Investor Center » Fireside Chat

9 September 2019

CEO’s Video Chat re: Shareholder Queries

In this 6-part video release, EN1 CEO & Chairman, Ted Dhanik answers questions emailed recently from shareholders. He covers these 54 questions in the videos below (at the bottom of this page):

Video 1 Ad Category Scanning
  • 1. Are you having technical issues with 8 customers?
  • 2. Any other customers having technical issues?
  • 3. Can you rate your degree of confidence in being able to retain this publisher long term? I am concerned that having the problem unresolved for a month is an excessive time that would have to have the publisher questioning the robustness of your technology?
  • 4. In layman’s terms can you explain how the problem is only being experienced by this one publisher? As evidenced by the great numbers for August even without your No 1 publisher, you are obviously meeting your other customers’ expectations which is fantastic, but you would not want to lose your No 1 publisher?
  • 5. EN1 has currently ‘voluntarily paused’. Is this all parts of the platform and business thus all earnings suspended until operations resume?
  • 6. Why has it taken so long to fix the issue with that one particular publisher?
  • 7. Probably a silly question and one you have no idea on how to answer, but how badly do you expect the ad quality scanning issue to affect September and are the tech guys any closer to a resolution and have they at least identified what is causing it and are they now working on a fix?
  • UPDATE - a potential resolution to this technical issue discovered shortly after this video was produced; a short clip added at the end of this video with a brief explanation.
Video 2 Debt Facility
  • 8. Do we need a debt facility or is it a nice to have?
  • 9. I just wanted to ask if there were any particular issues with getting the debt facility? Has the expected finalisation date been pushed out? Do you have an idea of when you can expect it?
  • 10. Can you give an update on when you expect an outcome on the debt finance facility which is going to support your growth expectation leading into your peak Q4 period?
  • 11. If the debt facility is not coming through, is the company entering negotiation with an alternative lender?
  • 12. Why asking the lender for $15mil instead of $5mil as it may be easier to ask for?
  • 13. Are we still able to carry on the business and still increase revenue without the debt facility?
Video 3 H1 Financials
  • 14. I have been waiting tirelessly for 30th Aug announcement which didn’t happen as well, why? Why weren’t the financials filed on the Friday?
  • 15. Balance sheet repair, can it be deferred to later on?
  • 16. The half yearly mentioned a cap raise towards the end of the year?
  • 17. Under other income there are 2 items - Per Group policy, payables are remeasured on a regular basis to adjust for invalid traffic. does this mean that the original charge to COGS was overstated or is it the difference between the value of creditors and the actual amount settled?
  • 18. In accordance with the Advertiser Service Agreement, balances that satisfy the following criteria are considered forfeited and eligible for recognition as other income: Balances older than 6 months; Likelihood of near-future business (6 months) Bankruptcies, mergers, closures, and assessment of those less than a year old.
  • 19. What is other income, and why have you consistently had this every reporting period
  • 20. What were the non-cash expenses in H1?
  • 21. Why did we lose (886k) NPAT, I thought we were profitable in H1?
  • 22. Why was gross profit 42% for the period while you announced the margin was reducing the last couple months?
  • 23. Why was Q2 NPAT $1.3m profitable while Q1 was so negative?
  • 24. Net assets improved by only $7.5m, while you issued $4m in shares?
  • 25. Liabilities only reduced by $5.3m, but you issued $4m in shares, why so little change?
  • 26. Why was revenue only 1.5% greater than 2018 for H1?
  • 27. Aren’t the current liabilities less than $12.8mil? Because that $12.8mil current liabilities was as at 30th of June and isn’t it lower as at today given scrips were issued during July and Aug to pay down liabilities?
  • 28. What accounts for the “other income”? Have we lost revenue? Is this covered by your insurer?
  • 29. The $7,645,728 revenue figure from the trading update 5 August doesn’t line up with the half yearly audited figure of $6,176,341.
Video 4 August Trading Update
  • 30. Is the gross profit margin falling permanently?
  • 31. Why was AdCel’s revenue left out of the August trading update? What was their revenue? Why only $120k profit in H1 and why so little revenue in H1?
