country bob>" Is this the turning point?" That is certainly what...

country bob>" Is this the turning point?"

That is certainly what you are supposed to think, Bob.

Most of the release is the usual hot air. The words "commence" or "commencing" appear 5 times in the document, all relating to the sort of promises we have all seen before. They have done their usual trick of throwing in the very large turnover of some other company (always good to get a big number of dollars in there, even if they are not iWebGate's!). I particularly like the way they make rather dubious claims in quotes. This time they tell us that it usually takes 24 to 36 months "to start generating revenues via a cloud partner model" but offer no evidence to back up those numbers. But then they wrap the claim in a quote from someone, so it is not a statement of fact being offered to their shareholders in a trading update, it is simply a report of something someone once said. Whoever writes these releases is a master of their art. I do not normally bother analysing iWebGate announcements.

But this one has that rather interesting claim of $265K in a single month in it, and that is worth some thought. The first thing that strikes me about it is the wording: "Telstra-related activities." If it were straightforward sales, would they not use a term like "sales of our products via the Telstra platform" or something similar? Why the weasel words?

My guess is that they have done something like approach a number of their established customers and said "move to our Telstra model and pay us a year up front, and we will give you a huge discount." Hence "Telstra related activity" which produces a sudden leap in revenue. But that is just a guess. In reality there are probably lots of potential explanations, of which a sudden burst of sales to new customers is just one unlikely one. Whatever it is, I would bet it is not what they want everyone to think it is. With another round of fund raising on the way, it is just a bit too convenient. Something is fishy.

Still, if $265,000 has materialised from somewhere, that must be a relief to shareholders because it will keep them afloat for another week. More importantly they have that next fund raising coming, and that last set of accounts is going to be a hard sell. If they can offer a picture of a business which has turned the corner, investors will be easier to find. They need to be. With a market cap at about $80m, if they are going to raise another $2m they will have to sell about 2.5% of the company. This level of dilution is getting horrific.