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MySQUAR – three questions it cannot or will not answer

By Tom Winnifrith, The Sheriff of AIM | Thursday 6 July 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

After tearing apart this week's bogus trading statement from MySquar (MYSQ) HERE and HERE, the AIM listed POS has tried to pop up its falling share price today with another piece of PR non news. We can address that later but first I have three more questions that it can't and won't answer.

In its annual results for the year ended 30 June 2016 MySQUAR recorded total revenue of $795,191, Note 5 of the accounts disclosed that $750,000 arose from the provision of technical services to MyPay a related party of MySQUAR. Mobile gaming and advertising generated revenue amounted to $6,353 and $38,838 respectively i.e. just over 5% of the total.

In the interim results for the six months ended 31 December 2016 total revenue was disclosed as being $340,716. There was no disclosure of the sources of revenue nor any segmental revenue disclosures corresponding to that set out in note 5 to the year end results) notwithstanding this is a requirement of IAS 34 Interim Financial Reporting. There was also no disclosure of revenue to related parties.

Interestingly the interim results stated that:
“The consolidated interim financial statements have not been audited but have been reviewed by the Group’s auditor.”
Notwithstanding this statement there was no interim review report opinion from PKF Littlejohn LLP included in the interim report.

Question 1 What was the split of revenue between related parties, mobile gaming and advertising in the interim results for the six months ended 31 December 2016 and what were the comparative results for the six months ended 31 December 2015?

Question 2 Why didn’t PKF Littlejohn LLP formally report on the interim results?

In the highlights section of the Annual Report MySQUAR disclosed the following:

“Post period end highlights: Mobile game revenue has been growing strongly in the first months of the financial year ending 30 June 2017, from US$27,674 in August to US$65,659 in September, US$73,113 in October and US$86,098 in November.”

Question 3 Why the reluctance to provide the monthly figures for the subsequent months in the recent revenue updates and what were they?

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