Ann: Response to ASX Query Letters, page-200

Unfortunately I think you're wrong.

I believe BIG receives the 35% (up to the maximum lendable) from FCC when it goes and shoots a client. 24% goes in commission and 41% goes to the deferred account controlled by FCC. When a client agrees to pay this extra amount is released to BIG.

If the client decides against proceeding with payment after the video is shot BIG has 120 days to replace this client with another or repay the full money plus a 24% penalty on top.

This incentivises BIG to shoots lots of videos since they're getting the prepayment from FCC even if customers don't proceed to buy them. This is probably why the 4C exploded as there's no need to find a paying customer in the first few months, simply shoot as much as you can as they're getting prepayments for each video.

Then BIG has to find enough customers to substitute for these forwarded amounts of money ensure that all prepaid amounts forwarded to BIG by FCC become paying customers by 120 days or face penalties.

This means lots of videos get posted, businesses think this is the next big thing, BIG has lots of content for the App / platform etc.

For it to be sustainable BIG needs to ensure they find enough paying customers to take up the package through FCC within 120 days. Because they are low cost they may be able to shoot a few companies for each actual sale they get, but they need to ensure they keep hitting their numbers before significant penalties hit.

It's possible to keep it all afloat if the growth is there and if enough customers sign up. If the numbers decline or stall and they are unable to find enough customers to take up packages things will go bad very quickly.

I think the last quarter does not tell us much as it looks like they relied on this new line of credit recently agreed to. How they go about finding enough new paying customers this quarter will be very telling whether this will survive or not.

There's a high risk path where this ends up working out because of the size of the US market and the 'network effect' they're creating, where businesses want in because they see heaps of other businesses getting videos. But if it fails the doors will close.

They should have been honest with the market and raised money for this specific strategy. It might actually work out but they've gambled with shareholders money.