Member Info for Silverblade

I think the revenue issue is whether the sales were a/ actual sales (revenue - not billings...) in which case the 2019 revenue is probably ok; b/ refundable deposits in which case revenue is debatable as it might need paid back; c / deferred sales in which case revenue shifts to future year recovery. None of this requires a 'formal investigation' imo - its not that complicated. I have said for some time my worry is the $1m headline is a potential smokescreen - in the scheme of things it is minor - the issue which needs addressing is when was this known; did we issue reports and investor meetings knowing this had occurred; what role did our Chief Financial Officer, Chief Revenue Officer and Financial Controller have in this (plus B. Disher and Mazars who audited 2019 accounts); was a cover up attempted - and if so - why given it is not material? Why would our chairman get involved; and why are we left waiting for an update. If this is all speculation and damaging the companies position - issue an update and reassure us that we are reading too much into the current position. SB

The problem is bakky - and this is based on assumption not fact - we may have screwed up already with the 2000 sales at the end of 2019 if the $1m is adultblock. That would hardly be confidence inspiring. SB

If we stop to pause and reflect - its been pretty much downhill since the conclusion of the strategic review. Purchasing ICM was meant to be "......earnings enhancing in the current year and believe it will deliver scale, strong recurring revenues and positive working capital to the Company in 2018 and future years. Further, it will strengthen the quality of our revenues, both accelerating MMX's already fast-growing renewal base and improving the geographic make-up of our sales, given ICM's revenues are primarily derived from the US and Europe. We see this transaction as a major step forward in our ambition to introduce a progressive dividend policy over the next 18 months."

How could it go so wrong 3 years into the acquisition? We were also told directly by SJL mmx was one of several offers for the business - some all cash - but he saw value in a cash and share deal, albeit this did not work out the way he figured - although his reasons for selling were more about the financial markets than the company itself (good call SJL). I guess the point is - we have assets which we know are attractive (and that's without the adultblock upside - potentially) – perhaps we should consider divesting on the basis there is simply no value recognition for this part of our business. With adultblock – the adult portfolio could be worth more than the entire company valuation at present. I would prefer a sale of the entire business; but that may not suit our board at present, although you have to think all avenues are being considered at present given the share price.

On other matters - the more the investigation drags on without an update the more concerning the outcome imo. SB

Only once in the last 10 years has the price dropped to 4.5p (in 2013), albeit there were less shares in circulation so the company was valued at £30m. Trading is still limited in volume - and there has been no II selling. Who knows what's going on behind the scenes.....! SB

Evening SS. There is significant evidence from vip RNS releases in 2017 pointing to decent revenue per domain - even a wedge of premium sales although I suspect that’s where a chunk of bad debts emanated. That said / the sales in 2019 look like they may be the source of this years drops as you noted.
I can see you are trying to look forward to a better place than where we are and I hope you are correct - I have become disillusioned since the interims and subsequent follow on issues; and have allowed this to pre-occupy my thoughts, and being overly negative does not help our collective positions here. I want to believe we have the right team to monitise the business and allow those who wish to exit to do so at an acceptable price - for me that would be in excess of 10p, and preferably a few pence higher. I do not believe our IIs will accept more of the same as has occurred in the previous 4 years without forcing change - there are relatively large sums of money at stake here. As always - good to hear from you and the bulletin team. SB

You would think there would be some interest at these levels......although not that you would know it from current trading activity!! SB

Hucks - don't forget during the last two years there has been in excess of $3m in bad debts (chinese aged debtors) - likely related to vip. And there are probably reasonable levels of deferred income as well - who knows if we will receive 100% of that. Again - can't blame others for that - so that's two revenue screw ups (potentially); two bad debt write offs in three years which our team were responsible for. Scratch the surface and there are issues with our current business which cannot be transferred to previous management regimes. As worrying is the DUMs trend - could this be the first year of overall decline - that's the way it is heading. VIP is hurting - we were always told this was not a freemium - so -500K regs has to hurt. As you note - revenue is more important than DUMs - but but that's also in decline. And we wonder why we are trading at sub 5p. Worrying times imo. SB

Evening both. Quiet weekend...! I hope my concerns are proved without substance. But we have all been here long enough to witness year after year of financial issues - to the point where I don’t believe we are taken as a serious investment proposition any longer - although I accept IIs continue to support the business. I don’t follow every domain business - but I keep an eye on our peer group/competitors - and not one has had the degree of fairly public issues we have had. Multiple onerous contracts, impairments, write downs, founders ousted, acquisitions to cover up failing business model, bad debts, 5 year plans out of nowhere etc. And now twice in three years we have issues on how to treat revenue / despite what I regard as a simple business model with significant executive positions to manage finances. The latest issue is such that it has required our chairman to get involved - let’s assume that is driven by the IIs asking the same question we are - exactly wtf is going on here. All of this at a time when we are trying to launch a premium sales product and return cash, despite the company losing tens - yes tens - of millions of $ dollars in value in the last six months - in a market which our peers appear to be prospering in. So yes - I’m concerned and will remain so until we get some answers here - hopefully starting this week. SB

