Deal with Canary Capital for "marketing services" in October 2020, was a big red flag for me.  Payment in the form of cash and options @ $7.5K per month.   

K2Fly has negative net tangible assets,  with intangible assets and goodwill making up over $6M in assets on the balance seet.  

K2Fly also have a $3.2 M liability of future payments for the SATEVA acquisition.  This liability is for 18% of all invoiced amounts for SATEVA Software products, but it includes consulting sales, which are low margin.   This is a bad deal IMO.   

Their gross margins have improved, and are now over 50%.  However, the concern is SATEVA is incentivised to grow consulting services revenue, which is not high margin SAAS revenue.  

Two trading updates in the space of a week prior to another capital raise - not a good look. 

K2Fly announce acquisition of SATEVA.

Announcement talks up SATEVA's software solutions. However, SATEVA do not appear to have any software products per se, and provide "Providing technology consulting services to the mining, metals, and rail industries" - SATEVA's website.   

K2Fly are paying $4M for 180k of EBITDA in a professional services company, that may be developing an unproven SAAS solution that may complement K2Fly's RCubed software...That is 20x EBITDA and 2.8x revenue.   

DISC: I hold

Key takeaways:

1) Invocing up 15% on PCP.  Noting Q1 is typically a weak quarter.   

2) Cashflow positive for the 2nd consecutive month. 

3) Reports propomising sales pipeline, flagging some significant wins to come in Q2 2021.  

4) Development of tailings mamagement / governenace solution is ongoing. 

Key takeaways - nothing new to report from previous announcements:

1) Positive operating cashflow in excess of $500k for the month.  

2) ARR now at $2.36M, up from $800K on pcp. $500K of ARR won over the quarter. Recurring revenue is now more than 30% of revenue.  

3) TCV won over the quarter: $2.77 M.   

Funny how K2F are up on this, given this was all flagged July 6.   

Operatinoal update.  Key takeaways:

1) FY 2020 revenue of $6.626 M, up 60% on prior year. 

2) SAAS ARR now $2.36 M, up 69% over the past six months.  

3) RCubed SAAS business wins contracts with Kinross Gold, South32, Sibelco, an Orano.  ove rtge past 3 months. 

4) K2F cashflow positive, with $660K of positive cashflow for the quarter, with $600k improvement on pcp.  

K2F report a strong pipeline, and anticiapte making further announcements in realtino to new contacts over the next 6 months.   

K2Fly announced a partially underwritten options deal today.  It looks dodgy.   

Underwriter appears to have also been an optionholder, and included a sub-underwriting clause in the agreement.  This could allow other optionholders to participate in the underwriting at a discount, and being awarded additional options in the process.  Free money at the expense of other shareholders.  It also gives the appearance of a quid pro quo between the board and K S Capital, assuming K S Capital (or intersted parties) are optionholders. 

Looks like the antics of a pump and dump.  I have written to the chairman for clarification.  

It may be a completely legitimate business, but this options underwriting deal is a red flag. 

Key takeways:

1) 3 of the top 4 iron produces now use a K2Fly product. 

2) 5 of the top 10 gold producers now use a K2Fly product.

3) serving 460 sites worldwide.

4) Management report they have the only off the shelf solution for achieving the new SEC compliance requireents of NYSE listed companies. 

5) 30 NYSE listed clients attended webinar earler this week, and are looking for a solution to their problem in Item 4 above over the next 6 months. 

6) Q4 is traditionally the strongest quarter, with a promising sales pipeline.  

Interview here: https://www.youtube.com/watch?time_continue=276&v=YusujVBfbO0&feature=emb_logo

Key takeaways:

1) Invoicing of $1.61M fo rthe quarter (up 92% on pcp

2) New contacts wins with Gold Fields, Newmont, Soth 323, Vale, Sibelco, and Kinross Gold. SAAS contract extension from Anglo Gold Ashanti. THAT IS A LOT OF WINS OVER 4 MONTHS.

3) ARR now at $2M pa, growing at +200% pa

4) SAAS revenue now represents 52% of reveue.  The transition to SAAS revenue will mask underlying growth IMO. 

5) TCV now at $6M, growing at +800% pa. 

6) North America sales team established and off to good start wiith Newmont ans Kinross Gold sales. 

7) Significant interst reported from NYSE companies in the RCubed platform due to US SEC regulation changes coming inot effect on January 2021. 

8) only $800k in the bank, but Board expects K2F to be cashflow positive for Q4.   This is being assisted by:

• In March, the reduction of staff /personnel by approximately 10 FTEs;
• Until at least 30 June:
  •  The Board have deferred all of their remuneration;
  •  The CEO voluntarily agreed to defer 50% of his remuneration;
  • Some Senior Executives have voluntarily deferred part of their remuneration; and
  • Significant reductions in travel, marketing, promotional and non-essential expenses.

It looks like the board is keen to avoid a CR.  If K2F can continue winning work at its present rate (16% per month!), they may not need to do so, but it is a close call.  

DISC: I hold a starter position (<1%)