Q: Would you mind talking through how you plan to monetise the merger with Appstablishment and especially what that means for your roadmap for 2021?
Q: Can you confirm Appstablishment acquisition details? (no. of shares, price)?
A: The acquisition is subject to shareholder approval. Therefore, the Company is required to dispatch a Notice of Meeting (NoM) to convene a general meeting for shareholders to consider the proposed acquisition. The NoM will include full details on the proposed acquisition and it will be up to the shareholders to make an informed decision and either vote for or against the transaction. The Board and Executive see the true value in the transaction and synergies it unlocks, however, we respect that approving the transaction is ultimately a shareholder decision.Q: A lot has been mentioned about acquisitions. Do you see any value in CRO purchasing a regtech company that has some good IP around sending payments with unlimited data attached securely, reg/compliance, clearinghouse facilities as well as already processing a good amount of payments in the superannuation space to complement our current business model?
A: The Board and Executive are continually reviewing, evaluating and considering opportunities. Our priority is completing the acquisition of Appstablishment and integrating this into the Cirralto group. However, we’d be remiss not to be considering other opportunities that will complement the current product suite, core strategy and ultimately increase shareholder return. Q: How will the acquisition of Appstablishment be completed? Is the intention to issue the share number previously agreed or will it be a cash purchase from the recent raise?
A: The proposed acquisition is subject to shareholder approval and all details will be disclosed in due course as part of the Notice of Meeting, which will be dispatched to shareholders, following receipt of all necessary regulatory approvals.Q: Other than the IP, what financially does Appstablishment bring to Cirralto?
A: The ownership of the intellectual property is one of the key drivers of the proposed transaction. Through the ownership of the IP, Cirralto will be able to attract investors that may not have considered investing in the Company previously - it effectively de-risks the Company in this regard for various fund managers and institutional investors. Other than the IP, Cirralto will also acquire Appstablishment’s skilled and experienced workforce, who have proven success in developing, marketing, implementing and scaling software. Cirralto will also access a large pipeline of potential new customers and trading partners, thus bolting on additional revenue immediately from the date of the acquisition.Q: Could you please explain the loan provided to Appstablishment?
A: Appstablishment and Cirralto have a commercial engagement, whilst we are in the process of completing the merger both parties have decided to share working capital accordingly. If for some reason the transaction doesn't go ahead, we will move back into a re-selling relationship and these funds will be repaid.Q: Can you detail the projected spend for the $18m + $3.9m? (cash on hand from the last report)?
A: The use of funds is detailed in the recent announcement.Q: Can we get an update on the institutions that participated in the recent capital raise?
A: The capital raise was completed by three institutions, as they are not substantial holders they will need to give their consent for their names to be announced to the market. We will update the market as and when this happens.
Q: It seems Spenda is aimed at the SME and business market, are there any plans to go fully integrated and move into the consumer BNPL market also?
A: Existing buy-now, pay-later systems are largely the same and are not very advantageous in terms of margin leakage out to the merchant themselves. While current market conditions have afforded them to grow very quickly in a relatively short period of time, we believe that there is a much larger cross-section of businesses that can uterlise our services with finance being a key component of that.
Q: Is there a marketing/public relations plan around Appstablishment to combat app store's low downloads and horrid feedback?
A: Yes, our team will re-focus on marketing through the AppStore throughout the 2021 period.
Q: Will Cirralto be doing something like Alipay or WeChat pay where you have two QR codes one for payable and one for receivable, all you have to do is to scan the QR code to get the transaction through and we can get rid of EFTPOS Terminal?
A: We think the Spenda services will provide strong innovation in the area of terminal free payments. However, as noted we are continually reviewing and assessing various options and opportunities, however, the risk of attempting to ‘do it all’ is that we spread ourselves to thin and lose focus on the core strategy. As the Company is at a key inflection point, moving from pure development to revenue growth, it is important that we monetise the product suite that has been developed, whilst simultaneously looking to the future how opportunities like these may be bolted on or integrated to generate new revenue streams and increase shareholder returns.
Q: Does CRO have any current/future plans to incorporate cryptocurrency capabilities as a payment option?
A: We would be naive to ignore the surge in cryptocurrency and the use of block chain technologies however at present we are not in a position to make statements around releasing software or services in this area.
Q: Do you need to manually key in credit card details every time, or can I store my credit card details like the functionality available in UBER?