  • 32. Why did you compare 2018 with 2019 figures, how are they relevant?
Video 5 3B's (shares issued for trade credit discharge)
  • 33. Why did you issue shares to pay creditors on the Friday the financials were due? Why didn’t you wait until they were filed and digested, as the result was fantastic and no one I spoke with so far expected such a strong result.
  • 34. How many 3b are there still to be issued? This is the reason for the sell off today, I think. They are taking their money, I know it has to be done, but is it killing the SP?
  • 35. How much dilution is enough? We have too many shares issued already?
  • 36. Can you see who’s selling? Is it the trade creditors?
  • 37. I feel the 3B's is one of the factors affecting our SP and keeping it far lower than what it should be. I am well aware of the necessity of this to pay off historical debts but am wondering how many more of these do we need to endure before we are in the clear. If there are a still a few to go and you do not wish to broadcast that please let me know via email.
  • 38. During the half year the company issued around 94M shares for settlement of legacy debts, and this total value is roughly $4.431M, and it is $5.3M improvement or reduction for the legacy debts on Balance sheet, so it’s 20% less than original amount?
  • 39. Also looking at the latest bs, there’re still $7.5M of these debts left, and if your plan is to continuously to issue shares to settle the debts, then I worked out there could be another 150M shares to be issued that will make total SOI to 700M. But are you going to do so?
  • 40. The main reasons to clean the legacy debts is to be eligible for debt facility, so if we can get green light on the debt facility, are you going to stop using shares to settle debts?
  • 41. You and your team may worked very hard to achieve where we are at today, but the market doesn’t seem to share the same view, that means there must be something that worried everyone, and I think the main one is the share issue to settle debts. In the fireside chat video, you did explain the reasons behind it but for the outsider (non-holder) they may not like the look of this. So, I would like to hear from you, what are you plan? And if that’s something you can put into an announcement so at least we know the upper limit, and to bring back to shareholder/market’s confidence on EN1
  • 42. Are these all historical debts or is this operating cost? When will we stop issuing shares for this purpose?
  • 43. Do you stop using shares to settle any debts once the debt facility is approved? And if so, what are your plan for the remaining legacy debt?
  • 44. How much of the legacy debts have been settled and how much left? It’s not obvious to see from balance sheet.
Video 6 Other Matters
  • 45. Is the AI bidding system in place and working now, if so how successful is it?
  • 46. Why is it a special month (Aug)? When is the other special day?
  • 47. Also, this might be a hard question for you to answer. Do you feel the growth prospects of the company are still good and do you still have confidence moving forward?
  • 48. Apart from needing free cash to buy ad inventory are there many other downside risks to the company moving forward?
  • 49. You have delivered and kept your promises by keeping the market up to date. But I feel that in the last 4 weeks, those updates are not there anymore which is a concern for me. Could you please advise why August had less announcements in comparison with earlier months?
  • 50. It would be useful to have the exchange rates used for each period or comment that x % is real growth and y % is due to exchange rate movements used for reporting.
  • 51. Please clarify what the tweet meant where you said you “Can’t wait to hurt some feelings on August 30”, I take it you thought the half yearly would be well received, which would hurt the “down-rampers” feelings, it was then delayed and then the 3B was also issued causing Mrs Market to dump based on emotion more so than anything else.
  • 52. Any idea if the professional / sophisticated investors still hold?
  • 53. Why did you list on the ASX, everyone knows it’s a graveyard for US startups?
  • 54. Do you plan on continuing to tweet? I enjoy your tweets, it’s very anti-tall poppy and I think the culture is programmed to dislike this but it’s a direct indication of how we’re tracking.

  • Ted will be visiting Sydney and Melbourne in late September or early October. To schedule time to meet, please email [email protected] Additionally, shareholders visiting Los Angeles are welcome to visit EN1 offices and meet with the executive team. We look forward to seeing you in 2019 and thank you for your time today!

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