2016 Frequently Asked Questions
Q. What does the business development pipeline look like? What kinds of corporate deals are you looking at?
A. There are a wide range of corporate deals being worked on. These deals include new asset suppliers and demand opportunities, marketing partnerships as well as additional offerings with existing corporate partners. It would jeopardise successful deal conclusion and provide competitors with an advantage if we were to announce deals currently under discussion. It is safe to say that we are very happy with the business development pipeline and opportunities available and that the team is extremely busy!
Q. When you announce a corporate deal how long does it take to have an impact on the business?
A. This very much depends on the nature of the deal and the relative preparedness of the partner. Collaborate is usually quite quick to implement deals, however partners generally require more time. Demand deals, such as that with Uber, can have a relatively quick impact.
Q. Will you sell the Rentoid business?
A. No. Rentoid provided a valuable boost to the online search optimisation for the network of Collaborate websites and is now providing the launch pad for www.Mobilise.com
Q. Why don’t you roll out a number of other websites in the sharing economy space?
A. We continue to review opportunities to launch new sharing economy websites and have advanced plans for further launches, the details of which will be announced at the appropriate times.
Q. Why does Collaborate not see the need to maintain a large cash balance at the present time?
A. Collaborate is able to raise funds, to support business growth as and when required, from multiple sources:
- Flexible Equity Facilities that allow Collaborate to source funds from existing shareholders at short notice.
- A number of CL8O listed options are expected to be exercised prior to the expiry on 30 April 2017. If all options are exercised, $3.44m will be received by Collaborate (exercise price of $0.02 per option).
- Collaborate is also able to raise funds from third parties and existing shareholders of the Company.
Q. What sources of funding are available to the business?
A. The Company has established $2.25 million of flexible equity facilities which enables it to issue shares to a group of sophisticated investors. The Company is able to control the timing of issuing shares under these facilities.
Collaborate has 172 million CL8O listed options (exercisable at $0.02 per option) on issue which may raise up to $3.44m if they are exercised. We anticipate that some or all of these options will be exercised prior to the expiry date of 30 April 2017. If a substantial proportion of options are exercised, the need to continue to raise funds under the flexible equity facilities will be reduced or eliminated.
Q. How much further financing does the Company have available under the $2.25 million flexible equity facilities?
A. As of 21 December 2016, the Company has $1.76 million remaining under the flexible equity facilities.
Q. Why don’t you complete a large placement to raise funds now rather than drawing gradually on the equity facility?
A. The Board is of the view that the current share price does not represent the true value of the business and to raise substantial funds now would unnecessarily dilute the value of existing shareholdings. Given the Board’s view that the share price will appreciate, the directors feel that Collaborate can deliver more value to shareholders by raising funds against an increasing share price when those funds are actually required. This view is balanced by ensuring the business is properly funded for growth and the Company will commit sufficient funds at the appropriate times to maximise growth potential.
Q. What has been the feedback from investors on the equity facility?
A. Current investors are appreciative of the effort that is being made to limit dilution and at the same time provide a mechanism to raise funds at relatively low cost as and when required. New investors have expressed the view that certainty of funding provided by the flexible equity facilities is positive. Existing and new investors alike appreciate that the Board has adopted an equity raising strategy that supports their view that the revenue traction, deal pipeline and strategic opportunities available to the business will result in a significantly increased share price in the future.
Q. Why don’t you release more information, more often?
A. We aim to strike a balance between honouring our continuous disclosure obligations and providing shareholders and potential investors with sufficient information to make informed investment decisions, but also protecting our valuable competitive edge and intellectual property from exploitation by competitors. As far as we are aware, Collaborate provides more information, on a regular basis than any other company operating in the sharing economy, and in the case of DriveMyCar, more information than any other car rental company.
Q. Why don’t you have a mobile app for renting cars? Surely people try to rent when they are away from a PC.
A. An app would be nice to have but not essential. The DriveMyCar website is optimised for mobile and provides all of the functionality required to rent vehicles. As DriveMyCar focuses on longer term rentals with lower frequency as opposed to say, taxi booking or pizza delivery, it would actually create a burden on customers to be forced to download an app and then find it on their phone when required. A large proportion of revenue is driven by online and search marketing which require the user to interact with a desktop or mobile website. Directing users to an app would negate the value of this marketing.
An app has been launched with our handover agent partners to manage handover inspections and interface directly with the DriveMyCar CRM providing real time access to reports and photographs. This app significantly reduces the time required to complete a handover and improves accuracy and access to information.
Q. You seem to make lots of good announcements, however the share price is the same as it was before. Are you happy with the share price and progress?
A. We do not believe that the share price reflects what the Board sees as the true value of the business. The Company cannot control the share price, however we know that from talking to our current and potential customers and strategic partners that we have the right strategy that will deliver a more highly valued business in the near future.
Q. Why do cash outflows increase when revenue increases?
A. Revenue received from customers includes amounts paid to vehicle owners and for the cost of insurance. As revenue increases, these costs also increase. All payments to vehicle owners are variable in nature, i.e they are only incurred when revenue is generated. They are included as part of the operating costs in the statement of cash flows.
Q. Why can’t you announce corporate deals faster?
Collaborate is pioneering new business models and strategies, many of which are being implemented for the first time, anywhere in the world. Often we are working with very large or global organisations and it takes time to establish the business case and gain the sign off from multiple departments both locally and overseas including legal, finance, marketing, strategy, PR, business development and operations. All material deals have been announced as per ASX regulations, however some corporate deals, which are not yet material and which are subject to the other parties confidentiality requirements due to competitive issues, have not been announced. Thus the rate of deal signing is greater than that apparent via ASX announcements. For clarity, as required under the ASX listing rules, any deals that become material during the course of operation will be announced, regardless of any confidentiality obligations.
Q. Can you tell us more information about the various trials that are going on? If not, why?
A. Any trials not already announced are subject to confidentiality at the request of the trial partners as they wish to develop the opportunity without alerting their competitors to the potential. Any initial trial is also not normally material in size, however with development may become material and will then be announced to the ASX.