If you would like to ask our webinar guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund a question please submit them here.
Because it's the last chance saloon funders, if you don't get the funding, you'll get a not a going concern audit report, then the sell off would destroy the company and you will have no customers or funders.
The finance is needed to ensure the accounts can be signed off a going concern. Now the hard work starts and the company have to prove up the revenue and start making money.
But for balance
Even with death spiral finance, a company can successfully navigate this with excellent operational performance, so IM and signed contracts are a way forward from these CLNs.
You are now basically investing on the integrity of AZ and him hitting a home run getting the customers and funders in place.
Itsagametome
This link explains it better than I can
https://www.investopedia.com/terms/d/deathspiral.asp
@HereKittyKitty
I don't really want to get involved in this discussion as I always try to stay as unbiased as I can.
But..
A CLN is not your normal case if finance, Negma will benefit from both an increase or a decrease in the SP. That's the nature of a CLN, they benefit the company with cash flow, the funder gains no matter what, the PI lose out. Negma gain more with a reduced SP, not an increased SP, as they gain more shares.
A CLN will sometimes adopt a strategy dump and pump, manipulate SP down, convert and pump, sell off and reduce SP again for next tranche.
Not saying it will happen here, Negma might have good intentions, we don't know the behind the scenes and integrity of the funder
The accounts are what's important now, and learning and recognising a trading pattern that MAY occur ten times running.
Absolutely spot on Theanalyzer.
I have never been a fan of CLN's, they are the business worlds sub prime debt companies, and people thinking that the lending company need to do DD are sadly mistaken.
There will certainly be no issue with going concern now, but the cash burn and revenue expectations are of imperative importance.
Lets hope AZ isn't taking the Euro's too literally and in the spirit of the England football team, snatching defeat from the jaws of victory.
Bad day for SYME, but AZ is young, surely he wants to build a legacy and turn this around.
@Hallowed
I think you mixed up two audit report outcomes:
A going concern will be in the audit (it is forward looking ), the phrase makes people automatically think it's a bad thing, it isn't:
- A company of going concern due to revenue is great for investors, it means the company can pay its obligations due the revenue it expects to achieve
- A company of going concern due to funding is "meh", it means the company can pay it's obligations, but by either obtaining a loan or issuing equity to boost it's income
- A company not of going concern - basically bankrupt and liquidated
- If the auditors are concerned the company is not of going concern, they don't believe through funding or revenue that the company will be able to pay its way, and would expect that company to fail within the next 12 months.
A qualified audit is completely different, and based on historical data rather than the forward looking going concern. It means in some area of the results, there has been discrepancies, even though as a company you do not want a qualified audit, it is normally still acceptable for lenders/suppliers to still trade with you.
No Problem
We accountants like to phrase thing so ridiculously and make things difficult for non accountants to understand, when actually, they tend to be straight forward. We don't like to admit that though as it would mean we have to reduce our rates and charges! Just try to work out what why we class debits (good) and credits (bad) on a balance sheet, but debits (bad) and credits (good) on a P&L.
For anyone wanting to learn more, google a book called Accounts Demystified: The Astonishingly Simple Guide To Accounting, really can assist non accountants and introduce them into the world of financial reports.
@MikeyInvestor
Impossible to answer without knowing the data. To answer this, you'd need to know expected expenses for 2021 calendar year in full.
As for individual revenue streams, again as they will not all be of the same value, no number can be put on this to quantify. You may have one stream that covers all expenses, alternatively you may have 20 that doesn't cover it fully.
In my opinion, It's really best to not speculate and just wait for the report, nobody should know any different know apart from the BOD and auditors, and any trading on the back of that would be insider trading.
BTW, if the company is of going concern due to revenue, that is a good thing! Every report will have a going concern statement, don't read the headline and suddenly start panicking, its what is in the going concern evaluation that's important.
@Poorinvestor
I understand delays are possible even acceptable in certain circumstances.
If you look at my history, what I don't find acceptable is a company stating a self imposed deadline, and then not sticking to it. They are the custodians of your investment, their job is to protect shareholders through their actions. The accounts are due end of June, there should never have been any information regarding dates that bought this expectation forward and put unneeded pressure on the SP. If there was no expectation on the release of the accounts, the funding would get completed in the background, and the accounts would be released on or before the statutory deadline with no drama. Was it a mates rates play, we'll never know.
I would hope AZ has learnt from it, as it dropped 5% on the day due to his words and his words only, plus with the introduction of a CFO, they will never agree to self imposing deadlines for the accounts in future.
@HereKittyKitty
Stat accounts are two fold, one part is analysing the historical performance of the company, basically showing you how the balance sheet goes from one period to another and what makes up the movement.
The second, and most important part of any annual reports to an investor is the going concern concept.
This is the unbiased/educated auditors signing their declaration that they believe they company has enough cash/potential income to meet the next 12 months financial obligations. They are in this whole section basically saying that as a shareholder, you should be comfortable that your company is going to trade for the next 12 months (they don't look over a 12 month period). The auditors reputation is basically on the line.
For me, the delay in stats and funding coincide, and is a normal event for some start up businesses and I can understand why they may have been delayed, if it is to satisfy going concern.
