Digital marketer Otherlevels reports lower cash receipts but has big spending plans
Link copied to
Robo-marketer Otherlevels spent $533,000 in the June quarter on corporate costs — but reported lower cash receipts and undertook no capital raising.
The business (ASX:OLV) had $217,000 in the bank with plans to spend $2 million this quarter.
Cash receipts dropped in the quarter “due to a number of factors” including late contract renewal and sales delays due to the impact of the FIFA World Cup.
The company on average spent $581,000 per quarter on corporate and admin costs in FY18.
Managing director Brendan O’Kane told Stockhead these costs include their servers, rent, travel costs, marketing, and finance and listing compliance, but no one area was more than 22 per cent of the total cost.
Normally companies try to keep this expense low, and among small caps they tend to rise into the hundreds of thousands of dollars when the company has to pay for special events, such as capital raisings or legal costs.
Mr O’Kane says costs are higher because they have offices in London, the US, Brisbane and Melbourne. They also have slightly higher server costs because they have large data loads from a handful of large clients.
Otherlevels has been listed since 2015 with a product that allows companies to automate their online marketing.
At the end of December it had negative assets of $2.6 million, but told investors the business was a going concern because the board thought it would be able to get its cashflow into positive territory and they’d be able to raise capital from the market.
“At the date of this [December half-year] report and having considered the above factors, the directors are confident of achieving the above and that the consolidated entity will be able to continue as going concern,” the December 2017 half year report said.
“Notwithstanding this, given the past losses, there is material uncertainty whether the consolidated entity will continue as a going concern and, therefore, whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.”
It also still had $300,000 available from a $2.15 million loan from chairman Brian Mitchell and Mr O’Kane. They have since added another $400,000 to that facility.
Indeed, in the March quarter, and the 2017 December and June quarters it did managed to enter positive cashflow territory.
Mr O’Kane says the liabilities are largely due to his and Mr Mitchell’s long-term loans, and loans from a core group of four shareholders.
He says they’re aiming for a full year of being cashflow positive and expects that the June quarter will be a blip that will be evened out.
They had been “relentlessly” driving down costs over the last 12 months and revenue was rising, he said.
“We don’t have any intent to raise capital for the purpose of working day to day needs,” he said.