Ann: Flexiroam Investor Update November 2017, page-3

Prae I'm interested to know what part of the presentation you are looking at, or are you referring the financial report?

I hope you aren't referring to slide 9 that states: "Revenue experienced marginal changes.." It's not inaccurate, just perhaps not the best use of words that can have financial connotation. But, I suspect you are talking about something else?

My analysis may be a little cruder than yours, but I'm essentially stripping out their 'old' revenue. I don't see it as relevant moving forward, I feel it simply clouds the financials.

In fact I would have probably left out a few of the slides, but I do appreciate the detail provided.

I'm not an accountant, and for companies like FRX I tend to look at the cash flow rather than P&L.

Can you explain to me where the 687k of Deferred Revenue appears in the P&L, or does it not exist until the pre-sold data bundles are consumed?

If so, that means the majority of this will appear in the next P&L?

I just think if you step back and look at the numbers in context its a vastly different picture.

Network Costs increased from $170k to $690k half on half.

Flexiroam X was launched in June 17, so the previous period covered only 4 months. In addition, how many SIMs were shipped, activated and actually used during this period?

June must have been next to nothing, and other than testing the thing actually worked, most users would have been eagerly collecting codes and hoarding data that they thought would last forever with their $10 annual membership.

The most recent half included the entire period of the new pricing scheme and the explosion in subscribers and usage.

In addition to supplying roughly twice as many active users over the period, the cost of the masses of FREE data that was handed out under the old pricing model was (and is) still being borne.

Taking the above into account indicates to me that they are achieving economies of scale in network operation costs, and coupled with the constrained staff expenses and significant reductions in marketing & R&D spend the underlying picture is infinitely better than it seems.

I'd be interested to know your thoughts?