Cash-poor IoT promises the ASX it’s getting money for Christmas
The ASX has raised concerns that selfie droner maker IoT Group is running on fumes and doesn’t have enough money to get its promised goods into kiddies’ Santa sacks at the end of this year.
“It is possible to conclude… that if IoT Group were to continue to expend cash at the rate indicated by the Appendix 4C [September quarter cashflow statement], IoT Group may not have sufficient cash to continue funding its operations,” the ASX noted in a query on Thursday.
IoT reported negative net operating cash flows of $1.6 million for the September quarter, after “disappointing” sales lead to the sacking of US management and appointment of a new distributor.
The move to a new distributor was “a huge step forward for our company” leading to “a strong lift in business activity”, the company told investors last week.
Still, IoT was left with only $216,000 in the bank at the end of September, ahead of estimated spending of $950,000 coming into Christmas.
IoT raised $582,000 in October but may also need to rely on bills being paid. IoT is expecting $420,000 worth of receivables.
It’s also paid a $1.3 million deposit to manufacturer AEE that it can draw down on, meaning it’s effectively pre-paid for 6300 drones.
Director Sean Neylon told Stockhead he was disappointed with third quarter sales which netted only $461,000. They’d underestimated how long it would take to get stock into new stores, he said.
The company is telling a great story about repeat orders in the US and lower costs, but the Christmas quarter will be telling. Mr Neylon is anticipating company-making sales.
Not the only one
Meanwhile China tech park builder LionHub (ASX:LHB) told the ASX today it didn’t expect positive cashflow for the foreseeable future.
Follwing an ASX query, LionHub said it “may begin to recognise revenue” from its development operations in Anhui province in the next few months.
It’s hoping to fulfil a $3.5 million capital raising announced in August, from which it plans to keep its corporate machine moving forward.
LionHub, which is building two tech parks in China, had negative net operating cash flows of $304,000 and $111,000 in cash.
It expected cash outflows for the next quarter of $300,000.
Lionhub acquired the land for its initial park in June, after listing in 2014. It has a master plan for its second site.