Time for management to be called out here, their performance this last quarter has been a disgrace
ALL TIME LOWS
The stock is currently 16c, all time lows - now down 25% from IPO price
As I've said multiple times, the issue is not market related or to do with the fundamentals, it is solely due to how management run this stock and how they completely neglect the shareholder base with news flow. There are shells that trade at $20-40M market caps, yet SP3 generating good revenue and soon to be CF+ is trading at a $7M cap ... it is a farce
There has been no material news since mid October, no bidding or support
Management have left the stock to get butchered on light volume, whilst throwing out excuses of it's not their job to micro manage the SP etc. There is a huge difference between micro managing and neglect / incompetence IMO
The issue is, they are absolutely useless at marketing this stock, making it exciting, up selling the potential etc
The BOD think like bean counters running a private listed company IMO. It is all good to think the financials will take are of themselves and do the talking, but it's nonsense. There are 2,000+ stocks vying for investment on the ASX, the last 3 quarters of news have fallen on deaf ears, and so to to think / hope that the Q4 numbers will suddenly change if they continue down this same course, is naive at best
Whilst SP3 shouldn't need a CR and is due to be CF+ early next year, a few $M injection early next year would provide breathing room and allow them to pursue other opportunities (US expansion etc). At the current rate, they are going to be forced to conduct a CR at or below IPO price, which is a disgrace
CANNABIS EXPOSURE
I emailed SP3 back in June advising that I had multiple contacts in the cannabis industry , and that I could assist with getting them a pilot trial with major cannabis group. I was told Andrew Hagen had it covered back in June.
We have not seen one cannabis trial announced yet, despite the numerous references to "high value crops" ...
I introduced SP3 to one of the early founders of Canopy, to a Colombian group setting up new operations in BC and a few others. This was some weeks / months back, the guy in BC is still waiting for a proposal
Now I'm not privy to the discussions, but if I can source interest that quickly, from outside the wall for pilot trials, simply sending a few emails or messages on Twitter, then there is no excuse a major deal hasn't been achieved here yet
I don't know why this isn't being pursued with priority. Even if it came at a small net cost to SP3 to get into bed with major cannabis group and conduct a 3 month trial, the association alone of providing them security would have enormous uplift to the SP, sentiment, our market awareness, flow on deals etc well before results ever come to market
LEAD BROKER
I have been telling Peter Holton since the start of the year the need for a quality lead broker and one incentivized properly. I introduced PAC to SP3 originally because they have huge runs on the board with CAN, TTT and a few others, however the deal proposed by SP3 misses the mark by a long shot
This shows managements lack of market nous IMO and part of the problem:-
After 12 months, PAC will have vested just 900K * 20c options. Meaning that if the SP3 is sitting at 40c, the options are worth $180K in total. This is hardly incentive to get behind a stock big time when they pull a multiple of this on other deals regularly
The news of PAC's appointment came on 31 / 10 / 2018, when the stock was 22c. Since then it has tanked 27% to new all time lows, so it is evident the stock is not being supported or promoted yet
My concern is the way the deal is arranged, there is far more incentive IMO for PAC to sit quiet till next year, leave SP3 to their own devices to market the Q4 results, and hope that SP3 approach them for a $2-3M raise right as they are becoming CF+ and at or under IPO price. The 6% fee on the $2-3M would be $120-180K alone. Take the stock to 40c after you are set for a few $M around 15-20c, it starts to be worth their while
SHARK WARNING SYSTEM
SP3 announced the launch of the Shark Warning System on 15 / 10 /2018. That was a half page announcement given for 2 warning systems at Graceville and Margaret River
Since then, despite the multiple shark encounters, the increase public pressure and calls for added safety measures, it would appear we have not secured any more locations ?
Well as it turns out, SP3 actually secured an additional 2 beaches, Castle Rock Beach and Yallingup Beach just last week
Punters would be forgiven for missing this update, as SP3 put it out on their Twitter and not via the ASX
You'd think that given the stock is offered on all times lows, that there has been no material news on the Shark Warning System since launch, and that the government has now installed the system on some of the more notorious shark beaches, it may be worth a 1 pager via the ASX
SOLUTION
IMO, this is in no way a sinking ship despite the lacklustre SP. The business should be CF+ in the next quarter or so and the underlying business is growing nicely, there is just a huge disconnect between the SP and fundamentals due to woeful shareholder communications
If SP3 was sitting on $M's or not reliant on external capital, then management's heads down, bums up approach and lack of communications / marketing could be swallowed. However, when there is a fair chance they'll be looking for capital next year, and the stock is at all time lows, action needs to be taken
It isn't good enough to let them continue down this path, then be forced into a lowball CR next year and simply blame the market, especially when it can be prevented so easily now
1. Cannabis Exposure
SP3 should make it a priority to secure a major cannabis deal. Even if this comes at small net cost to the company in conducting a free 3 month pilot trial, you jump at it. There is no shortage of ideal candidates. The SP reaction would be notable, SP3 would have it's name in the cannabis protection space and no doubt get flow on leads and business during the trial
This isn't simply to tack onto the 'cannabis hype'. These facilities are huge, they require advanced security measures as part of their licensing and many have commented the technology could have added uses such as syncing to infield monitoring systems etc
2. Lead Broker
PAC should be incentivized to support this and get behind it immediately. I would propose to give them 1-2M 20c options expiring Dec 2019 as fees for leading "US Expansion", then have them roadshow and promote the stock
Any CR's should be conducted Q2 2019 as a minimum and no less than 30-40c
3. Shark Warning System
Twitter is not the place for releasing material updates, such as securing additional beach locations. Given the initial cameras are still during their trial period and the government is already moving to additional locations, it seems a huge positive and material to me
END
For those who think I'm simply ranting / complaining, I've actually been lobbying a few of the major shareholders behind the scenes, such as Richard Wilkins who holds 5M
I hold / control close to 1M shares personally, having added more this quarter. I am that confident that SP3 is a no brainer turn around and simply a result of poor shareholder communications / marketing, that I even offered to do the role for free and guaranteed that I'd deliver:-
1. Doubling of the company revenues in 2019
2. Land a major cannabis trial / pilot deal within next 3 months
3. Land a major mine site sale within the next 3 months
(20min delay)