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VIV

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2.5¢ vivid technology limited

Researcher101, pretty much the same conclusion which I arrived...

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28/09/18

13:39

Post #: 35909942
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Originally posted by Researcher101 ↑

The board and Snr management of Vivid appear to be managing the capital position of this company on an adhoc basis with complete disregard for the long term survival of this company. What are they thinking?

1. On 31 July 2018 the company announces a convertible note for $1.5m. The announcement stated that the size of the facility could be increased by consent of the lender (Evercharge Pty Ltd) (One wonders if they refused to provide additional credit and so the company had to deal with different shareholders?)

2. On 27 September 2018 the company announces a further convertible note of $1.3m with the capacity to increase it to $2.0m to 'different shareholders' BUT only 1.3m of funding had been secured.

The $2.8m of convertible notes with capacity to extend it to $3.5m is NOT an adequate long term solution to what is clearly an extremely capital intensive business.

The recent fall in the share price can hardly be surprising, and the inevitable capital raise is going to be painfully diluting.

FY18 revenue from sales $7.26m
FY cost incurred in the sale of inventories $5.23m
Gross Margin is therefore around 39%.
Note there appears to be no economies of scale in this business as FY17 Gross Margin was around 36% on a paltry 2.3m of revenue.

If you look at the other stay in business costs of the company they total around $7.8m of which employee costs are 4.2m (why these are so high is another question that needs to be answered).

In any case ,assuming a Gross Margin of 39% and stay in business costs of $7.8m implies that vivid will have to do around 20m of revenue to break even. This will not happen any time soon - IF EVER?

The company has NO alternative but to CUT COSTS, and these temporary measures of trying to plug cash flow shortfall's but issuing piece meal convertible notes is a JOKE!

At what price are management going to acknowledge that the game is up! This trajectory is not sustainable.

Tick Tock Tick Tock

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Researcher101, pretty much the same conclusion which I arrived at except I think revenue needs to be nearly $30M and all other costs (except COGS) need to stay at the current levels. Given where they are, I thought the last convertible note was an OK deal for VIV but guessing there needs to be a CR some time soon. Hopefully pricing on LaaS brings some better margins (impossible to tell at present). Certainly not for the faint hearted.

VIV Price at posting: 3.7¢ Sentiment: Sell Disclosure: Held
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0 Great analysis

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Researcher101, pretty much the same conclusion which I arrived...

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