Originally posted by growler1969
I agree with you 100% re: resolution No. 7.
Primarily based on the fact there are only 6 resolutions. clear.png
So assuming you only lack attention to detail, do you think all resolutions will be passed if there is no news of deals before the AGM?
Is there Stockholm Syndrome with some perma-bulls here? Let's recap where the company is at:
1. Imo, it is on the verge of entering into VA if the underwriter pulls the pin and SH's do not take up the SPP. At 30/9, there was $466k. NOR burn on average $300+k per month. At this run rate, NOR are close to running on empty during this month.
2. For all the bullish talk on WV, I do not see this product supporting the cash requirements of NOR in the immediate future. Why? NOR has little in the tank for marketing spend. The business model was predicated on Ad-spend see:
https://www.asx.com.au/asxpdf/20180913/pdf/43y98dl09s66x7.pdf
In the latest Quarterly, "Advertising and Marketing" was zero. How can this be? Further, on a cash basis, $59k in receipts was off-set by $164k "Product manufacturing and operating costs". It has always been my contention that NOR's apps have negative margin. NOR create positive margins by accounting for non-discretionary expenditure such as payments to Google and Apple below the margin line. The NOR app business model via current distribution methods (app download stores) are not sustainable, imo. See WP as a prime example.
3. In a year where there was 50% SH wealth destruction, PO was granted a 60% pay-rise. The Chairman has since bolted. I wonder why? NOR will say a cost-cutting action, imo. But... there are dark clouds forming here and Amit needs to understand that quitting the BoD does not absolve him of any responsibility for actions taken on his watch.
4. PO has taken an advance on his salary in a quarter where the cash reserves are at a critical stage. How can he possibly justify this? Further, he has declared he is not taking up his SPP. so the cash advance was not used for this. Imo, an utter disgrace.
5. The BoD recommend granting PO 60m in the FY after his Performance Shares expire. Why did they expire? Lack of performance. Same with the first tranche. I always viewed the performance hurdles as low hanging fruit. PO and NOR failed to even achieve these low hurdles. But the BoD see fit in granting him 60m oppies at strike rate which may be the same as the oppies current SH's can get via handing over their hard-earned to NOR. Wow. Imo, a spit in the face to SH's.
6. Not to be outdone, the other 2 BoD want oppies... for free! Zero strike. Imo, either they are deluded or think SH's are more so. Then again...
So despite most SH's being in the red, some significantly so, Disco wants to sign-off on all the resolutions. Wow.
What can SH's do in protest?
i. Vote against all resolutions
ii. By voting against the, imo, outrageous Remuneration Report, SH's can deliver a first strike against, imo, an incompetent and selfish BoD. PO cannot vote for the resolution. I would urge SH's not to vote by proxy as this will be handing your vote to the BoD.
iii. File a resolution to remove a Director from the BoD via S.249D. I have some experience in this and happy to give thoughts and guidance outside HC. It requires 5% of shares to bring the motion to a vote by all SH's. Holla and Yogi can achieve this together, should they wish to pursue this action. I would urge them to do so to break up the current BoD, which imo, do not make decisions to benefit all SH's.
What will Pinnacle do?
It has always been my belief that Pinnacle wish to take over NOR. Imo. they have NOR by the short and curlies. A clause for Pinnacle to withdraw from underwriting the SPP has been triggered. We do not know if they will withdraw. They do not need to show their hand. Instead, they can sit back and count down the clock to get an understanding of current quarterly cash flows, SPP uptake and broader market conditions. If Pinnacle withdraw support and the SPP is not well-supported, the SP will, imo, plummet as SH's rush to the exits before a VA. This will allow Pinnacle to scoop up shares below the SPP, should they wish to try to salvage their previous investment. To those that think NOR is currently under-valued, they have an EV of over $6m. Very expensive based on current negative operating cash flows. More so when one backs out the last R&D gift grant from the government.
Finally, I do not see a big deal coming for NOR based on their current precarious financial position. They are, imo, on the verge of a VA. What large company would do a deal with a service provider in this state? In my experience, none. The perma-bulls may counter, a big deal will save NOR and the prospective customer needs the tech. Who in their right mind would hand over significant money to this current BoD based on their history of imprudent financial management? Same apples to any SH considering the SPP, imo.
PS: this post has not been written to scare SH's. What could be more scary than the current financial state of NOR and the SP.
PPS: Apologies to those that tagged or replied to me earlier with questions. I was on a HC holiday. All good; no complaints.
@gorwler1969
Great Post. Thanks also for your offers of advice, might be taken up on those depending on how things unfold over the next week or two. Your generous offer of assistance, has inspired me to go further in depth with this post, rather than dance around points as i usually do.
Couple of items you highlighted I can't quite agree on. I think your "logic" is spot on, but i do however feel you need to adjust your thought process slightly in order to factor in a companies own "unique" DNA and your own HC Forum based interpretation of them.
My Take set out below: (Without a rather embarrassingly, randomly coincidental alignment of letters
)
"What large company would do a deal with a service provider in this state?"
Lets address the "finance" side of things. $4m yearly outgoings is peanuts! It is a hell of a lot when you are returning virtually nothing, but generally speaking it's peanuts for a publicly listed company, that has ongoing dialogue with some of the largest companies in the world. Signed contracts will not require massive infrustructure investment, large additions to HR, or indeed COH to ride out any global fluctuations to commodities, power etc...
MC of say 5-7m is also not a huge worry to potential customers as this only represents a 200% - 300% premium to what we believe are targeted $2m+ contracts. Not ideal, but certainly nothing to panic customers out of a deal imo...
"PO has taken an advance on his salary in a quarter where the cash reserves are at a critical stage. How can he possibly justify this? Further, he has declared he is not taking up his SPP. so the cash advance was not used for this. Imo, an utter disgrace".
An utter disgrace alright!!
Hindsight allows us to now know what that advance and salary increase were for?
Under the SPP he was eligible to 36m odd shares @ .005 = $181K
Options attached to that 36m @.008 = $288,000
Total: $469K for 72m shares.
He elected not to take part in this option....
Magically, 60m have now been approved by the BoD, @ give or take .0085 x 60M = $510K
First 20m available after 12months require $170K (Payrise + advance?)
An additional $41K is required under this options route, as opposed to taking part in the SPP. Why not just take part in the SPP?
This is just my opinion, but i believe PO is just as good at managing his personal finances and he is managing the companies. (Not very). Lock in shares now, no money down, and when needed get the holders to pay for it!
So why all the run around with above??
Mark my words, deals are imminent! Within week or two, they will start rolling in...
IMO, contrary to other posters, he has not gone running at all. He has deals up his sleave, and will release them as soon as
his "positioning" is complete. This I am CERTAIN of. He knows it, Pinacle knows it, and I know it!
Ohh, and six months termination pay @ $143K , will ensure that even if removed, his first year options are all but paid for...
(20min delay)
