Ann: Quarterly Report and Appendix 4C, page-5

Ah, iWebGate accounts! Much needed entertainment given the way the cricket went. }

Where to start? The losses. They lost $1,866,000 in just 3 months! Last quarter they "only" lost $916,000, so they have doubled their losses in just 90 days. They are now losing over $20,000 per day.

What about sales? Last quarter was quite interesting because they went from $26,000 the previous quarter right up to $182,000. Definite signs of improvement there, but how so? Had they turned the corner, or were they just putting the squeeze on existing customers or something? Well, now we know. Sales have tanked back down to $86,000 which is less than $1,000 per day. Puts those losses into perspective.

Staff costs are interesting, from $271,000 the previous quarter to $572,000. That would be all those sales people they acquired from Blue River, driving up the wage bill. And yet, even though they have finally opened the wallet for sales and marketing funds (nearly quarter of a million spent), they are selling just about nothing.

The other interesting number is R&D costs. Nearly a million dollars? My guess is that the Australian company is funding the work they are doing in the USA, and now the new bloke in the UK. But what have they got to show for it? They have spent over $1.8m on R&D in the last year and have not announced, nor released, nor sold, anything new. Must all be in the pipeline, right?

The bottom line is clear. They need another capital raising. The last one was for $2m, and that was gone inside 100 days. That $1.75m they had in the bank at the end of June is probably now at $1.1m, which gives them less than 2 months at current expenditure until they run out of cash. Any company which loses $5.4m in one year on sales of less than $300,000 clearly is not going to last much longer.

The last fund raising was a private one, so presumably they still have the option of going back to the ASX and dumping a few million more shares. The remarkable thing is, despite these accounts, they will probably still find people to buy into it.