Ann: Exceptional sales growth across all channels in Sept Quarter, page-4

Hi Teddyward

You are correct in saying that it easy to be drawn into an investment based on the ‘heady’ school and student license numbers. I have rather centred on the ‘paying subscriber numbers’ and moreover the rate of uptake. Looking at the ANZ experience, the Company has achieved a strike rate of about 20% in terms of Parent adoption. That is through school promotion to school support to parent adoption.

They appear to have had a stronger response in the USA with growth definitely accelerating. Looks like they are signing about 500 customers /day which is impressive. Like the various push/pull forces at play where on-boarding a school can drive parental buy-in. Then you think of school districts / overseeing bodies who formulate standards at a district level. Then add the Telco involvement (facilitating compliance) and the ‘concerned parent’ push. IMO , numerous levers to directly and indirectly stimulate demand.

At at the end of FY19 their activities spanned 8 countries, with the USA accounting for just above 50% of sales. Their energy will be directed accordingly.

Looking at Operating Expenses, staff and corporate costs run out approx. $3 m / quarter (by far the biggest area of Spend). Yes, a hefty burden now but if they continue to scale the business, IMO quite reasonable. I gain some confidence from the convergence of cash income and cash costs.

Almost certain we will see another capital raise come Q1 CY2020, but that’s fine if the Revenue continues to grow. Only 200 m shares issued thus far, so all healthy in my book. I was interested to see that the MD recently exercised his options at 25c, a significant premium to the ruling SP at the time.

In summary, lot’s too like about the trajectories which are forming. Cashed up for six months and no debt. And finally, addressing a global problem with a well supported workable solution.

Rokewa