I think this might be the worst cap raise I have seen and a textbook example of being forced to raise capital to survive rather than choosing an optimal time. As PinchOfSalt points out a massive turnaround in the fortunes of the company over a 12 month period, that I am still struggling to get my head around how it all happened.

Everything stems from the change in CEO and the 3rd (FY22) quarter massive drop off in sales whilst also investing heavily in old model inventory that they are still having trouble selling. The problem I have is that it doesn't really add up for me - either the company is a fraud and has always been such and the the replacement CEO exposed it (I think unlikely, but possible, especially given the $8.7M of revenue that the auditor didn't let them include in last years accounts, channel stuffing?). Or they have made some/many terrible decisions in 22/23 and now they are just trying to keep then lights on. Either way no need for me to play with them currently, but I think if they aren't fraudulent and can start to turn around their cashflow position in 2H23, and start to deliver on their new strategy then I think they could look really interesting again. The quality of the company and board though is a lot lower than I previously thought it was and I think there is an even chance that they will be bankrupt by 2024.

So they have raised $17.9M @$0.10, with most of it being used to pay down debt ($5.5M), and to provide operating cash ($5M). $2M for improved marketing to generate sales, $3.4M to invest in Mavis technology which is needed to support their new cloud connected device strategy and $1M to commercialise their new 8K sensor. The kicker for this being a shocker of a raise is $1M was spent on the raise itself. Dilution for shareholders is massive with shares on issue rising from 230M to 410M. The retail component of the offer ($8.5M) was under subscribed by $5.4M so the underwriters have 54.8M shares to offload over the coming months. So I expect this will go below 10c and maybe closer to 5c when the poor numbers (based on the poor Q1) for the half year report are released in Feb. So of the $17.9M only $4.4M is being spent pn what I would consider investments to support company growth rather than just survival.

The debt facility they have is also being reduced from $12 to $8M, so even with the $5M debt repayment they are still maxed out and are paying 10.5% interest.

I am still watching this as I think it is informative to monitor failed investments to learn from them or possibly re-enter, but for now and I think probably for a while the question I will be asking myself, whenever I start to think about re-entering is- Is this the best place I can put my money? A- Not currently

After the poor 2022, I wanted to put some numbers down as benchmarks check against for the next 3-5 years. This is what they want to achieve over next 5 years. Guidance for 2023 is for it to be stronger than FY22 (revenue, margin & earnings) but will skew more to second half.

So from this I am putting some conservative assumptions of 5% revenue growth per year and EBITDA margin increasing from 5.5% (2022) to 18% by 2027. I'm not trying to forecast accuracy here just using it as a thought exercise of different scenarios. I think a PE of 10 is appropriate for the current period before moving back up to 20 as the strategy is executed and FCF is positive again. At a PE of 10 it is pretty fairly valued at the current price of 18c. If the strategy execution is going well then they should be making a NPAT of 6-8m in 2-3 years and probably deserve a PE of 15, which would give them a 57c fair value (discounted back 10% is 41c today). I have a terminal value of $1.30 (55c today) in 2027 if their strategy is successful, and their EBITDA margins is at 18%. To me there is enough upside potential here to remain interested, but it does all hinge on getting back to positive FCF in the next quarter and avoiding a cap raise. If they can do this it might start to look very cheap. I am estimating the probability of a cap raise at <20%.

In addition to what mikebrisy just said, which I agree with. I would also add that there looks to be a good working chemistry between Trevour and the CFO- James Cody, who has also been their for 5 yrs. I have been impressed with Trevor as a the interim CEO and I think this is a good choice by the board to make him permanent. Now for some consolidation before another upswing with the hopefully very much improved FY23 numbers.

Spot the effect of a poor CEO - Estelle started as CEO at the start of Q2 (Sep 21) and was terminated mid April 22. On these numbers its safe to say that the new sales strategy she implemented was not working. The 80% decline in sales during quarter 3 was a lot more than I was expecting, especially given the board was still reitirating the old guidance at this time. Was Estelle keeping them in the dark or were they asleep at the wheel? I guess its good that the sales numbers support that it was a leadership/strategy/ execution problem rather than a broader strucutal product quality/demand type problem.

It is also positive that they were able to move the inventory stockpile that they had built up during quarter 4, but i was hoping their margin guidance would have been for the high rather than the low end of the 6-8% range. Still happy to hold my existing stock and monitor the recovery. I was thinking it was looking very cheap at 20c, but I am wanting to see further positives regarding continued sales momentum and margin re-expansion back to the 12% range, before I am willing to chase this rally and add to my positions.

I think your right GavCo in that this selloff is overdone for what was released and I agree the company will come good but I think it might take a while to recover the trust.

Over the day as I have thought more about AMS prospects I don't really see the SP doing much until they either beat their revised guidance, or when better numbers start to come through in 2023. Like you, I find it hard to understand how this company is now worth less than it was during the initial COVID selloffs, and at this price (1x EV:Rev) it is being valued at no future growth. It has 17m of cash in the bank and is a real buisness with high quality products. I am thinking that based on the rule of 3 this should be our final negative- 1- Founder moved on, 2- new CEO replaced 3- long standing guidance revised.

I just did some numbers to see what the 2nd half will now look like. In the old guidance H2 was already doing the heavy lifting in getting the EBITDA margin up to the 12-15% range for the year, so I think the FY22 numbers will look pretty unexciting.

In the Old guidance (Rev ->95m EDITDA margin 12-15%) --> this gives a EDITDA range of 11.4-14.25m, which would have been a 39-73% increase over the FY21 numbers (EBITDA - 8.2m) and I was expecting an increase in NPAT to >5m.

