Shekel Brainweigh Limited (ASX:SBW) has announced the issue of a US$5m 4-year convertible note to a single investor, Kvutzat Yavne, a Kibbutz from the central district of Israel. The note holder will receive a 7% interest rate paid quarterly and have the right to convert ALL notes into equity two years from the issue date, or upon a transaction involving the sale of all or part of the business at 75% of the 25-day VWAP. For existing shareholders the company now has significant funding and a two-year window to deliver both renewed sales in the core scales business and meaningful sales in the new retail innovation division to ensure a higher share price and limited equity dilution. There are a number of positives for sales growth heading into CY21 including the first “Hubz” vending kit sales expected from Q2CY21, the annualisation of three new scales customers late in 2H20 and an expected “FastTrack” self-checkout launch in 2HCY21. The group is also cycling a 10% decline in retail self-checkout sales and a 45% decline in own brand weighing equipment. From a numbers viewpoint we have increased our operating costs by 12% or US$1.2m as new human resources are added, while incorporating for the first time some revenue from “Industrial special projects” given greater resources.
