Ann: Quarterly Activities/Appendix 4C Cash Flow Report, page-202

FYI - NAB "Expert" trader James Dunn has just released he's 2 small cap stocks he thinks will be the "Champions"! and guess who is number 1?

1. iCandy Interactive (ICI, 6.5 cents)

Market capitalisation: $81 million
12-month total return: –33.7%
3-year total return: 26.6% a year
Analysts’ consensus target price: n/a

Successful investment often means noticing what’s going on around you, as Peter Lynch of the Magellan Fund fame, maintained – Lynch always stressed that was one of the best ways to pick up powerful trends. If so, you may have noticed that young people spend a lot of time on their smartphone screens.Much of the time, they are playing games on mobile apps. Research firm Data.ai says that 60% of the world’s game-playing activity is done on mobile apps, and the mobile gaming market will top US$136 billion ($203 billion) in 2022. The secret to mobile’s growth is that it has “enabled the complete democratization of gaming,” says Data.ai.As Web 3.0 – the new blockchain-enabled iteration of the internet, incorporating concepts such as decentralisation, blockchain technologies, and token-based “economies” and assets – spreads, gaming is moving on to it at a massive rate. The total addressable market will grow to at least US$200 billion ($298 billion), with three billion “gamers” globally spending an average of seven hours a week playing. Web 3.0 games will enhance users’ gaming experience; allow players anywhere in the world to engage and exchange digital assets and earn profits while playing. Gamers can also improve their skills by using Artificial Intelligence, growing credibility, and solving weaknesses. Web 3.0 will be integrated with the Metaverse – universal and immersive virtual world that is facilitated by the use of virtual reality and augmented reality headsets, and carried over the internet – and the blockchain platform.It is a potentially massive investment “thematic” – especially in the home of gaming, South-East Asia – but not many investors have their heads around it.One of the best exposures to this growing global market on the ASX is iCandy Interactive, a game developer that has been listed since 2016. iCandy is the biggest independent game developer in Australia, New Zealand and Southeast Asia with operating bases in Australia, Indonesia, Malaysia, Singapore and Thailand, across which it employs about 650 game developers.iCandy has had a busy year with a slate of acquisitions that have positioned it very well to become a global games publisher within the fast-growing metaverse and web 3.0 space. In February it made a potentially transformational buy, picking up Malaysia-based Lemon Sky Studios for $44.5 million. Lemon Sky Studios is a video game, game art, and animation studio, having worked on a large portfolio of video games including Call of Duty Infinite Warfare and Marvel’s Avengers. Now that Lemon Sky Studios is fully integrated into the business, iCandy has a full pipeline of contracted services for game production for the next three years.Additionally, the company acquired majority stakes in game development companies Storms and Gam economy in the March quarter, while in June, ICI staked out a bridgehead in the European market, buying a 60% stake in German game developer Flying Sheep Studios for about $3 million. Flying Sheep founder Thomas Rössig was appointed ICI’s head of Europe. Rössig will manage and provide strategic direction for the ICI team in Europe, while continuing to serve as Flying Sheep Studios’ managing director. ICI says Flying Sheep Studios will significantly augment its software engineering and technology capabilities, in its objectives to develop broad-range metaverse games.Having brought the financial results of Lemon Sky Studios into the fold, iCandy saw its revenue surge from $900,000 in 1H2021 to $15.7 million in 1H2022. On the back of that huge revenue infusion, iCandy is operationally profitable for the first time ever, recording EBITDA of $4.4 million, after excluding one-off acquisition costs related to the recent acquisitions.iCandy sees its shares as under-valued, and in July, put its money where its mouth is, announcing a buy-back of up to 135 million shares. As at 31 October 2022, iCandy has bought back 26.75 million shares, and says it remains committed to its buyback scheme.Mobile app gaming and the extension of gaming into the metaverse is not an easy topic to understand – but iCandy does. I think it looks to be great value at these levels.