Connected IO (CIO) has been in suspension for awhile and its latest suspension update indicated that a full update would be made to the market no later than 20 April 2018- that date is today and has come and gone, still no update. What is taking them so long to reveal the names of the customers they claimed they received Purchase Orders?
I am highlighting the article below not to take a swipe at CIO but more importantly to highlight the revised disclosure requirements on material contract announcements. Pay particular attention to the bold sentences below. So companies can no longer willy nilly announce contracts that cant be substantiated or not nearing completion. Implication is that tech small caps that once rose largely on the back of such "positive" announcements have largely lost their elixir - it is all quiet now as we noticed today with significantly lower trading volumes and lacking enthusiasm- market now wants to see real numbers. So when FGO disclosed its 4C today, market reception was lacklustre as revenues are still very low and company is still at early stages of commercialisation but market cap may have already run ahead of itself. Market participants may be feeling that nothing has changed in their company's fundamentals , and in fact companies such as FGO has actually progressed its product and business (short of delivering the revenues yet) but why has its share price dropped 15% since 3 weeks ago and about 56% from its all time high? Market cap valuation has run ahead of its financial progress and we are witnessing a retracement to par back the exuberance that was built into its market cap. It is market adjusting mechanism, not the company.
Connected IO is still struggling to get its customers to go on record April 13, 2018 | Rachel Williamson Connected IO has issued its fourth suspension update in a matter of weeks as the wireless networking provider tries to get two US customers to agree to be publicly named.
Connected IO will at least be able to reveal one customer next week, saying last night that it had approval from the cybersecurity company to publicly reveal their partnership at an IT conference in San Francisco.
The US company (ASX:CIO) dropped two agreements in March saying it had signed “a major US telco” and a “US based cybersecurity company”.
On March 9, Connected IO (ASX:CIO) announced it had signed “a reseller agreement with a major United States telecommunications company with whom it has had a historic relationship and the disclosure of which is considered commercially sensitive at this time”.
On March 13, the group told investors it had received “a purchase order from a US based cyber security company… The purchase order is for an amount of $349,000 and confirms recurring revenues from this customer.”
However, in March the ASX changed continuous disclosure rules around material contract announcements to require that customers be named. Connected IO (ASX:CIO) shares over the past year. Connected IO’s company secretary Nicky Farley told do not advertise external links the crackdown came on the same day that they lobbed the first announcement to the market.
She says they took a suspension to work the matter out so they don’t put the two deals at risk.
Tightening rules The ASX has been tightening its rules after the GetSwift (ASX:GSW) disclosure scandal, when the company allegedly failed to update the market twice when it lost material contracts and prematurely announced another. The market operator now spells out specifically what companies need to say when they unveil material contracts.
Those details include the term of the contract, the nature of the product or service being sold, and, crucially, any conditions that need to be satisfied in order for the contract to be legally binding. GetSwift told the market about an alleged contract with Commonwealth Bank, which the bank later said was just a trial and they didn’t formalise it once it finished.
Connected IO last traded at 2.8c.
