This morning controversial software company Getswift Ltd (ASX: GSW) saw its share price rise 2% or 0.5 cent to 24 cents after it posted its financial results for the quarter ending June 30, 2019.
For the quarter Getswift posted sales from customers of $889,000 which translated into an operating loss of $6.3 million as staff costs at $1.9 million and administration or corporate costs at $3.77 million continue to drag the company deep into the red.
Over the quarter research and development costs only came in at $921,000 which is small compared to others costs, although it's hard to know whether this should be taken as a positive or negative.
The whopping $3.77 million in corporate costs is probably the result of the firm racking up huge legal bills as it's forced to defend civil proceedings in the Federal court issued by ASIC against the company and three of its directors, alongside class action lawsuits launched over its allegedly misleading announcements (the infamous Amazon partnership, etc) and continuous disclosure obligations.
Ironically the company is using some of the $75 million it raised at the end of 2017 at $4 per share to defend itself from law suits alleging it misled in the market in getting its shares pumped up to this price in the first place.
As we can see then this is a company with a bizarre track record, but on the bright side it appears sales from customers are now moving higher even it still at a meagre $889,000 over the quarter.
It also reports that it is pleased with the penetration of its software through small to large size enterprises and that it continues to invest in improving the software product.
It also still has $68.9 million cash sitting on its balance sheet thanks to the aforementioned capital raising, with its market cap of $45.2 million actually less than its cash on hand.
This unusual situation reflects another irony in that the company may end up having to use its capital raising proceeds to compensate class action members suing it for the kind of allegedly misleading behaviour that saw it raise the money in the first place.
If any action is successful much of the funds will also be taken by litigation funders and courtroom lawyers for their work in securing the compensation on top of the bills GetSwift racks up in defending the action.
As you can probably guess I would not suggest buying Getswift shares and in fairness I repeatedly warned investors against it through 2017 and 2018.
