a point of highlighting some share based payments coming in yesterdays presso. These are likely to be on-boarding enticements but Its not uncommon to also offer key empoyees salary for equity deals in cash strapped times (maybe $2 option equity for $1 salary)....we'll soon see in the Dec half yearly.

I just hope IO can keep away from the Mezz finance vultures. Unfortunately, I know how they operate and I suspect our 3DP would have (after the SPP result) moved into pecking range of a few.

Yet I'm thinking its better than 50/50 that IO does have something of real substance to show and can skate us over the next 6 months of thin ice. No evidence...just a hunch I've pulled from between the lines.

I'm staying...

Rant over