Ann: Appendix 4C - quarterly, page-10

@zaidi675 ,

Coincidentally, I did spend some time a few weeks ago getting to understand the business.

What prompted me to do some research on SOM was the fact that, at a market cap at the time of only some $210m, the market wasn't exactly pricing in much in a way of commercial success for the company.

Despite that, I came away with two concerns which prevented me from buying the shares:

1.) The company still looks a bit under-funded to me, in the context of the more capital-intensive (but higher-margin) RSS business model, and its associated lease liabilities.

2.) The single-product nature of the company. While I don't think this is necessarily a threat to the business on a 12-24 month view, as someone who likes to own shares for 5 years and more, I do wonder about the long-term durability of a business based on just one product, irrespective of how good that product appears to be at any given point in time, or how strong the IP protection around that product appears to be.

3.) It is a really difficult stock to buy should one wish to establish a decent position


If push came to shove, I could deal with the last 2 factors, but I think the company is under-capitalised, so I would need to see that addressed before I put my mind to the effort of trying to acquire SOM stock.