In the H1 22 results their EBITDA margin was only 7.8% (10.4% in FY21), so to maintain the previous guidance H2 was going to have to perform well. I missed this during the H1 results, partly as I was trusting management on their guidance that margins would expand to 12-15%. Likewise the NPAT in H1 22 was only 0.3m vs 4.2m in FY21.

Based on todays guidance (80-90m rev 6-8%margin) I think we can only expect the FY22 EBITDA of between 4.8-7.2 (H1 was 3.2m of this), so a decrease of between 13-70% on the FY 21 numbers, depending on whether they hit the worst (80m rev, 6% margin) or best (90m rev, 8% margin) guidance combo. I am unsure whether we will be profitable on these numbers but probably around breakeven would be my guess.

Interestingly if I was better at technical analysis, then I would have given more weight to the multiple market signals to sell :)

Good call by @Vanderlay to sell your holdings when the CEO resigned. I think I might need to add this to my investing rules. It is rarely ever for a good reason that the boss quits so soon.

Well this came as a pretty big surprise to me and i'm guessing by the 50% drop on open that the market isn't impressed either.

The guidance is now for 80-85m rev with EBITDA margin of 6-8% compared to previous of >95m at 12-14% margin. So a pretty big shift. The annoying thing is that the reaffirmed guidance only 2 weeks ago, raises a pretty big red flag. The mention sales have been slow for the first four months of the year - so this isn't a new problem and probably partly behind the CEO change a few weeks ago.

On the upside the new products have won awards at the recent trade show and feedback has been positive, so no problem with the quality of their products, just the exceution at the moment. I still think there is a good buisness here, but wont be adding any more until they start showing the result. I'm not ready to dump my holdings yet, but another negative surprise, will make me reassess the quality of the management. I think the new CEO needs some time to see if he can get this buisness moving forward again. I hope this downgrade has been driven by him assessing things now that he is in charge, as I don't think the board could re-confirm the old guidance 2 weeks ago under any other scenario.

They have maintained there ARR guidance for FY23 and 24 of $3 and 6m, so they are confident of there new strategy, unfortunately until they rebuild some trust their guidance is next to useless. The guided margin compression is due to accelerated promotional activity to get more users onto the cloud --> "Management anticipates that this activity could increase the installed base of its heroproduct, Ninja, currently at 150,000, by 15% by the beginning of FY23."

This is my favourite line from the update -

"Management has implemented strategies that may result in an outperformance to revised forecast

revenue, however the Company believes it is prudent to update the market at this time."

My translation

Negative view- We really hope, and all our fingers are crossed that we sell some units!

Positive view- I reckon my ideas are pretty good and we will beat the new guidance, but better cover my ass just in case.

I thought this was a pretty good webinar and the new products look very good and the explanation around how this will transistion the company for its next phase of growth sounded realistic to me.

3 new products to be launched this year and 5-6 next year.

The new products are in pre-production now and they plan on having 2-3 months of stock available in the shops by June, said they are managing supply chain problems and don't forsee any problems on stock availability this year.

The timecode aquisition from a while back is embedded into all of the new devices and this is what enables the cloud compatibility and collaboration potential. All products can talk to each other and the new devices are really about enabling collaboration and remote workflow capabilities which is what customers have been requesting. They want to own the ecosytem of video creation through cloud connectivity.

A positive is the move from entirely hardware sales to software enabled sales and they gave ARR guidance of 3M (end FY23) and 6M (end Fy24 monthly run rate). They will initially have a 3-4 month free period and then convert people to a range of maonthly plans from free (limited features) to $10/month for basic functions collaboration type function to $30/month for simple live production capabilities up to hourly rates for professional plans for live event broadcasters.

Initial feedback from professional broadcasters (live events etc) was transformational and enables them to react to things in real time.

A lot of positives for me and no real negatives and now it is just a matter of seeing them execute on their plan and monitoring stock availability and uptake of subscription plans.

First impressions of the interim CEO (Trevor Elbourne) was good, he seems pretty straightforward, he clearly knows the company, its products and their customers well and I think he will do a good job in this role. He is definately not a smooth talking salesman but if he was I would be worried.

This is a pretty surprising annoucement and has not been taken well by the market. I feel for the WAM guys as they hold 7% of AMS and have been buying recently in the 90c area so they get a quick 25% hit for them as a happy easter gift.

When Estelle was appointed CEO last year I thought it looked like a win fopr the company. She looked well experienced and connected in the technology space and knew the product area. I thought she seemed like a good option to growth the business and replace the founder who was leaving for new challenges. It seems like the only real issue is that she changed (?) her mind about wanting to move back to Australia and the board required that.

The positives -

• The board acted quickly to remove her when she wouldn't replocate to Australia so hopefully any internal damage is minimal.
• The interim CEO is the old CTO/ product designer and has been with the company since 2012, so should be very familiar with the product space and can navigate the new product launchs that are expected at the upcoming trade shows in late April.
• Guidance has been repeatedly maintained. Rev- >$95M, EBITDA margin 12-15% (2021 - Rev $78M, 12-15% margin)
• The company itself hasn't done anything wrong and has managed supplky chains and have built up inventory to insulate against chip shortages.

The negatives-

• More distraction for the company to find a new CEO and the risk of staff or momentum loss while it is all being sorted out.
• AMS will need a lot more time and to get some solid runs on the board before it gets back to its previous highs.
• Market sentiment seems pretty low.

On balance I think that a 25% drop on this announcent is a big overreaction and I will look to add some more to my portfolio.