SES Imagotag (SESL): THE CIRCULAR DANCE WITH A CHINESE TWIRL – PART I

SUMMARY OF GOTHAM CITY RESEARCH’S OPINIONS AND SUPPORTING OBSERVATIONS

• BOE is the largest shareholder, largest supplier, one of the largest customers, JV partner, and on the audit committee. Potential for financial malfeasance is high.

• We believe SESL financial statements are materially misleading, incorrect, and deficient. An independent & comprehensive investigation would confirm our opinions.

• We have identified accounting irregularities – explained both in this report and in Part II – that lead us to believe SESL’s financial statements will require restatement.

• 2020-2022 revenue are overstated by at least 7%-13% and 2022 EBITDA is overstated by 106%.

• A November 2022 BOE filing, available only in Chinese, reveals that as of 30 Sep 2022 BOE’s balances facing SESL amounted to 71% of SESL’s accounts payable and 18% of its accounts receivable as of June 30, 2022. These related party payables & receivable are undisclosed by SESL.

• The recently announced Walmart deal is not profitable for SESL, based on our per unit economic calculations. WMT is paying SESL EUR 5.30 per ESL, but SESL's cost per ESL is currently at least EUR 6.66 per ESL. "Everyday low price" is not good news for SESL.

• SESL has not generate lasting cash flow since inception. Its 2022 Free cash flow -€48M, and its cumulative free cash flow from 2002-2022 is -€159M.

• SESL would trade between EUR 15 – EUR 30/share, if shares were to trade simply in-line with peers.