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Key Figures Group
 

Letter from the CEO

This is my first quarterly report as CEO of Mavshack. My ambition is to give a clear and comprehensive view of where we stand today, how we got here and how we will progress going forward.

In this year's first quarter report, a need of several structural changes and improvements to the service was conveyed. Work during the second quarter has been dominated by implementing these changes. Thus, the revenue figures for April - June 2015 remained unsatisfactory. That being said, I believe Mavshack's offering, the company's organization and future prospects have been strengthened thanks to the efforts made during the quarter and thereafter.

On July 29 Ambientmedia became a part of Mavshack. This as a result of a evolution of the partnership agreement the two companies entered into during the second quarter. The acquisition gives Mavshack good position to strengthen its offering with relevant and attractive content especially for the Philippine market (local and diaspora). Ambientmedia has significant expertise on the content side and a strong network within the Filipino entertainment industry. Local representation also gives Mavshack access to cultural knowledge of the target group and gives the company a firm Filipino connection. Mavshack also takes a step closer to opening new revenue channels through the production and sale of IP rights. One of the benefits is that new movies and TV shows have again started to be published on a regular basis in the third quarter.

A significant part of the company's restructuring has been the revision of its partners. I know that several shareholders have raised questions over the outcome of certain agreements. Our review of partners shows that some partnerships work well while others have not met expectations. Hence I want to comment on some of these partnerships below.

We are currently reviewing the agreement with 1Mainstream. The company's mission was to shorten time to market for Mavshacks applications (apps) for leading game consoles and set-top boxes. Unfortunately 1Mainstream has been unsuccessful delivering on that. Mavshack own development department has taken over their commitments and has already successfully built and launched Mavshacks Amazon Fire TV Apps. Next in line is the Roku, Humax and Samsung Smart TVs.

In regards to our sales channels, our collaborations with IMS in the Middle East and Snapdeal in India have unfortunately been a disappointment and have not delivered what we expected. These agreements are therefore also under evaluation. We are however very optimistic about our partnership with telecom operators Etisalat and Du in the Middle East. The first indications from these partnerships have been very positive. Out of respect to the companies' requests, we chose to delay the launch until after the religious festival of Ramadan. That is why Mavshacks launch in the Middle East took place in late August.

The sales strategy to move focus back to the Philippine and Indian diaspora from domestic markets has meant that the customer base has changed fundamentally. It does not mean that we have abandoned the domestic markets. We will however await these markets to mature both in regards to consumption habits and infrastructure. Mavshack customer base has thus gone from bulk sales to recurring subscriptions with electronic payments such as mobile and credit cards payments. It has in practice meant a restart and a rebuild of the customer base. The launch in the Middle East along with new quality content is an important part of this reconstruction process. I am aware of requests to communicate the number of subscribers. My goal is to implement a format for presenting information about the number of subscribers and its development in prioritized markets at the next reporting date.

Now that we have implemented the structural changes we are able to look forward and continue to improve the product, increase the number of paying subscribers and cultivate new revenue channels. In other words, we are now going full speed ahead. Recently, Mavshacks offering expanded with quality content from Filipino content providers. This has so far included digital premiers of two movies, as well as a number of popular TV shows. Late autumn we plan to launch our first Mavshack original series. I look forward to in the near future announce more information about our Mavshack original content strategy.

In regards to our content offering, I also want to briefly touch upon the topic of piracy. Along with Mavshacks content providers, we will in future actively use the legal tools available to remove copyrighted materials from leading channels such as Google-owned YouTube. It will be done through so-called DMCA takedowns, an effective and proven method. 

As is known, we have implemented a number of new share issues and been forced to short-term loans with high interest rates. This obviously consumed a lot of time and effort from management, and we have evaluated various options to achieve a more long-term financing of the business. It resulted in the selection of a so called "Equity placement facility" solution which was announced on July 10, 2015. This enables management to put full focus on developing the business.

Exciting and positive things are happening with Mavshack right now. I hope you as a shareholder want to continue the journey forward together with us. Finally, I would urge you to follow Mavshack on social media (Twitter and Facebook) where we will regularly communicate with both our subscribers and shareholders.

Stockholm, August 28, 2015

Anders Lindén, CEO

Next report

Interim Report 3 for the financial year 2015 will be published October 30th 2015. 

The full report is attached.