Ann: Response to Appendix 4C Query, page-12

Food for thought with CCP:

Annual FY operating costs are around $2.5 ~ $3M. (Lets use the lower $2.5M in this analysis)
Smart tags sold via channel partners generate $120 pa.
While smart tags sold directly are priced at $180.

The companies direction is to leverage their channel partners at I think  65/35 ratio so lets average a smart tag at $145 pa.
So to reach break even we need to sell over 17 thousand smart tags.

Our current CCV is $730k so we have around 5,000 active smart tags in active subscription.
So we need 350% growth on our current subscription amount to break even.

Below is the CCV growth from Q1 2017 to now.

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6	Column 7	Column 8	Column 9	Column 10	Column 11	Column 12	Column 13	Column 14
0	Customer Contract Value (CCV)	Q1 17	Q2 17	Q3 17	Q4 17	Q1 18	Q2 18	Q3 18	Q4 18	Q1 19	Q2 19	Q3 19	Q4 19	Q1 2020
1	24 Month CCV	$    275,000	$    340,000	$   440,000	$   530,000	$   630,000	$ 750,000	$    900,000	$   1,080,000	$ 1,296,000	$   1,555,200	$ 1,866,240	$ 2,239,488	$ 2,687,386
2	Increase		24%	29%	20%	19%	19%	20%	20%	20%	20%	20%	20%	20%

We are growing CCV at about 20% average each quarter.
Assuming all stays as is we are pretty far away from returning a net profit.

But realistically we know the company will sign more channel partners and expand into new geographies/countries and the technology is 'morphing' to target new markets as we have seen with these new Ph sensors and so forth.
So in my 'optimistic' model I see us break even 1H 2019.

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6	Column 7	Column 8	Column 9	Column 10
0	Customer Contract Value (CCV)	Q1 17	Q2 17	Q3 17	Q4 17	Q1 18	Q2 18	Q3 18	Q4 18	Q1 19
1	24 Month CCV	$    275,000	$    340,000	$   440,000	$   530,000	$   630,000	$   819,000	$ 1,064,700	$   1,597,050	$ 2,395,575
2	Increase		24%	29%	20%	19%	30%	30%	50%	50%

Pure speculation and of course have assumed Opex stays flat.

Just food for thought and I also think CCP are selling the devices too cheap, unless we make a significant footprint globally.