Its time for change and its on finally on the way, page-48

Hi mate

Broadly speaking I am quite happy with the most recent 4C released today.

The market cap at market close is $7.45m. The business still has $0 debt and with the benefit of the most recent quarter, as you note, cash on the balance sheet has increased to approximately $1.9m. Put simply, this infers an Enterprise Value of $5.55m and over the course of the 12 months to June 2021, in my opinion, it's reasonable to expect DDT to return a net profit between $0.5m and $1.0m.

ROE should be greater than 20% for this financial year, which is nothing to be sneezed at, especially without the use of debt.

In the interim, I note that receipts this quarter was lower than last quarter, however, due to appropriate expense management, positive cash flow still improved by 32.3%. We are now starting to see money spent on advertising and marketing, which will hopefully grow revenue in due course. Product manufacturing and operating costs have almost halved, which I anticipate in part is due to the re-weighting of revenue streams towards the "Service and licence fees" and "Royalties" streams and away from the "Sale of goods", which I highlighted in my post on 6 February 2021.

Despite the lower receipts, an interesting comment I noticed is that the cash balance increased due to a cyclical reduction in inventories and is "offset by an increase in debtors in line with improved revenues". It will be interesting to note when the revenues are converted to receipts in future quarterly reports and what they are.

A possible concern is that R&D for this quarter was materially lower than the last quarter and for the year to date only totals $39,700. For a quasi-tech company in a niche industry, I'd expect staying at the forefront should be a reasonable expense and consideration.

Finally, the Half Year Report indicated that a Distribution Agreement had been entered into for its bicycling related microdot and Property Vault products with a leading distributor to the cycling retail industry in late January 2021. Some commentary on this, along with other possible arrangements that have been mentioned in various reports in the last 2 years, including relating to the 3 year pharmaceutical contract, the relationship with the gambling chip manufacturer and the wire/cable theft solution with DDT's Malaysian distributor mentioned in the 2019 Annual Report, or even expanding on the comments from the 2020 Annual Report noting additional revenues from the development of new offerings to UK and European based customers in the insurance and motor vehicle industries.

Overall, I think the turnaround story is truly underway and management is setting a great foundation for future growth. I believe at its current price, the business is substantially undervalued, however, still needs to kick a few more goals yet before the market will truly realise its value and we see a material re-rate. In some instances, value is its own catalyst and I believe that holds true for DDT.

I hope our patience is rewarded, but don't expect to see any massive pricing changes in the short term. This is a 3-5 year hold for me and I intend to continue buying as and when I consider there to be a material dislocation between price and intrinsic value.