Member Info for Kooba

Investors need sufficient information on commercialisation prospects to be able to make decisions not just figures pulled out of the air by a company that serially misses targets.

How can we verify the growth prospects without know the market the one small order is destined for or whether it is a one off or likely recurring order.

The company say the share price is illogical ( BT in presentation) but there is nothing for shareholders to make any independent assessment of. Not even the size of the order that they brag about..how can that be confidential?

Troublesome i make you right with the best will in the world strikes me in the wonderful world of new state of the art devices very few meet the time timetable they hope with the inevitable delays down the line.maybe the company has already adopted a more cautious approach and that is factored into guidance but after many years of missing and the experience of the capital return i’m not sure their expectation management has changed.

Well they have some ongoing r&d and will be getting interest on cash balances which haven”t been seen pre second tranche so that helps. Their revenue numbers are somewhat difficult to interpret from a cash flow basis due to the treatment of the Samsung settlement which is accounted over the length of the patents but is a non cash item as the money has already been received some spent some to be returned. So the forecast is for revs £8.6m for current year to july 2024 but that will not be showing positive cashflow.

My guesstimate is they need a fair jump in revenues over the r&d work currently factored to move to cash flow breakeven.

Doing it myself now

Not by 2026

“Forecast mobiles adopt SWIR in 2026”

https://wp-nanoco-2020.s3.eu-west-2.amazonaws.com/media/2023/10/Final-Results-FY23-FINAL.pdf

Small point because i have no idea what product our materials are in or intended to be in but just in terms of when the company may achieve cash flow breakeven think its best to say they hope to achieve this during CY25 rather than for CY2025. Also from the company’s last results presentation there is a forecast for mobile adoption by 2026. This kind of timetable better fits the r&d timetables for the next gen products. So how they get to cash flow breakeven in CY2025 is likely down to gen 1 materials in none mobile…unfortunately we can only imagine how the kind of revenues and margins required to achieve that are going to build into some sustainable levels from the scant information available…but build they need to do an evidence that is happening sooner rather than later would be helpful. Maybe the results in a couple of weeks time will shed more light.

Ngr I’m unclear how you threaten legal action to a party for potentially infringing ..but I get your point hopefully some lessons learnt and with litigation experience and some cash we might have more clout in getting an up front licence of sorts and not get bullied again !

Certainly the bull case is pretty strong on a risk reward basis. Post distribution when there is a more concentrated interest in the manufacturing business the potential upside of the company delivering on its commercial strategy is far greater than the downside of it disappointing in that mission. If there was more trust in the delivery I’m sure it would be reflected in the valuation. If evidence mounts that their products are gaining traction then it will get factored in.

The comments on display are intriguing too have they kept more money back because they expect to take another infringer to court and want to demonstrate financial strength ..these things can take a while but wouldn’t be surprised if they show their hand soon. Problem there is the deal with Samsung sets a very low bar per unit and any other company will be a fraction of Samsung volumes. But there is definitely a bull case and I’m hoping the new Ned’s bring about more clarity around the corporate governance and messaging issues , maybe also introducing the idea of an experienced commercial director with some experience in dealing with the likes of STMicro and other multinationals.

One of the founders of the company and current CTO and main board executive Mr Pickett ( the guy who knows more about the technology and was the big threat he might leave.. that guy) he is tendering to sell 38.5% of his not unsubstantial holding..so rather odd if they don’t think this will go through. His tender is enough to take it over the minimum 1% of shares in issue to proceed.

“What’s more important is do I believe the company? Do we believe what Edison or Turner Pope are saying when they assert the company is undervalued in their opinion and well positioned to generate long term shareholder value creation?”

Believing what Edison and Turner Pope churn out as Gospel is also not something that has worked well for investors…it is just defined as marketing material which is only ever a very positive interpretation of company prospects. When you are paid to do it there is a real bias!

That’s not to say the company do not again believe their own narrative ..but just that they haven’t necessarily delivered what shareholders have been led to expect it seems to me.

The £30m is topped up to £33m with the on market £3m buyback getting them over the minimum £33m wire.

