One more thing that was really interesting, and I didn't get around to posting about. Here's their most recent 4C:

I read it and thought: "huh, either something's missing, or I don't understand the conditional IF statement in item 8.6". But then the next day they provided an update with, let's say clarification, of what they will do now that they have less than 2 Qtrs of funding left:

Another red flag. Although, you want an even more alarming colour for the flag that this 4C raises.

I'd already sold out of this business, so it was just a funny occurrence.

So it finally happened, Livetiles in now in receivership: ASX announcement.

I feel like I'm getting better at this investing stuff. For the first time I've been able to avoid riding a business into the ground. I usually bag-hold until after the receivers are brought in. That's not to say that I didn't lose a lot of money, but at least I'm moving in the right direction.

Here's some notes for myself to remember for the future (not all of these are from LiveTiles):

• Do not, DO NOT, trust management when they say that things are about to get better. If it looks like they are going to run out of cash, they probably are.
• A business restructure is bad, but two restructures is a definite sign to get out (if I haven't already)
• Any attempts to change the way the shares are bought and sold (moving to a new exchange, voluntarily delisting, actively seeking to sell the company in a hurry).

I've been meaning to write something about LVT for a while, and I want to get my thoughts down before the new 4C in the next week or two. I also want to keep track of my evolving thinking on this company for my own reference in future.

This new announcement is a good kick up the backside to get on with it: Restructure and Cost Reduction Program to Achieve Cashflow

The latest is yet more restructure and cost reductions. The new one is to save $16.2M/year, which is about a third of their total operating expenses based on their June quarter 4C. This seems optimistic, to put it lightly.

At any rate, it's of academic interest to me now, as I sold out after that June quarter 4C. This was based on this set of data:

Post Dec 4C thesis:

"Well, they've got the new cost-saving measures in place, even though I can't see it in the data yet. Hold on and see what the Mar 4C brings."

Post Mar 4C thesis:

"Well, costs seem to be decreasing faster than revenue decreasing, so maybe there's something there. Hold on and see what the Jun 4C brings. With the EOFY maybe the company can get a buyout offer."

Post Jun 4C thesis:

"Costs up, in particular, the staff costs that were supposedly part of their cost reduction program. Revenue down, while marketing is up a lot! Losses getting worse. Share price trending down and still no buyout offer. Sell."

After all that, I'm dubious that the new structure will change the direction.

It's taken a while to get around to looking at some 4Cs, but now's the time and I see @PinchOfSalt has already given a rundown for LVT, so this is just a quick follow up.

The 4C announcement doesn't explicitly say that the improvement in cash outflow is the result of the Operational Review that they published in October last year, but they hint at it. (See my straw about the review below).

This is a bit confusing as @PinchOfSalt suggested. The October review identified about $6.5M/year in savings of which about $5.5M/year is from reduced staff costs. Quote:

``To this end, the Company has reduced overall headcount globally by 32 employees across executive, senior management and general staff, representing annual savings of AUD$5.48M.''

But they identify only $1.4M of non-recurring staff costs in this quarter, while their (presumably) on-going staff costs have actually increased to $3.9M from $3.1M. Maybe some of that is also costs associated with getting rid of people and will not show up in future, but they don't seem to have made an effort to explain it. In fact, they seem to confuse it further since in the ``Highlights'' statement they say that $2.66M of the cash outflow is non-recurring, although I can't see it in the details of the cash flow statement itself.

The main areas where they did save money is in R&D ($1.1M down from $3.5M) and manufacturing & operating costs ($3.7M down from $4.5M). Also some savings in marketing and admin. This is in-line with their Review, so nothing surprising there.

My takeaway is that this MAY indicate that the company is finally on track to start getting some positive cash flow, and the next quarterly is all important.

If we go with their estimate of on-going cash outflow (ie. $2.98M-$2.66M= $320,000) then they should have plenty of quarters left to get things moving in the right direction. But the confusion about the ``non-recurring'' expenses leads me to temper my expectations.