Cheers SS. Quite a few issues milling around now which need clarified / revenue investigation, management team changes (those we know about and any to come), options clarity, tender offer / and all the time our sales do not appear as strong as we would like. Sometimes it’s difficult to see the sun in the clouds. Let’s hope the wind blows soon. SB

What’s your take on the options issue SS? It doesn’t add up to me but maybe it’s a misread. If they were awarded - why no RNS? And if they were not awarded - that would be strange based on previous years awards. Just another issue which makes me uncomfortable here. Like you I want to know our investment is receiving due attention from our BOD - and that goes beyond merely talking about shareholder value - although even that reference has been dropped. ATB SB

I’m not exactly sure who to ask anymore bakky!! Are TH and MS now classed as the ‘executive team’
and not Directors as they were referred to in previous years? I would have thought any options which impact on potential share dilution need market notification. Senior managers were also previously included. The web site still does not include the management team changes highlighted at the investors day presentation. It gets more mysterious the longer this drags on. As Hucks noted - quite farcical if you removed the significant sums invested here. I remain concerned at the current state of play. SB

I asked that question bakky. That does not tally with the info in the interim accounts - unless I am reading it wrong. Note 6 in the interim report states 25m
Shares were awarded during the period to the executive team and key employees. Surely the period is H1 2020? The year before almost 29m options were awarded. No idea what is going on here. SB

Removing exec directors is not an easy task - especially if they are party to confidential information a company would not wish to be made public. Compromise agreements are sometimes best all round and are designed to protect all interests. Even gross misconduct is dealt with in this way at this level - and proving this is timely, involves lawyers and would drag out. I seriously hope mmx is not in this place; but even if it was I suspect we may not find out. Individuals would leave with a lump sum severance package - that’s the way it works whether we like it or not. SB

....especially if last Friday is anything to go by! If there is trouble with our executive team there will be compensation deals to be agreed - and they will not be cheap. But that’s pure speculation / as noted some form of update would be good after the past week of uncertainty and share volatility. SB

Morning Macc. Vip bad debts have indeed been a problem - but sadly we also have significant evidence of impairments and provisions throughout our portfolio going back more than five years. The one positive with TH was he was not in charge when those early deals were done and he has sold the notion that he has been cleaning house for 4 years. The same cannot be said for MS who has been looking after the numbers for 8 years - he cannot avoid current and historic criticism. More recently TH is now being dragged into the same criticism with revenue issues on his watch. Like scotty I am surprised we have not heard more yet / and like most of us the longer this clouds trading - and let’s not forget the upcoming tender offer - it worries me. SB

YHAL - it’s not about the $1m exposure. It’s about the ongoing pattern of annual financial issues which has led to a complete lack of confidence in the business and the team who run it - we have been in decline for more than 3 years. In terms of purchases - if there’s no value at 5p purchases we are doomed. SB

Dr K - from what I see the type of shareholder action undertaken by the likes of sharesoc is mostly retrospective against companies who fail and investors try and recover assets through legal actions (RBS - Fred Goodwin type stuff who raised capital from shareholders knowing the bank was massively over leveraged). I don’t think we are at the stage where we are claiming our management are behaving that way - incompetence and deliberately misleading investors are two very different issues. If we find the second here, I agree with a stronger approach. SB

As angry as I am at present - I don’t think we have reached the stage where an organisation such as sharesoc would be required. Such interventions are more likely in the event of worse situations than mmx at present - as bad as we feel things are here, it could be worse. Behind the scenes moves will be afoot to address this latest issue / which in itself is not huge in terms of its impact - but looks to have been the tipping point for our chairman to launch an investigation which has spooked investors into selling. Maybe the issue itself is being used as a tool to drive some change. Uncertainty breeds fear as we know which often gets manipulated by a wider investment community who thrive on such fear and panic. I think we have to sit tight and see what response comes from the business / and hope this comes sooner than later and deals with both the core issue and either support or replace those who are running the business. All imo obviously. SB

YHAL - formal for me implies people not systems are at fault. And if that’s the case, what else gets uncovered - that’s contagion which is why the market is selling - in the absence of clarity people tend to react negatively. SB

5 weeks ago the share price was 7.5p. Since then, almost £30m has been wiped off the company value. Our largest II has lost £3m - on paper - in the last week alone. It seems incredulous that this will be allowed to continue. Our chairman’s holding has also been decimated. The words that continue to frighten me from the RNS are ‘formal investigation’ - that’s what’s spooking everyone. That does not sound like a run of the mill contract issue. SB