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Thanks for a strong analysis, Morbox. I also believe that Nanoco is in a good position. Moreover, I suspect BT and other Nanoco management know more than they are saying, which limits their ability to buy shares at this time without risking lawsuits. We also need to recognize that Nanoco employees have been underpaid for many years and probably lack large investment resources. After seeing them struggle for so many years yet remain loyal, I hope that they will benefit signifiicantly in the future.
Having failed to control Nanoco, why would he stay invested. Good riddance of an apparently evil person who appears to lack good sense. Sadly, he will probably manufacture a new justification for suing Nanoco. While he may win against Lombardier, he is not likely to win any further lawsuit. Nanoco has advised everyone that it expects sales expansion in the future. I plan to buy more shares following the conclusion of their current open market purchasing program.
Despite what is said on this blog, I believe that Nanoco management are neither dishonest or dumb. I cannot conceive that they would have executed the buyback without expecting substantial orders this year. If and when this happens, we will see an upsurge in share price.
The fact that the share tender was oversubscribed is puzziling, but may indicate that LOAM lacks inside information. On the other hand, a large LOAM sale would probably cause the share price to drop, enabling them to buy back shares at a lower price.
I stand corrected If Nanoco fails to receive the anticipated orders this year. I would also lose much of my investment.
Nothing is being returned. Nanoco is simply giving us the opportunity to sell our shares for slightly better than the market price. This shows that they are not idiots. I bought large numbers of shares with the intent of holding on until Nanoco becomes profitable. Why would I want to sell now when they are nearing some level of success. If the buyback is unsucessful, they will likely raise the buyback price. If successful, the number of shares will have been reduced substantially, causing a eventual increase in value, especially if profitability is achieved in 2025.
While Samsung led the world in Quantum dot TV product development, it galls me to see Samsung get pioneering credit for quantum dots. Samsung led Nanoco on for years in order to steal their technology. Samsung's enormous influence in the industry appears to have helped to block Nanoco at every effort to succeed with other companies. Ultimately, Samsung's top scientist admitted to being unable to create cadmium free QD's and asked Nanoco for help. Samsung eventually transferred stolen techonology from Nanoco to a Samsug subsidiary and possibly even other companies such as Nanosys.
Amazon was the first company to produce quantum dot devices in mass quantity. I bougnt one of the first Kindle QD products. They were amazing, but did not use Cadmium free dots. Kindle's later models did not use QD's, probably due attention drawn to the cadmium danger.
@ Two-Good
1) Two-Good: Samsung IP revenue recognition is £6m a year.
Amerloque: Nanoco has defined Samsung revenue recognition to be 3.1M bi-yearly. This is in stone and will continue to be treated as revenue for many years. Nanoco expects to receive licensing fees from other customers in the future, perhaps even in 2025.
2) Two-Good: Cash already received, can't have it twice, nice idea, hence its just spreading the settlement" into the future and recognising it as future (fully paid) licence revenue..
Amerloque: A. Can't have it twice??? "Long-term prepaid subscriptions (e.g., annual plans) should not have revenue recognized upfront for the entire amount. Revenue is recognized gradually over the subscription period, aligning with performance obligations. Deferred revenue moves to recognized revenue incrementally." Nanoco would report an annual total of 6.2M Pounds in quarterly increments. Since Cash has already been updated at the time it was received, one would never update it again. Revenue Recognition affects earnings, not Cash Balance.
3) Two-Good: Whereas cash spend is a given £400k a month upto £4.8m burnt which needs to be covered.
Amerloque: ???? No argument here. Nanoco specifies that they will recognize sufficient earnings to breakeven. Given identified earnings of 7.1M per year and prospects for new sales, this should not be difficult.
4) Two-Good: Breakeven I believe was in cash terms not underlying or reported profit terms.
Amerloque: Although Nanoco did express cash flow breakeven confidence, profit breakeven seems to be a much easier goal. If Nanoco achieves cash flow breakeven, we should see a nice profit, especially since the licensing revenue carries almost no Cost of Goods expense.
I have finally discovered how to convert my E-Trade NNOCF shares on the US over-the-counter market to Nano shares. After discussing this issue with multiple brokers and even Nanoco management, I have discovered an incredibly simple solution. Every broker told me I could not move NNOCF shares to their accounts. Thus, I was forced to keep almost 200K shares on a very illiquid exchange, and that I would need to sell them and then repurchase them at a broker able to trade on the LSE. It greatly limited my ability to manage these shares.
