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@AussieCash

No way we are profitable for another 12 months. Cash receipts occur before revenue due to revenue recognition, so will only (maybe) become profitable by Nov 2019 if things go to plan.

In my experience, there is no rhyme or reason to when these things re-rate. In general, a lot actually depends on liquidity and how long people are willing to wait. Once available stock starts drying up and the overall story is positive re-rates occur. In bullish markets, the rerate occurs very much in anticipation of improved metrics and in bearish markets it is very much lagging reports.

It is a bit of a paradox, because if you try to acquire stock in companies once operations have been ironed out two things have happened. 1) a significant chunk of the appreciation may have occurred and 2) you invariably cannot actually acquire meaningful stock at the listed prices.

The challenge is identifying when, there is little chance of things going considerably wrong and when the probability of a favourable outcome is very high.  In FRX's case, the recent capital raising has significantly derisked the company and the probability of bankruptcy is low. Secondly, multiple metrics in both management data, audited revenue figures as well as verifiable public data (such as google trends, app annie etc) are all saying that uptake and growth is occurring strongly. My only concern had always been that the there is limited visibility on the actual gross margin with these plans. However, the gestalt I have is that there have been enough consistent quarters of cashflow and enough audited accounts to suggest that GM of 40-50% is real. To be absolutely sure given previous false-starts (and have to be alert to the higher corporate revenue last half which may not be recurring), given seasonality you could wait for confirmation next quarter- if cashflow positive the business has turned the corner definitively (after 3 straight quarters).

It is a real luxury to be able to gobble up stock at 11m when >35m has already been expensed getting this business up to scratch.  I have been acquiring stock steadily over the last month and accounted for a not insignificant % of the volume in December.  I now have an adequately sized position that if this goes bust it does not hurt my overall portfolio too much, but if the 5-10bagger possibility eventuates, I will have enough for it to make a meaningful contribution to portfolio returns. I have LVE and FRX as both being high probability short-term (12-18 months...I am a long term investor!!) multi-baggers and am very excited to see how things play out with them....

The last point I would make about FRX is that the upside is very asymmetric. That is the main reason I have taken excess risk on this one. If it is a viable business, given the business model- it is inherently scalable and there is an enormous market for growth. Once acquisition channels have been optimised, it just becomes a matter of directing excess cash to user acquisition and it will grow and scale beautifully.  This is in contrast to most other micro-caps and industries that I am aware of, which usually require significant investments in working capital or PP&E to grow, naturally curtailing explosive growth.

Time will tell but I see a low (20% chance) of up to a 50% drop in share price and an 80%+ chance of 3-4x appreciation. Given my inherent optimism, discounting this to 50% chance of going to 0 and a 50% chance of 3-4x appreciation, it is still a reasonable risk/reward proposition (as long as sized appropriately).