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ASX-listed 9 Spokes widens first-half loss, may need additional funds

Tuesday 28th November 2017

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ASX-listed 9 Spokes International reported a wider first-half net loss on higher expenses and said it may need to raise additional funds in the next 12 months to meet an ongoing shortfall. 

The stock fell 9.9 percent to 8.2 Australian cents after 9 Spokes said its net loss increased to $10.6 million, or 2 cents per share, in the six months to Sept. 30 versus a net loss of $6.7 million, or 2 cents, a year earlier. Still, revenue soared to $2.3 million from $3,000 in the six months to September 2016.

Operational expenses were $3 million, from $1.8 million in the prior period. Research and development expenses were $2.1 million versus $1.5 million in the previous year, and administrative expenses reached $7.8 million versus $3.6 million in the prior year. 

As at Sept 30, 9 Spokes had $15.7 million of term deposits, cash and cash equivalents. 

The company noted substantial progress in 2017 including a recent implementation at Royal Bank of Canada. That, coupled with further opportunities, will contribute additional revenue and a longer cash runway "however, given management's expansion plans, the level of additional revenue for the next 12 months is unlikely to exceed planned expenditure," it said. 

In its independent review, auditor PricewaterhouseCoopers noted the group forecasts continuing losses and will be unable to fund them from its current cash position. As a result "a material uncertainty exists that may case significant doubt on the group's ability to continue as a growing concern," it said. 

In order to address the situation, 9 Spokes said it may need to raise additional funds in the next 12 months, noting access to capital through its listing on the ASX "greatly enhances its funding opportunities," pointing to an oversubscribed placement in July when it raised A$12 million. 

There are new business opportunities in North America, Australasia and Asia, and user adoption increased nearly 10-fold in the six-month period, starting at 2,100 and ending at more than 20,000 users, it said.

In the unlikely circumstances it is unable to raise the equity "the group would be required to raise further capital through alternative sources and depending on the amount raised, review costs and focus on existing business," the company's accounts said. 

9 Spokes provides an online, software-as-a-service application platform and store allowing businesses to access a wide-range of third-party applications and online services to meet their needs for core business activities such as accounting, inventory management, booking and scheduling.  In September it inked a deal with Royal Bank of Canada for the North American bank to provide a white-label version of the company's platform. The service went live on Nov. 1. 



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