Ann: Appendix 4C - Quarterly, page-7

There is some really interesting stuff in here.

Receipts are down, again, but we knew that. The pre-Christmas announcement said:

"...has built a substantial Telstra and non-Telstra partner network currently positioned to begin delivery of IWG’s products..."

Hands up who spotted the "begin" hidden in that sentence? Back in May, when the Telstra deal was announced, we were told:

"iWebGate is expecting to grow revenues from this arrangement from May 2015."

Yeah, right, and over 6 months later they then told us they were positioned to begin delivery. Based on this information I would suggest they are still selling close to zero through Telstra and there is no indication that is going to change.

Staff costs continue to be interesting. In the June 15 quarter they were $572,000. In the September 15 quarter they were $393,000. In the December 15 quarter they were down to $246,000. When I pointed out this trend in my post of 30th October I was told in mocking tones that it was "staff rebalancing" and that I obviously had 0% experience of running a business. Maybe, but they have now cut their staffing by nearly 60%. That is a hell of a rebalancing isn't it? Or could it be that they are, in fact, dumping staff as quickly as they can?

That repayment of borrowings (line 1.18) of $1,000,000 is intriguing. The 16th October announcement said they had borrowed $1,000,000, at interest of 10%pa, and it was repayable within 9 months. Unless the figures are a coincidence, it seems they chose to hand the whole lot straight back.

How about the capital raising costs of $300,000 (line 1.20)? It is not cheap to raise money, is it? I wonder who that cash went to. Whoever it was is doing a fine job of milking this cash cow!

Then we get to the rather puzzling bit: cash flow. The quarterly burn rate of $2,278,000 represents a black hole swallowing cash at $760,000 per month. At the end of December they only had $613,000 in the bank, so as of right now, one month later, with all other things being equal, they are broke. They must have raised more money from somewhere. Only there has been no announcement, which they would have had to make had they sold more shares. Which implies what? A director has loaned the company some more money? Maybe that $1,000,000 loan had a credit facility clause and they have dipped into it? Maybe Eddie Sugar has something in the pipeline which will materialise any day now and everyone is holding their breath? I guess we will find out soon enough, but whatever is happening, they are cutting it really fine.