A: You can already store your credit card details or bank details as a payment option. This functionality was not shown in the demonstration as it would require 2FA authentication on a mobile phone prior to processing the payment.
Q: MYOB has a substantial customer base, could we expect to see Spenda on its app store soon and an exclusive targeted promotional launch offer to MYOB customers?
A: Yes, arrangements are currently underway with MYOB to ensure we are listed correctly and adequately advertised through the platform.
Q: How are you planning to market Spenda and get this product out there?
A: We have a very competent marketing team implementing a strategy that focuses on brand awareness, traffic and lead generation campaigns. As a relatively new brand, the team has spent the last year focusing mainly on brand awareness, positioning Spenda as thought leaders in our field, refining the go-to-market strategy for each Spenda module and developing a new website laden with content. As we progress into 2021 their focus will shift to heavy lead generation campaigns in line with the growth of the Sales Teams capabilities.
Q: Is Cirralto invoicing solution compatible with the Peppol standard? As this is a government standard are there any projects to work with the government or conversations with the government for input?
A: As you’re no doubt aware, in Australia, the common e-invoicing standard is PEPPOL, which is an internationally established standard. Essentially, the PEPPOL standard allows invoice exchange between different accounting systems. E-invoicing is a more efficient, accurate and secure way to deal with suppliers and buyers. This couldn’t have been introduced at a better time for the Company and goes hand in hand with what the Company’s product suite is offering, i.e. full automation and integration of processes including invoice generation and payment. The Company will ensure compliance with any such standards and would certainly consider government projects in addition to its B2B strategy.
Q: Does the platform only work if both the buyer and seller are using Spenda?
A: No, a Supplier is able to invite their customers to pay an invoice without the customer needing to be part of the Spenda network. However, for both parties to get the most out of the process and enable end-to-end integration, then yes, both parties need to have Spenda. This is intentional as it increases the viral nature of our product.
Q: Can the creditor and debtor annotate invoices? For example, add notes, flag an invoice as requiring supplier follow-up? And do businesses get an instant notification when a customer has paid?
A: Yes, the only reason notifications were not visible during the demonstration is because it would require switching between screens and make the process harder to follow. There are a variety of notifications available along the transaction process these are in-app, text, via email and through live chat.
Q: Can this process be used for straight-through payment of wages ? For example, part time employee finishes a shift, logs hours and gets paid immediately?
A: Yes, but at the moment this would only be possible for subcontractors. The company is currently looking at opportunities in this area.
Q: Do you see B2B or B2C as being the made source of income over the next 12-18 months?
A: While B2B will be the main focus of the company for the next 12 months we are continuously looking at the B2C capabilities of our software.
Q: What happens if two businesses use different account software and not just Xero?
A: This is to be expected as no two businesses are alike. Our software supports integrations with small business accounting software (Xero, MYOB Account Right Live and QBO) and ERP solutions (MYOB Advanced, SAP Business One and Google Drive).
Q: From a customer level, do you see this paylink like a Google pay, where I can go in-store, find an item, scan it, get pay link and pay and walk out?
A: We are currently focused on the B2B market with our Spenda Payment Services, but in the future, we plan on expanding our offering and leveraging the BPA / BPSP agreements to offer similar services in the B2C space. In the scenario explained in the question above, pay by link for B2C would be part of this second phase.
Q: Any update on user growth?
A: User growth is one metric that the Company monitors and will report against on a regular basis moving forward, to keep shareholders and the market fully informed.
Q: What has been the uptake of the Spenda app in Xero? There is only one review compared to competitors.
A: In 2021, we will be expanding on our relationship with Xero to further promote the Spenda brand.
Q: What's your reaction to the significant momentum and volume of CRO's share price in the past month?
A: The significant momentum and volume of CRO’s share price in the past month is obviously pleasing to see and a possible indication that more people are becoming aware of the Company and its offering. You would have noted that the Company has also responded to ASX queries in respect to this matter. Our goal moving forward is to create stability in the share price, which we believe will be achieved through the acquisition of Appstablishment and integrating it into the enlarged Cirralto group. Following this process, the key is customer growth, transitioning into a revenue generative and cash flow positive company, which in turn will deliver increased customer returns.
Q: In regards to CRO conversion, how quickly are you allowing options conversion from submission?