The solution turned out to be incredibly simple, since the underlying NNOCF shares are, in fact, LSE Nanoco shares. Frustrated with both E-Trade and Morgan Stanley who had acquired E-Trade, I decided to move all of my accounts to IBKR (Interactive Brokers) and evenually replace them with LSE Nano shares. I had expected IBKR to not accept the Nanoco shares. Surprisingly, they accepted all, and I now own the equivalent number of Nanoco shares. I can now trade these shares directly on the much more liquid London Stock exchange.
I strongly recommend that all NNOCF share owners investigate moving their shares to IBKR.
@twogoodtodie
Thanks for the calculation. However, my calculation differs considerably from yours, as explained below. I welcome any corrections to my calculations.
1) If Nanoco can achieve a gross marging of 40%, they would need a gross revenue of 10.5 British Pounds in 2025 to cover the 4.2 Pounds Burn Rate.
2) Since the revenue table is only for first half of Calendar Year 2024 (beginning in August, 2024), the anticipated 2025 License revenue should be 2*3.1 or 6.2 pounds. This license revenue is built in to Nanoco P&L's for many years. Service and Material revenue brings the total revenue to 7.1, leaving a deficit of 2.4 pounds.
2) Thus, the expected EBITDA margin of 40% would require only 3.4 Pounds of additional revenue to meet breakeven.
3) While licensing helps to provide breakeven, there would still be a cash flow deficit, since the Samsung licensing revenue has already been recognized in the books (I am not sure how delayed revenue recognition affects Cash Flow). If Nanoco correctly anticipates positve Cash Flow in 2025, Nanoco must expect another large material contract coming in the near future. Apple's decision to introduce Pro Vision into China in 2024 would possibly support this, as would Nanoco's years-long involvement with a large Asian company.
Kooba is right. Nanoco's tender offer would not happen if they did not expect a promising future. If the tender offer is undersubscribed, we can expect Nanoco to raise the offer. This would mean that current shareholders would participate to a smaller degree. I have made two decisions now and recommend that other US citizens do the same.
First, I feel that my trading account in E-Trade, now owned by Morgan Stanley, is unsafe, especially with changing US banking laws. I am transferring my account from E-trade to IBKR. Also, this will give me the opportunity to trade on the London Stock Exchange and thereby avoid the Over-The-Counter travesty known as NNOCF.
Second, I will wait for an increase in the tender offer before making a decision.
@daz-- trouble brings another reasoned voice and a good sense of humor. as country folk used to say in mississippi, "he ain't et up with himself."
there is a great french word that describes some of what gets discussed on this board, "radoter". it means "to ramble on". i noticed once that subtitles in the movie, "american grafitti" translated it as "talkiing ****e". when i later asked a frenchman the meaning, he confirmed the grafitti translation.
Thank you, Ecclescake. You have always been a voice of reason.
Someone else on this blog recently applied the Peter Principle to BT. I don't feel this is justified. Edelman, the prior CEO, had neither a business nor a sales background. While the BOD could eventually have found a better choice, it might have been too late to save the company. Nanoco's most severe problems were financial. I tire of all this constant criticism of BT. It achieves little.
Thank you, Ecclescake. You have always been a voice of reason.
Someone else on this blog recently applied the Peter Principle to BT. I don't feel this is justified. Edelman, the prior CEO, had neither a business nor a sales background. While the BOD could eventually have found a better choice, it might have been too late to save the company. Nanoco's most severe problems were financial. I tire of all this constant criticism of BT. It achieves little.
BT replaced Edelman as CEO and had to deal with the latter's disastrous baggage. I refuse to believe that Edlelman did not allow and, even silently encourage, Samsung's behavior. Edelman had had no experience in sales and and no ability to read customers or willingness to stand up aginst the Samsungs of this world. He seemed to lack the afility to recognize and hire strong sales management. I strongly suspect that BT and Nanoco's lawyers ultimately discovered compromising behavior and implied agreements that could have resulted in a Nanoco loss. We are probably lucky that BT was able to escape from Samsung with as much as he did.
In summary, those complaining about BT's decisions could not possibly have appreciated the degree to which his hands were tied.
While the board could authorize the issuance of a tender offer, recognize that "a tender offer is a public bid for stockholders to sell their stock". I don't believe the board could authorize any related share sales. Any shareholders accepting the offer would be allowed at a later time to withdraw this acceptance (e.g., if the tender offer is increased). Due to limited funds, the board would need to limt the offer to a maximum number of shares. This could lock out smaller shareholders and benefit better prepared major shareholders such as LOAM. There exist, therefore, legitimate questions regarding MAR implications?