I am slightly more concerned that it appears what should have been available to leave the company with £20m is firstly less than one might expect at what appears £56m and that the firm commitment numbers are also impacted by the late decision to retain £23m not the planned £20m ..the cash position could have been depleted from buying kit for fab and general increase in fixed costs , there is no specific new reasoning behind retaining more cash but could relate to a legal challenge to an identified display infringer I guess.

Either way commitments to secure shareholder support have proved to contain some perceived optionality by the company

There is a low threshold of subscription for this to proceed.

“..receipt of valid tenders in respect of at least 3,244,187 Ordinary Shares (representing approximately one per cent. of the Issued Ordinary Share Capital as at the Latest Practicable Date) by 1.00 p.m. on the Closing Date;”

But as they say if there is a low subscription level they may look at alternatives post tender.

They could tender where they liked…there is a balance though between where they think they will get shareholders accepting and trying to retire as much equity as they can for the benefit of remaining shareholders. We will know if they pitched it right once they announce subscription levels. You can probably say they are comfortable the business is worth more than 24p with current shares outstanding justifying the action and hope fully enhancing medium to long term value in the process. Thats where the choice is for shareholders short or long term perspective .

One thing i do think is that a small technology company should not be over funded , they find lots of ways to spend money and it removes the commercial pressures that living hand to mouth gives. Sometimes at inflection points as we are led to believe we are here there are different skills in sales and contract structure negotiating than just r&d development arrangements and as we are well know there are sharks out there ..so far there is little evidence of the firms commercial acumen as of yet , there is little evidence of much on the commercial side at all!

That is true there remains a far more concentrated interest in the underlying business the % upside in the remaining shares should be far greater if the company manages to deliver on its stated strategy. So the long term view could be more bullish having retired some outstanding equity …in the short term though if you wish to take advantage of the distribution there may well be opportunities if the recent basis of valuation remains fairly consistent around cash per share levels.

Hi everything you should need to know will be in these circulars. They will have been sent to your broker/administrator who will contact you to make decisions around what you wish to do.

There is not pressing need to do anything as the process needs to be approved at a GM before things can actually happen.

https://www.nanocotechnologies.com/investors/documents/

You would think the company would realise this and likely are very aware of forthcoming events that could become a factor. I also note that directors are discretionarily participating in the process ( could be factor around the delay as pdmr’s would have been constrained during a close period ahead of results due on the 27th March ..they will be clean to deal after that ) so it becomes rather complicated if anything price sensitive emerges during the exercise and could result in a significant waste of money ..so i doubt it will.

The company will have circa 200m shares in issue and £26m cash = 13p cash per share post a fully subscribed tender..that amount will decrease as they go about the on market share buyback.

There is currently about £7-8m in enterprise value in the market cap if that was transfer to the smaller amount of shares in issue that would translate into about 4p.

So all being told it is highly unlikely that the shares will fall much below 17p on a like for like basis..and the buy back should give some stability.

But i do see a post entitlement correction.

With the level of apparent institutional support it’s unlikely that resolution 1 will not get through..but folks not pleased can always vote against resolution 2 which is moving existing arrangements for the advantage of staff bonus’ .. If there is some opposition it might be a protest vote if nothing else. Think they realise not many pi’s vote even though they represent the majority of shareholders..they could have put some alternatives up in a GM and acted on majority view. Wonder if 4% shareholder TH the largest non institutional holder was consulted…pretty sure I know the answer to that one!

No issue at all..but bear in mind also most nominee holders will need to commit well ahead of the 9th April so anyone buying close to that date might not qualify depending on the administrator.

Those that tender also if you tender all of your holding then you will likely be unable to deal in your shares whatever amount you successfully sell for some time as during corporate actions there will be a block on shares tendered.

Aquae..i don’t think you have missed anything.

Flying

However the organic business is currently valued at £0 so there's scope for that not to happen

The organic business has had some value as from what the company are putting forward the cash position pre distribution is lower than expectation. I calculated net of debt the company should have very close to £60m cash from todays numbers that appears to be more like £56m

So having now done the sums current cash appears like 17.3p not even 18p. So there is about £10m of enterprise value on those latest numbers. I guess the £4m difference is in the crates being delivered and increased fixed costs.