Ann: Market Update, page-89

I would like to add a couple of points...to take or leave (just thinking out loud about this).

The reality is, no-one (not even management themselves) know how this is going to turn out. The best intentions are there for it to be a major disruptor in the HR space - and there is some potential for that for sure.

But...this is early days.

The reality though, is that while the share price has come back near what appear fair levels - there are questions that need to be answered (sure you can close your eyes, jump in and hope it pays off). But the question is really just about one thing - revenue and the speed of that revenue growth.

Last year, they were throwing around figures of revenue of up to $25 mill run rate at end of 2015. If that had come off, and they were running at say $7.5 million revenue this quarter, the share price up around $5 while heady, may have been almost justified (with such extreme revenue growth). That is what the market was expecting, and I am sure many brokers understanding the hype pushed it for all it was worth.

I was one of a few around that level that sounded the alarm on here (to some rebuffs) but that is beside the point. I just could not see why it was worth paying $5 when there was virtually no revenue.

Now - the price has come back and with close to $50 mill cash there is certainly support coming in

But...they are now talking about burning $24 mill a year in expenses. This is what makes me very nervous buying back in. With perhaps a revenue run rate around $5 mill a year there is quite a gap there...yes you will argue they have the cash...which is true - it gives them about 24 months breathing space...

But even at this high market cap, they have to not only increase revenue, but increase it strongly quarter on quarter - at enough of a speed to justify paying out this type of premium for a loss making enterprise

Just look at how slightly similar companies like NWZ or UNS have gone when they decide to dial up the expenses into the hope of revenue - sure they are not SaaS companies...but the premise of the operating model is similar

You can make alot of noise with $24 mill a year...but you need to come up with returns as well...

I am not saying 1PG will end up like them, I hope they don't and they do have some very very promising clients. But you have to be aware of outcomes - the worst case ones could be very considerable loss even from these levels.

I guess, just realize whether you are investing or punting. I think anyone on here getting set for the long run is probably punting IMHO.

As I mentioned, like the story...hope it does well... need to see more to risk any hard earned $ (learned to be cautious the hard way over the years)