Well, the eps tells a lot: loss of 4c/share when the current SP is 2.7c. Gross revenue/share is 1.35c. We are getting close to firesale territory here and the Directors are playing a risky game. New equity is essential but the collapse in SP will make it more difficult and more expensive to obtain. Raising a further $13M at say 2.5c/share requires the issue of 520M shares without counting any options given. In other words, a 51% dilution for existing shareholders (ignoring options).
The company has not been able to produce sufficient evidence to the auditors that it can be qualified as a going concern in view of the high cash outflow and level of funds on hand. The Reports states: "Management and the Board have been engaged in active discussions with a view to raising additional funding from strategic investors. The Group is focused on progressing these discussions over coming weeks and is cognisant of its compliance requirements which may influence timing. The Group will provide an update to the market as soon as the discussions are sufficiently advanced. At the date of issue of these financial statements, while potential strategic investors have signalled interest in participating and one party has signed an expression of interest, discussions are continuing, and no commitments have been entered into at this point. The Group forecasts it has sufficient cash, at the current run-rate, for a further three months from the date of signing these financial statements. This period may be able to be extended if the Group reviews the extent of its development plan, reduces costs and focuses on existing business. The requirement for sufficient additional funding within the next three months indicates a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern and therefore, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business."
We now have an update on end user numbers. The growth looks good. Same for increase in annual revenue. Still low but showing the kind of growth that is looked for with new tech stocks.
Management have been making efforts to tackle cash burn but strong increases in revenue going forward remains critical (this is the game the Board are [playing). Of course, there is a balance between growing the business and staying viable. The reduction in the cost of user aquisition reflects this although the large increase in users allows the overhead to be spread out. This statistic should continue to decline as the user base continues to expand but is likely to be bumpy as new contracts are signed and the product implemented with banks.
I like the new alert function. It helps meet the needs of people who are busy with their business without havng to monitor the dashboard. Ease of use is what the dashboard is all about.
My guess is that a placement will be made to "sophisticated" investors with a SPP to top up and to make existing shareholders feel as though they still matter.
9SP Price at posting:
2.8¢ Sentiment: Hold Disclosure: Held
