Ann: Appendix 4C - quarterly, page-35

Spot on I think Ava, also gives credibility to the lowdown's latest view that they were delayed 1-2Q's (https://seekingalpha.com/author/the-lowdown/comments).

I had it in my mind that at 0-10% I'd sell, 10-30% hold and 30%+ I'd be buying. So right in the middle of my hold range and to be honest I'm very happy with the result (relieved probably more the right word). Quite surprised at the negativity on here, people seem to still be treating this as a $4 company, rather than the 41c company it is with 100m in the bank, coming off negative transaction growth in the previous quarter. You need to realign your perspective.

Not a whole lot to read into from the 4c, but my observations and inferences:

1) Actual RnD costs as well as staff costs broadly in line with estimates from prior 4c. This represents an increase to staff costs of around 325% on the same Q last year, and an astronomical increase to RnD, though again broadly in line with RnD spending since the end of last year.

On RnD, at 30 June 2017 the YTD RnD spending totalled $111,000. According to this 4c the YTD RnD spend sits at $2.8m ($1.2m of that in the Q alone). I am not an accountant, though I do not imagine it is unlikely that implementations and trial expenses for a company like this would be going under RnD costs. So I see this rise as positive news.

Both these increases indicate the company is working on something large, be that NA Williams, Amazon, Yum or other is not so important at this stage. As any large scale implementation success would be a big SP boost.

2) Advertising and marketing expenses have decreased from last Q from 119k to 96k. Doesn't seem so much on the numbers alone, however actually represents around a 20% decrease in spending. To me this has always been an indication that there are big things in the pipeline, as a company which is struggling and has such a huge war chest would not be spending so little on advertising. Rather this indicates that the only pressure they are facing is in terms of implementation capacity, not product appeal.

Expected spending is set for 200k next Q, though the company also said this in their previous 4c of this Q. Indication of a delay in the excess capacity or just standard fat built into the budget, hard to know.

3) Admin and corporate costs - company explained the reasons, defending CA and we may see some of them back. I doubt that very much, but who knows we may get lucky. I think those costs are sunk, annoying to see so much money going down the drain on what could really have been avoided with some more professional disclosure practices. I'd be more concerned if there wasn't still 100m sitting around not being used.

3) Commentary.

Class action comments could have been written by most regular posters on the forum, no surprises there.

2 vital lines for mine, the first being:

"The above proceedings, along with related matters have delayed the company's previously projected development timeframes"

NA is 9 months into a possible 18, though I would expect some elements to begin generating transactions soon (I'd not expect the entire 1.2b to hit the books at once upon completion). I don't think it is unreasonable that there has been a delay due to the CA etc, so happy to give them some slack here (though next 4c is when I am expecting to see some signs).

Is there an implication here that none of the deals have been lost due to the CA, merely delayed? If so , that would be reassuring.

"the company expects transaction and revenue growth to resume its acceleration"

To me this statement says - "ok, we are back on track". If we are going to resume acceleration, that would indicate that this 20% increase is not what they would consider a resumption of their growth acceleration. I don't think anyone would say it is, but its good to see management recognises this also.

4) 100m

Still sitting there. Unused.

I've offered the theory previously that if amazon had been signed in any significant way that it would make sense the raise was a de-risking mechanism for them to ensure the company would continue as a going concern into the future, along with a hypothesis that the 40m strategic partner which was declined could have been amazon. While just a theory, the breaking up of the 100m into 2 components - 60m for "investing activities" (I'd agree with the previously expressed view that this would be a high interest account of some sort) and remainder in cash - could represent the mandated portion that they were required to raise (invested 60m portion), and the additional over subscription portion which could be earmarked for possible acquisitions and operating expenses (cash).

Though the only evidence I have for the above is circumstantial, so who knows. I just find it so hard to believe that this money would not be being used if the company were in such dire straights...


Outlook:

This 4c was what I expected, and hoped for. A return to growth, a small part of me had a sick feeling that I'd be seeing negative growth again, huge relief there. Next 4c I'd expect to see signs of large implementations.

Feeling much better today and happy to continue holding.



All IMO, DYOR.

Apologies if any numbers are incorrect I have so many pages open that I'm jumping between (I'm sure I'll be told if they are).


MJ