Add to that the report will contain a director statement, explaining what they see in the future and reasoning for the 2020 result, plus the information you can get from the DD fee income, you have a really powerful tool coming with this 2020 stats, which is going to be eagerly anticipated by the wider market.
If you are solely looking at the 2020 P&L/RE result, it's not going to tell you anything, dig deeper and you'll find lots of good info to really get your teeth in, and dependent on going concern etc, to give you future comfort.
Parm, last one as I'm out now and the wife will stab me in throat with her wine class if I talk shop today.
I think both invested and non invested can contribute and in equal measure, the key, as long as they are genuine!
Take this conversation for instance, between you and I, adult and sensible, and assisting with understanding. Look at the other replies I had to endure, that immediately to me shows who the genuine interested parties are, scratch that, I more mean the ones who just want to argue or those who are open enough to read what is actually wrote. I fully believe if I was in front of you, your reply I expect would be exact face to face that was is written here, the others, not so much.
No matter what our background, if you are genuine and open to listen and discuss, we all have the ability to learn from each other and grow as investors, we all want the same thing, to find opportunities and stock it right up the mm's.
Anyhow, that's me signing off this weekend, I look forward to reading later all the abuse I get from the mob who don't even understand what is wrote.
Hi Rebel
Instead of trying to start a personal argument, how about take what I wrote yesterday and tell me what you disagree with.
I think you'll find it was quite positive and gave a reason why stats may be delayed. It's easy to find, just click my username.
What was your issue with it? What is your view on the funding stat correlation? Do you think my analysis was correct?
Filtered
If your personally integrity is trying to point score over someone's personal and family life, I really do have sympathy for you, but have no time to converse with you and play those sort of games. It just shows the sort of person you are.
Apologies Rest of BB, I will stop this childish behaviour and leave Mick firmly in my bin.
As you his comment, I'm in the garden with my laptop, whilst my children are on the swings and slide, waiting for the wife to get before we go to one of our favourite restaurants for the afternoon, not that I have to explain!
Well done Mick
You just keep knocking it out the park with your contribution to this board. You are a true shining light. I had enough of kids yesterday, so if you don't mind just letting the adults talk, that would be swell.
This whole thread is what is wrong with the SYME BB board.
Your SP reduced yesterday, why? Because of sentiment. Your SP will normally move because of one of three key areas, fundamental, TA or sentiment.
The sentiment reduction was recognised because AZ has promised something he doesn't have to deliver, there is absolutely no need to promise accounts before they are due, it puts pressure on the SP that is not needed or wanted, and unless it's a backdoor play for mates rates, serves zero purpose. The market views keeping to dates as a major factor, wether the small PI does or doesn't.
The thing is, I'm not invested, so what? If you look at my comments yesterday, I'd like to think any sensible poster on this BB would not have issue with them. Intact, if Steve or The analyser are reading this, I know you two are LTHs and both display intelligence and understanding, any issue with what I said??
A non investor can add balance and understanding, it is such a closed view of the world to not think this, and could really impact your investment decisions.
Unless you live you life not commenting on anything, you only like cars you have driven, you don't mention other peoples clothes because you haven't wore them etc etc.
Open your mind, sitting in a room with people who all have the same view is dangerous. What you need to do is figure out the people who are genuine and who aren't, I can guarantee there are non genuine holders on here, do you call them out? There are non genuine non invested too, but occasionally in all the guff, they may ask a great question, which in turn will generate a great counter argument, end result, peoples understanding grows from that response.
Anyhow, I don't normally read the board on a Saturday but as it was a beautiful day yesterday and half term, perfect opportunity to take kids out and enjoy a family day, so just catching up. And with that, time to enjoy the sun again, it's Saturday, switch off the laptops and tabs and go enjoy a restaurant or beer garden. The SP is having a couple of days off, you should too.
MikJnN
What in earth have I said to bracket me into this??
I think you'll find I've given complete unbiased commentary and factual responses.
I can only apologise that you do not have the intellect to read it correctly and understand.
Trevor brooking
I'd say he has it correct, and it can be quite normal for start ups to have going concern issues. It's not a massive issue, you don't have future orders for auditors to generate a comprehensive income forecast, but do have a picture of expenses going backwards which can be extrapolated. Funding is normal and keeps the going concern ok.
The issue here is, this should be sorted out before any promises are given to the holders. If AZ did not promise the accounts, you would not know about these things happening in the background and they would release accounts smoothly before the statutory deadline.
Appreciated Steve, likewise, I find your post amongst the most informative on here.
No alter ego I'm afraid, I just say it how I see it, which I understand can ruffle some feathers, I've followed this company for a long time, and am genuinely interested in how it plays out. It has the potential to change how we see the inventory and working capital issues that some companies face on a monthly basis.
But, I want to see deadlines hit, I want to have faith in the communications I am reading, and I want to see some IM. Then, I'm in.
I don't agree Poorinvestor
Under promise, over deliver
The accounts aren't due until end of June, there is absolutely no reason to put deadlines on something that isn't needed, it creates unwarranted pressure in the SP and investor confidence.
I believe you will see the accounts tomorrow.