Ann: Appendix 4C - quarterly, page-21

Thanks for the update Shadowplay, I appreciate you calling the Beijing office and passing on the info. I think what has let down the shareholders here is not poor growth or high marketing costs, it is that the quarterly did not clearly disclose the delay in cash flow and payment terms of their contracts. If they simply told us that terms were 90 days and calculated monthly then we would all read the quarterly very differently! Some sellers dumped on the poor numbers in the last 30min of trading, without full investigation into the information. I think they may have moved too quickly.
Some are now predicting a cap raising, but if the $1.8M and $4.1M are paid in a timely manner then there should be no need!!! Also with contracts and accounts pending if absolutely necessary SMA could easily secure a fi chance facility that covers initial spend until accounts are paid.
Total expenses for the quarter from memory were $3.2 and revenue was $4.1, so things look good. With approx 30% margin. Some out there might be looking for higher margins, but let's also consider that marketing spend this quarter may not materialise as revenue this quarter. On this basis last quarter they spent $500k and then SMA generated $4.1M the following quarter. Now having spent $2.1M marketing this quarter maybe we can expect much much higher returns next quarter. Again the quarterly didn't provide any information about marketing spend verses users acquired, which would clarify the cost per user. But I feel that if the revenue increases proportionately to marketing spend of the previous quarter, then we should see more significant figures coming.

With regard to the payment terms I have a few comments. Much like traditional manufacturing or retail businesses the are essentially providing their service on consignment, and then awaiting payment as per the contract terms. This is common place in physical sales and we shouldn't expect just because they are tech company that the cash will just instantaneously drops into the account the second a users signs up. Let's get real.. Think about how a user generates income for SMA, they find a product and agree to pay for it, they are then billed to their mobile phone account at the end of the month, which is then analysed by Sma and the telco, accounts are then issued, probably monthly, and then the payment terms commence. So theoretically from the time of sale to the time of payment could easily be 120 days if the contracts for payment are 90 days.

My personal opinion is that there were a number of traders who might have made a poor choice on Friday. And if management are reading this I'd like a clarifying announcement that discloses the basic terms of contracts, expected payment dates, and costs per user. With this Info let's see where the share price moves. I'll be passing these thought on the Bryan also.
But I still feel Sma has a very bright future!
Happy trading