Ann: Appendix 4E & 2023 Annual Report, page-102

Hi mate, thanks for your comments. I provide some of my thoughts below.

Superfunds; Just because the govt is encouraging investment, doesn't reflect the eventuation of this. PRO and AR9 are very different companies. The volatility and uncertainty in revenue with archtis make investors wary, the pumping nature from 2020-21 of the share price by notable twitter characters, these guys are not even on HC anymore, also has left a bad smell of archtis, so to get back on track with encouraging investors material revenue growth needs to be made to get back trust.
I agree it doesn't mean insto investment will automatically be directed at archTIS, but I think it does materially increase the chance of institutions investing in archTIS. The simple fact that there are so few listed investment options available domestically (particularly in the small cap space), with the government encouraging investment in this space explicitly at the least means institutions will be turning over rocks in this space.

I actually think the underlying businesses are more similar than most appreciate. They're both involved in the defence sector, with a cybersecurity bent, generally major clients in defence/government, and transitioning from services based revenue to licence based revenue in recent years. Regarding revenue volatility and uncertainty, I don't think that's accurate.

There's definitely been share price volatility, but in both situations, revenue for FY23 cf revenue for FY20 is effectively 1.4x for PRO and 11.4x for AR9. From my best estimates, as I've noted before, for FY24, I expect that to be closer to 20x revenue cf with FY20 for AR9. For full transparency, I acknowledge the base for AR9 is materially lower, which does make those numbers look more impressive.

The business can only be held responsible for its own actions, and I think the slightly more sophisticated nature of insto investors may look beyond twitter or HC ramping.

MSFT: I have always wondered if they offer archtis tech (NC Protect) just to say they can offer thousands of solutions and then say, he guys come to MSFT we have it all, we can give you everything you could want and need. Call me skeptical, but until this MSFT partnership results in some meaningful revenue growth I will remain as such. MSFT has been under some pressure with hacks and exposure, it may have even forced archtis to diversify.

It sounds to me your biggest issue here is a lack of transparency regarding partnerships and revenue generated from them. I'd be very happy if we were to see this in reports, especially so we as shareholders can identify where growth on an ongoing basis stems from.

All we can tell is there's $5.2m in deferred revenue, which infers licence based revenue for this FY. I'd also like to know from where this has stemmed.

There's an assumption that absence of evidence is equivalent to evidence of absence. The numbers testify to the opposite of this, but management needs to identify a better way of communicating that to shareholders than requiring us to extrapolate the data ourselves and number crunch.

Time: The first mover advantage is slowly eroding, trillion and billion dollar companies can invest to create a Kojensi like solution if they want, what can this 30m minnow do to compete with big tech?
How much money does it take to recreate a Kojensi-like solution at a massive company, versus adding the tech into their offerings via archTIS at no additional cost to them?

I think that's ultimately what it comes down to.

Perhaps I'm mistaken but I think about this in the same manner as OEMs in the manufacturing space.

It seems like it's always "next 6-18 months will be huge" for this company.

Fundamentally, I think that's actually proven to be true. See comments re revenue growth, expansion into NCProtect, now global expansion of Kojensi, acquisition of NCEncrypt and their client base, adoption of their offerings in sectors outside of defence.

The biggest hindrance to the business' share price success has been people overpaying massively in 2020 - if my numbers are approximately correct, at its ATH, people were buying on a 160x Price/Sales multiple.

In the interim, the share price is trading at a 4.8x Price/Sales multiple; and circa 3x Price/NTM Sales multiple. When you consider there is nominal debt (circa $1,000) and cash at bank, the EV/Sales; and EV/NTM Sales multiples look even cheaper.