Locafy Limited — FY2023 Form 20-F
Period clarification: Although the request identifies 2022 Q4, this filing is an annual report for the fiscal year ended June 30, 2023, with FY2022 comparisons. It does not provide standalone 2022 Q4 results. Financial figures below are in Australian dollars (A$), unless stated otherwise; the company reports under IFRS.
Business context
Locafy develops SaaS search-engine-optimization products, including local, national and brand search solutions, and operates online business directories. Its strategy emphasizes reseller and publisher partnerships, automated landing pages and expansion in North America and Australia. In June 2023, it released its Local Pages product and began partner trials using directory data to generate pages.
Financial performance and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | A$5.377 million | A$4.223 million |
| Other income | A$0.993 million | A$1.298 million |
| Operating loss | A$3.786 million | A$4.342 million |
| Net loss | A$3.892 million | A$5.090 million |
| Operating cash used | A$2.261 million | A$4.240 million |
| Investing cash used | A$1.620 million | A$2.006 million |
| Financing cash received | A$2.853 million | A$9.184 million |
| Cash at year-end | A$3.175 million | A$4.084 million |
Revenue grew 27.3%. Subscription revenue rose 26.8% to A$4.020 million; data revenue increased 34.1% to A$0.872 million; advertising revenue was broadly flat at A$0.316 million. Direct-channel revenue increased 47.6% to A$1.961 million and reseller-channel revenue increased 15.5% to approximately A$2.230 million. Other income declined, mainly reflecting lower R&D incentive income recognized for the comparison and lower foreign-exchange gains.
Total operating expenses rose 3.0% to A$10.156 million. Employee-benefit expense increased 19.4% to A$5.267 million and depreciation and amortization increased 59.0% to A$1.355 million, partly offset by lower consultancy expense. The net loss narrowed year over year, but the company remained loss-making; no income-tax expense was recorded.
At June 30, 2023, cash was A$3.175 million, net receivables A$1.289 million, total liabilities A$4.245 million and equity A$4.990 million. Current liabilities were A$3.774 million, including A$0.302 million of matured, unsecured convertible notes payable in cash and A$2.508 million of trade and other payables. Lease liabilities totaled A$0.418 million. The filing gives conflicting working-capital figures: its liquidity table reports A$0.690 million, while current assets less current liabilities equals A$1.046 million.
The company raised A$2.892 million net from share issuance in FY2023, including an at-the-market offering. It reported 1,276,248 ordinary shares outstanding at June 30, 2023, after a 1-for-20 reverse split and new issuance. The filing says cash and other anticipated inflows are expected to meet needs for at least 12 months, but cautions that assumptions may prove incorrect and further financing may be required.
Changes, outlook and material risks
- Management said subscription growth was moderated while technology acquired from Jimmy Kelley Digital was integrated; the upgraded products were released in June 2023. The acquisitions and development spending contributed to higher intangible assets and amortization.
- The company expected significant revenue in FY2024 and later periods from a June 2023 Keystone distribution agreement with a U.S. media company, but provided no quantified forecast. A separate enterprise Keystone contract was announced July 18, 2023. No formal revenue, earnings or cash-flow guidance is provided.
- The independent auditor highlighted substantial doubt about Locafy’s ability to continue as a going concern, citing the FY2023 loss and operating cash outflow. The financial statements remain prepared on a going-concern basis and include no adjustments for a possible failure to continue operations.
- Nasdaq notified Locafy of noncompliance with its minimum stockholders’ equity requirement. After a hearing, the company received an exception through October 31, 2023, based on demonstrating compliance through filing this annual report. Continued listing is not assured.
- Management reported material weaknesses in internal control over financial reporting, including inadequate documentation and application of complex accounting policies. Remediation was underway; completion and success were not assured. The auditor did not audit internal controls.
- Other key risks include dependence on third-party cloud infrastructure, customer retention and partner growth, competition and changes in search technology and AI, privacy and cybersecurity obligations, reliance on grants, potential future dilution, and foreign-exchange exposure. The company disclosed a 10% Australian-dollar appreciation sensitivity of A$0.953 million for FY2023.
- Grant and subsidy income remains relevant: R&D tax incentives and other rebates were recognized, and the company warns that grants may be reviewed or subject to repayment if eligibility is challenged. Directors reported no material legal proceedings and no contingent liabilities at year-end.
Important facts for investors to verify
- Confirm the going-concern position, post-year-end cash use, collections, financing availability and status of the matured A$301,600 notes.
- Reconcile the filing’s working-capital figures (A$689,588 versus A$1,046,370) and reported reseller and publishing revenue amounts, which differ slightly between sections.
- Check progress and realized revenue from the U.S. media partnership, July 2023 enterprise contract, Local Pages trials and FY2024 expectations.
- Verify Nasdaq listing compliance after the October 31, 2023 exception deadline and any subsequent financing or share issuance.
- Track remediation and independent testing of the disclosed internal-control material weaknesses; confirm the correct FY2023 net-loss figure, as the auditor’s opinion contains A$3,891,686 while the financial statements report A$3,891,586.