Pinned straw:
Just went down a rabbit hole on the latest annual report ... (trying to work out my latest valuation)
Trying to work out the negative cashflow -8.052M and get a feel for when these guys are going to run out of money and need to raise more capital. They've only got 8.22M cash so look to have less than a year or runway left. Based on their last raise and burn I'm guessing they are going to be looking for another $10m or so which would be a further 10ish% dilution.
In doing this digging I realised how large an amount of goodwill they have on their balance sheet. In viewing this, they have racked up 66m of retained losses to generate 107m of intangible assets. This seems to be backed up by a DCF model from management.
My key question here is how do these figures compare with those in your DCFs or estimates of value (mid teens revenue growth rate with 12.5% discount rate) that seem to have lead to a consensus valuation of 15c per share?
Strawman
Just putting some thoughts together on EVS's results now, but just wanted to note @RhinoInvestor that the goodwill is largely about the acquisition of EMS in early 2020. Right before COVID struck -- talk about bad timing!
It was really a reverse takeover, and frankly I wish they stayed focused on their Industrial solution. Covid messed things up a lot with the aviation segment, and things look to be on the up now, but not sure if it wasn't a giant distraction and pretty sure shareholders would have been better off without it. Maybe history will prove otherwise in the fullness of time.,
They paid $70 for EMS and issued 350m new shares to help fund it. Plus there were options (although cant remember if they were ever executed. the strike price was 20c)
Anyway, from their FY20 results preso:
EMS recorded $47m in revenue for 2019 calendar year of which $35m was in annuity revenues. So basically, no growth recurring revenue since then, and total trading revenue is down about 20%. I'll ask Jason more about this when we catch up with him on Thursday.