Although there is a global shortage in their products, semiconductor tech company Revasum (ASX: RVS) continues to be plagued by cash flow problems despite delivering a 60% increase in revenue with their struggles being attributed to supply chain problems.
The Company revealed a revenue uptick from USD $7.4 million for the half year ended 30 June 2022, a 60% increase on the previous corresponding period. However, it claims that the global supply challenges are to be blamed for its mere $2.3m of cash on hand. The Company expounded that the delay in the shipment of critical equipment has resulted in a reduced amount of cash receipts from customers.
Right now, there are $US7.7 million worth of confirmed backlog orders being processed, and they have experienced delays in shipment of final product. Still, it is not a long term concern according to Revasum. The Company expects its revenue to return in full once the equipment is shipped—thus recovering the outstanding cash receipts from customers—and backlog covered.
As for its funding needs, the Company entered into a secured loan with SQN Venture Income Fund II on February 18, 2022, for the principal amount of $5 million. The loan has a term of 3.5 years with a 9.75% interest rate. An additional $3 million is available upon the Company achieving YTD purchase orders of $12 million from two of their primary products by 30 September 2022.
Despite the limited cash flow, the Company’s equipment sales revenue rose 170% from $1.8 million to $3.9 million in 1H FY22. Growing demand for clean energy resources have increased the demand for Revasum’s products. Revasum noted the rise in demand for Silicon and Silicon Carbide water processing equipment. Besides that, Silicon Carbide devices also fulfil the eco-conscious agenda of companies. It is used in electric cars, which currently make up 9% of car sales worldwide.
Effective immediately, Revasum appointed highly credentialed Scott Jewler as the Company’s President, Chief Executive Officer and Executive Director, and he brings over 25 years of experience in the industry.
Revasum Chairman, Scott Jewler commented, “I am thrilled to be joining the dedicated and talented team at Revasum. The task ahead is clear: support our customers as they ramp their business. I look forward to leading this team as we help our customers meet their own ambitious goals.”
With the new CEO appointment, the Company is reimagining its vision based on Jewler’s business review of the company. The Company is currently evaluating its working capital mix and realistic funding requirements for which the quarterly cashflow report estimates they only have funding available for 3-4 more months without raising capital or borrowing money.
Over the past year, Revasum’s share price has plummeted to now be trading at $0.24 per share. Though it went over $1 between February and March this year, shareholder concerns about Revasum’s supply chain problems and cash flow issues have caused its value to drop significantly.
Alinda is a Business Reporter for The Sentiment
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