A: The exercise of options is an administrative process, which requires the option holder to submit a ‘Notice of Exercise of Options’ application, either to the share registry or Company Secretary together with the requisite amount of funds. Once this process is complete, the options are converted to ordinary shares in the Company. We are batching option conversion up to save the Company costs, currently we are lodging conversions about every eight to ten days.
Q: Would you mind also talking about your plans for international expansion. We've noticed the start of the US:OTC - or over-the-counter markets - listing recently?
A: The Board and Executives are continually reviewing opportunities that will ultimately deliver increased shareholder return.
Q: What are CRO's short and long term plans to consolidate its shares on issue, particularly post-merger?
A: There are no plans currently in place, however, it may be an option for the Board and Executive to consider in the future.
Q: Fiserv’s largest shareholder is KKR, KKR took over MYOB in 2019, do we see potentially KKR to invest into CRO?
A: As a Company grows, it inevitably attracts different types of investors. All we can say at this stage is that we’d obviously consider all proposals that were presented to us on their individual merits.
Q: How can we shareholders don't get offer capital raising?
A: This particular Capital Raise was presented to the Board by Kaai Capital and as announced on 22 February 2021 was a strategic raising to institutional and sophisticated investors.
Q: What is the forecast revenue and profitability for 2021 and 2022?
A: The Company does not provide any forward-looking statements at this stage of its development.
Q: CRO is one of the very few companies that shareholders can directly impact its short term growth. How is CRO looking to leverage this substantial referral network? Investor referral packs for example?
A: This is another strategy we are exploring as we have a very active investor network. At this stage, we have started working with a handful of investors who have expressed interest in pushing our product to their networks. Where there is a good customer to product fit we will continue to do this and, in the future, may look at formalising processes that would allow more investors to get involved in pushing the product. If you are interested we encourage you to get in touch.
Q: CRO captures substantial amounts of data. What are the business's strategic plans to leverage this to position Spenda as, not only a cashflow play but also a data & risk management play? e.g. adequate dashboards live?
A: This speaks to the heart of strategy in B2B lending and we will make further announcements in this areas as they become market sensitive.
Q: How long before we attack the US market?
A: Obviously a massive market with many opportunities, which is certainly on the radar. However, our focus is to bed down a number of key strategic deals domestically in the short term.
Q: Any update on revenue growth?
A: We continue to be pleased with our revenue growth and the upward trend of the Company as a whole. Our quarterly reports have shown consistent steady growth which we hope to continue over time.
Q: Where do you see Cirralto in the next 5 years?
A: We have grand visions for Cirralto and in the next five years hope to be a well-established payments and supported features brand within the B2B and B2C markets. The Company’s goal is to be Australia’s most successful tech company.
Q: Is CRO crypto linked to Cirralto?
A: No, we have not heard of this.
Q: From a reporting perspective, could shareholders expect to see routine updates of revenue by sales funnel stage and customer acquisition by sector?
A: Under the Company’s continuous disclosure obligations, it is required to report both quarterly (in the form of quarterly cashflow) but also report any material, price-sensitive information, which may include customer wins. The Company’s obligation is to keep the market fully informed, including reporting on key metrics and stats such as this.
Q: Following the last capital raising you mentioned the potential for acquisitions. Is Cirralto currently actively pursuing or considering any acquisitions? In what areas would Cirralto see acquisitions benefiting the business?
A: We are currently looking for two kinds of acquisitions scenarios, acquisitions of IP which complement our core services and allow us to grow our annual revenue per user and be more appealing to more market segments; and organisations that have a significant customer footprint that is a fit for our products.
Q: There appears to be a massive potential to add value through providing financing/factoring to SMEs through the platform with opportunities to use data mining and machine learning/AI for credit risk assessment. Is this a strategy under consideration?
A: Yes, if a lender is able to access the ledger in real-time and offer contextual finance at the point of sale then that becomes a very compelling product. This concept links in with our soon to be released buy-now, pay-later and pay by instalment payments framework.
Q: What is the continued market differentiator between spenda and others etc (eg Xero)?
A: Spenda's real point of difference lies in our integration framework and ability to support a transaction ledger-to-ledger. Unlike banks that only support the payment event and SaaS companies that are limited to improving business processes, Spenda is a feature-based payments platform that supports the business events leading up to a transaction, the payment and the reconciliation events.
Q: Will there be a push in the near future for marketing on TV to get the app out there?
A: Not at this stage. Large scale mass marketing is not as efficient as niche target marketing.
DYOR and all that
(20min delay)