Ann: Minimum Holding Buyback Program, page-11

A raft of ideas there from Von Rico, plenty to chew on.

I for one wouldn’t like to see any loan repayments done by issuing shares, in effect turning a loan into a convertible note arrangement. I’ve seen how these operate elsewhere. It gives an external entity a major reason to drive down the SP to maximise the number of shares it is issued, which invariably means major dilution for existing shareholders.

The minimum holding buyback program with its A$140K upper limit will see CM8 buyback a little less than 1.85 million shares. The last 3B had 223.4 million on issue, so this buyback represents around 0.8% of issued capital, a welcome but insignificant tightening of the register.

To shrink the register by 10% would require around $1.5 million if done at 7.6c/share, which could be used instead to pay down debt, depending on your preference. Mine would be to pay down debt.

Or use it as capex to start or develop a new business stream.

Hopefully, the annual accounts, which are due in a tad over three months by Aug. 31, will tell how the capex into the digital influencer space is panning out, and just how fat the margins are in this business.

CM8 must now have a pretty decent idea about the margins and gross profits obtainable by providing this service to other businesses, given they’ve now done hundreds and hundreds if not thousands and thousands of campaigns.

I imagine margins are fairly tight, given that it’s a human service we’re providing in what is a fairly competitive space. I doubt there is a yea hallelujah veritable mother lode of moulah just sitting there waiting to be tapped. Rather, it could be a grind to eke out a handsome living for our hard working account executives.

And therein lies one of the unknowns for CM8: has the company poured already considerable capital locking up staff and financial resources into a low margin sector. Time will soon tell.

Something has got to account for the appallingly low SP. Board and management are more than a little coy saying what.