Ann: Investor Update, page-18

In case you have not seen it - emails posted by THa1 on another stream - interesting read. Thanks TH

See below my recent email exchange with Dom - 

MY QUESTIONS TO DC:

 The ASX announcement indicates:

 

"The SPP funds will be used to strengthen the Company’s balance sheet and pay down some further debt."

Please could you provide me with the following information:

1. Why does the balance sheet need strenghtening?

   
   

2. How will the money raised be used to strenghten the balance shhet?

   
   

3. What is the "further debt" that is referred to? Is it existing debt, if so which debt? Is it anticipated future debt, if so for what purpose? 

DC'S ANSWERS:

 Thanks for your questions – we are working hard to transition the company and as stated in the ASX release we have had a few headwinds in our mobile businesses in the last quarter (although seasonality does play a part). We also have the existing JGB debt to pay down and generally bolster the balance sheet.

 

As we grow our media business, our requirements for cash increases. For example we spend money this month promoting Apple music across social media (FB/IG/Snap etc) and they need to be paid in this month and then we don’t get paid from our partners for 60-90 days after end of the month; so as we scale working capital and a stronger balance sheet is required.

We have also had an important EU partner pay us via their bank called Sata Bank (circa AUD$450k) 2 days before Satabank was placed under the control of the Maltese financial regulator in late October. The funds sent to us are classified as “inflight payments” and we have no idea when those monies will come (could be a week, or a month or 3 months) until they get released etc.

See bank website: https://www.sata.bank/en/weekly_updates_2018_11_05

The board view is that it’s prudent to bolster the balance sheet before XMAS – the monies from Sata Bank will come however we don’t exactly know exactly when.

I have also participated in all prior capital raisings with close to $1m personally invested (as high as 25 cents and as low as the prior 13 cent raising) and I am also underwater in a material way myself.

Rest assured the team and I are working very hard to turn the business around and we just ask for a little more patience from our shareholders. It’s not going to be a quick turnaround in a month, it’s going to take a few more quarters of hard work, patience and persistence. Moreover the company has listened to shareholders and we will start communicating more frequently via the ASX, so watch this space.

I am happy to jump on a call to discuss further and both Michel our new COO and I will be attending the AGM – hopefully you can attend also (28^th Nov in Melb).

MY REPLY:

Thank you for your quick reply.

My view is that the information regarding the Sata Bank issue and the Apple music payments is price sensetive information that should be available to the market.

Transparency and accountability are essential to maintaining and building shareholder and market confidence. If there is bad news or good news, please release it. Uncertainty, mystery and only part disclosure will be the death of CM8.

I know other CM8 holders, I assume that you have no problem with me passing on your email response to my questions?

DC'S REPLY:

We don’t believe the following  material is sensitive from a disclosure perspective (Sata is just a timing issue while Apple payment terms are generally in line with our existing terms with carriers/aggregators (ie. long payment cycles), however your point about further communication and disclosure is a current topic at the board. Expect a change in the frequency on how we communicate.

 

Feel free to pass my email to other shareholders. I am always happy to jump on a call with any shareholder (big or smal