AFR Article, page-344

I think @squeef is right that the article prints facts. If you read through and extract those facts you can weigh up whether you think it's a problem or not. I feel that a lot of HC followers have been influenced by my actions on the weekend and have stopped looking into the company. I feel it's my duty to share what I have found and then you can make up your own mind about what to do. Also better coming from me than an AFR article.

The major indication of the article is that discounted shares have been issued based on agreements from when the share price was lower. There was no appendix 3B at the time they made those agreements. This seems pretty open and shut in terms of a non disclosure issue when you study the rules.

So now if we think about it, ok so if they didn't disclose what would the ramifications be? It's been discussed in this thread before, fines would apply and shareholder trust would be damaged (hence price drop). We could still see the ASX step in and issue a please explain which the company seem confident in answering and in the end the result may be a fine or a slap on the wrist.

If you look past the disclosure issues and think back to what has happened. Shares issued at a heavy discount. Yes the share price went up very quickly but the issue of shares happened around the price peak without prior disclosure so you either trust that this is poor disclosures or you believe that the company has deceived shareholders and given out money at a cost to shareholders.

Shares were issued to Finstro. The company says they were paid for however even if they paid for them they still got them at a heavy discount and at the time of issue and were essentially given millions of dollars. The reason doesn't really matter if it was to pay for loans or for being a trusted partner. The fact remains that they got the shares at a low price when the share price was higher and we as shareholders were given no indication at the time of the orginal agreement that shares being issued was part of it.

There's also a few other instances where shares were issued without shareholder approval (technically the company is allowed to do this) at larger discounts and no disclosure issued at the seemingly correct time. Another thing I noticed while researching is that the terms of acquisition of the Tipsly platform are to issue 3m shares at 60c (another discount) for stage 1 and stage 2 is the payment of $4.2m. The original notice says, "the acquisition is subject to shareholder and regulatory approval if required". Well as of January those shares were issued without requiring shareholder approval (technically allowed under the rules). The payment of $4.2 million has not been made yet and I'm assuming that will happen once the app is released. The latest update of Tipsly says that the shares are subject to an agreed no sale period however note that the shares have not been escrowed. This doesn't exactly mean that there is anything wrong with the deal but now you know the facts and can decide for yourself.

The companies update from Monday says that they won't be issuing shares to finstro persuant to the current agreement. Fine, that answers that imo but I'll be watching closely.

Imo our job now as shareholders is to hold the company accountable. I know that I will be reviewing appendix 3B documents more closely. If there's any issuance of shares at a discount then my sentiment will likely change. The company has been put on notice that we're watching. Let's see what they do.

I personally will continue to hold as the company is performing based on the financials. Governance issues can be addressed and the company is aware that we are watching. The issue of shares may have just been part of the plan to build the business quickly which it certainly has and as the business is now sitting on cash the issue of shares should not continue.

If you have questions I'm happy to answer them.