Tracking AJX Catalyst Progress Below are the catalysts I'm looking for to drive the share price higher. I've updated them to include commentary from the last cc).
1. Additional OEM/VAR large business wins (similar to the $55mm contract): No update here from the call. In fact management only talked about the already disclosed $55mm contract and how it will help fund R&D for "small farm" products (why is this not being used to fund R&D for OEM/VAR products?). Management should provide more colour on how additional conversations are going and/or if their is potential to extend the $55mm contract beyond the 12 month period to something recurring.
2. Small farms (estimated Total Addressable Market (TAM) of $60bn): Positive. The company is clearly going in this direction, however the distribution strategy is unproven (direct/online). How will the company generate sufficient interest so that farmers en masse start purchasing? How will dealers feel now that end customers can circumvent them and go direct? Overall this is very much a "show me" story and upside is uncertain but has tremendous potential. Management should provide more colour on why they think their strategy will be successful and what the upside potential could be. Also why are they only starting in the US? Are the 10mm farms they cite a global number of just the US? What will be the strategy to go international? (they said they'd go international eventually but little colour on potential and strategy).
3. Rice-Planter and “other” new markets in APAC: Potentially concerning. Very little discussion on the last call about APAC and none regarding the rice planter. A few calls ago AJX cited orders should be forthcoming. Management needs to provide an update here on the next call regarding rice planters otherwise shareholders will translate the lack of discussion on conference calls as an indication that the opportunity has failed to materialize.
4. IP Patents: Positive. The Raven settlement was a huge win as it validated the legal interpretation of the companies patents. Going after their first "big fish" and winning means other companies are more likely to settle and courts are likely to validate the patents. While management can't discuss the settlement agreement we should eventually discover where revenues associated with IP will be recorded (e.g. as an "other" item on the I/S). Key to understand if the settlements and agreements are "one time" events (last years $3mm was) OR are they going to have an annual royalty? Furthermore does validating the IP make the company more attractive as an acquisition target by a big player?
5. Ag market recovery: Neutral. Management's commentented that things remain difficult for farmers, though their is some optimism in the lower HP categories. No change.
6. Company sale: No commentary. Not likely anytime soon.