Ann: Response to ASX Aware Letter, page-29

Wow that was a lot of questions from the ASX, no wonder it took buddy so long to respond. Overall a very well written response and I don't see anything remotely fishy. I have a hard time seeing what the ASX was on about.

It seems the ASX was concerned about the deals from last year (Rizon, Sasktel, Ingram Micro Canada, Digital, and Thor). They seem to be all up in Buddy's butt over the basis for the revenue forecasts and the lack of inclusion of termination penalties in the announcements. Firstly, since these are all old announcements that HAVE ALREADY BEEN APPROVED by the ASX, why are they just asking these questions now? If it is indeed a big deal, why wasn't the ASX concerned about termination clauses at the time?

Firstly, the revenue forecasts. I think Buddy answered these very well. They certainly were not numbers picked out of thin air. Had Buddy not included any guidance, I bet a lot of us here on HC would have complained about the lack of such information. I'd rather have a well thought out guess than no information at all. I think we all understand that they are just targets and especially since this is a new product it could swing either way of center.

Second, the termination penalties. Really ASX? I do not care in the slightest about that. I am not at all surprised to learn that there are no penalties for cancelling these agreements. These are just distribution and reseller contracts! If they do cancel the agreement, the units already installed will continue to produce revenue. It's not like we are billing Ingram for a service, and then if they cancel the payments stop the next day. It just means there will be no more growth with that reseller. And lets say there was a penalty to cancel, how do you enforce that? They would just decide internally to not try as hard to sell the product. It would be like hiring a sales guy to work on commission, but oh by the way if you don't sell 1,o00 units in a year you owe us 1 million dollars. Who would agree to that? With Digital they have the loss of exclusivity which I feel is motivation enough for them to work hard at selling. And let's not forget that this is a new product from a new company. Who would sign on to sell the product with a contract that gives them no way out and includes a monetary penalty? No company would sign that. So that should be a non issue.

My first reaction is that this was a complete waste of time. On the other hand, the suspension was randomly during a period of great turmoil in the global markets so at least it was good timing in that sense. As someone else mentioned, one down side going forward is that Dave might be extra cautious about sharing info with us. He will share what he is required to and nothing more.

But overall I am very pleased with Bud's response. Well done Dave and Team and I look forward to seeing what you have in store for us next!