(Disc: held in RL)

A comment on their latest 4C.

Not looking good.

• Receipts down $3.5 million
• Operating costs down $1.5 million
• So Op CF went from -$2.3 million to -$4.3 million

Now:

• Cash on hand $12.5 million
• They have a $10 million loan facility which is already fully drawn (at 9.5% interest)

At the current rate, they have 3 quarters of funding left.

I'm not sure what their plan is now. According to Big Tin Can $BTH:

``To date, Bigtincan has received very limited engagement from the Board of Livetiles, beyond acknowledgement of our proposal.''

So it seems $LVT is not that interested in the buy out, and I guess they're planning another capital raise. I'm still hanging on to see what happens, but the sun is very quickly setting.

(Disc: Held in SM and IRL.)

An announcement about their latest review, this one called an ``Operational Review'', which follows on from the ``Strategic Review'' in 2021. They say that this new review has resulted in annual savings of $6.48 million, although I'm pretty sure these are projected savings as at least some of the recommended changes haven't happened yet.

Announcement here.

It mostly involves getting rid of 32 staff (saving $5.48M), at all levels, including the co-founder Peter Nguyen-Brown, although it's not clear if he'll have some other role at the company as they include the obtuse statement that he will remain ``an ally to the business for years to come''. So both the CXO (the X stands for experience) and the SVP of People and Experience (Vanessa Ferguson) are leaving, which given the buzzword-y job titles, I think is probably a positive. This company really needs to focus on the business and less on self-promotion. At any rate, I'm not sure how soon the savings from these sackings can be realised given notice periods and contract termination clauses --- in my own field of academia people can be given 6 months or even a year to leave a university (so they can finish teaching courses or wrapping up research projects). I don't know what the protocol in tech businesses is. Then there's potential morale problems with the staff who remain.

The rest of the savings ($1M) will come from moving offices, renegotiating the prices they pay to suppliers and reviewing marketing expenses. Again, these seem like aspirational savings so it remains to be seen how they eventuate.

At any rate, they claim that they are on track for free cash flow positivity in CY2023. If I've correctly read their full year statement from 2021--2022 (happy to be corrected) then it says that they had cash outflow of about $10M (excluding a $6M loan they took out). It seems like they want to roll these new savings ($6.48M) in with the savings from the 2021 Strategic Review ($3.5M), giving a total of $9.98M in reduced spendings, making it seem that +ive FCF is pretty close, but at the beginning of the current announcement they say that those savings from the 2021 review have already been incorporated into last year's results. So ignoring that $3.5M I think +ive FCF next year is optimistic, and it requires significant increase in revenue.

They also took a swipe at shareholders' vote against the delisting, saying that this prevented them from an additional $1.5M in savings, although, again, this doesn't seem like enough to convert to cash-flow positivity.

Lastly, they mention the proposed buy-out by Big Tin Can at 7c/share. They're still weighing it up and talking to ``other parties that have expressed interest in LiveTiles'' presumably to drive up the price, but nothing to report yet.

Disc: Held IRL and SM. (Hanging on to see what happens with any buy-outs.)

Livetiles had their Extraordinary General Meeting today to vote on the delisting proposal, and shareholders voted against it. Here's the table of votes.

You can find the announcement here.

I've been holding a small portion of shares for a while, since Claude recommended them at MF, and being a bit of a dolt I didn't sell them when he told us to (I think it was about 70c at that point). I don't want to keep holding a delisted company but I wanted to see how the vote went before I sold out. I guess I'll keep holding on.

No comment yet from the company, but if it's truly undervalued as the management team claim, then I presume they'll try to find someone to buy the whole thing.

(Disc: held in RL and SM)

@PinchOfSalt yep things look dire. Two awful announcements today:

• The CFO resigned, effective today.
• Trading Halt --- "The trading halt is requested pending the release of an announcement concerning its application to be removed from the official list of ASX.''

(Disc: held. I've got bad luck/foresight with this sort of thing.)