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MXC - AGM NOTES
I have taken a few notes on the AGM. IMO it is a step in the right direction for MXC to open up the forum to shareholders by being able to listen remotely. This is the first AGM I have “attended/listened” to live and I can say it holds a lot more weight if you are hearing the directors rather than looking at the AGM report they post on the ASX. As always, these are my personal notes and are not to be relied upon as financial advice. I tried my best to get it all down however, there may have been a few details I have missed/misunderstood.
It started by Brett addressing the shareholders and outlining the milestones of MXC:
Introduction
3 milestones
o Full GMP certification – Interestingly stated that MXC has the most advanced facility in Europe and the 6th most advanced in the world.
o TGA approval of Cannipel
Cannipel is due to be exported to Australia; the shipment is due to arrive in Australia in December as per their original announcement.
Once it arrives in Australia it allows authorised prescribers to use Cannipel. HL PHARMA will distribute in Australia. It is expected that sales will come in 2019.
o Licence granted in Malta
Vision of MXC:
• MGC Pharma
o Growth potential of the pharma business
o Highlighted that Aurora and MXC were awarded licences in Malta; this is a big achievement.
• CannaGlobal
o Board is confident about the success of MGC Derma with Lorne and Winters on board; they both have experience in retail and have worked with some big brands.
o Noted that changes were made the CannaGlobal deal.
• RMIT
o Launch of a research hub – help with new product develop
Brett acknowledged that that MXC have made some mistakes:
• Failure of Varm Cosmo
o Acknowledged this failure and are subsequently taking legal action
• Other than VC, the board if of the belief that they have hit their key milestones and are progressing well.
The formal part of the meeting was in regards to the resolutions. Wasn’t able to get a detailed break down but got a little bit.
Resolution 1:
• Adoption of the remuneration Report
o Majority vote was against
Resolution 2:
• Re-election of Brett Mitchell
o Majority vote was for re-election
Resolution 3:
• Prior issue of placement shares
o Majority vote was for issue of placement shares
Resolution 4:
• Issue of options to corporate advisors
o Majority vote was for issue of options for advisers
Resolution 5:
• Approval for the disposal of MGC derma
o Not applicable
Resolution 6:
• Approval 10% placement capacity
o Majority vote was for the approval of 10% placement.
Brett then invited questions to be asked, the majority of the questions surrounded the VC deal (Note these questions were paraphrased):
1. Were any bonuses granted to anyone in regards to the Varm Cosmo deal now that the deal has been resinded?
a. No bonus or salary increases was granted to any one as a result of the contract
2. Did VC provide a reason as to why not to follow through with the deal?
a. No commercial reason was given
3. Can the board give some guidance on a successful outcome of VC litigation?
a. Minimum amount is provided in prior announcements.
4. Was is the status of the VC deal?
a. Legal proceedings underway in the UK – the contract is bound by this jurisdiction- this has been declared to the market already.
b. How will the board ensure this wont happen again?
i. Further due diligence
5. Why did VC default on the payment?
a. Reasons were unknown to MXC
6. Can shareholders see evidence of legal proceedings?
a. No, its detailed in the ASX release.
7. If anyone got question 7, feel free to comment and ill add it to the notes.
8. Why did they sell derma?
a. It was undertaken because derma wasn’t apart of the core business model. Mainly an opportunistic venture that succeeded.
b. Holding on to Derma would consume too much resources
9. (Unsure about this question, may have misinterpreted) Why is the value of derma 12.5 million not the 1.5 million that is paid for the remaining 50%
a. Missed the answer
10. Missed this question also – something along the lines of is MXC stake in Cannaglobal 12.5% or 10%
a.
11. Will key management receive performance shares in regards to the sale of derma
a. No – but if they receive 1 million euro in revenue then there is performance rights.
12. The potential to sell mgc pharma?
a. Director of cannaglobal has the ability to open avenues for this possibility.
13. When will the balance be received?
a. Unclear when the balance will be received – unless I missed something.
14. MGC derma is on track to be completed by the end of the month
15. Other than the association with Lorne, what value does Cannaglobal have and will shareholders get to know more about cannaglobal.
a. They agree- they are pushing cannaglobal for a company over view. Should be coming shortly.
b. The value is not in the directors but rather the companies that apart of this deal.
16. MGC pharma- When will we see revenues?
a. Revenues are expected very shortly and is distributed to our doctors. Will happen during December.
17. Nutraceuticals
a. Minimal revenues- and little resources given. Now derma gone they can put more effort into it.
The board stated that they will be taking material travel reductions. The AGM gets a neutral vote from me. Nothing exciting and nothing too detrimental to current holders. As expected, there was no apology from the board but rather they stated “we are all human”. The simple acknowledgement of wrong doing will have completely shifted the sentiment. That’s all old new’s now, either you decide to move on or your better off selling. The recent social media issues were touched on and Brett stated that MXC’s funds will not be used to pursue Ross (Dangerous precedent, but that’s for another day). Concluded by stating the Cannipel will be sold in Australia first and then potentially sell in any country in which its viable. MXC has a relationship with RMIT and St Vincent’s hospital. Clinical trials on dementia will be done in the first quarter. Interestingly, their partnership with Epilepsy Australia was not mentioned. Its all in the eye of the beholder, either you believe them or you don’t. Director’s received their first strike in regards to the remuneration report; its clear that shareholders aren’t happy with their high wages. Don’t be caught with a second strike If the price hits 7 cents before hemp expo, first round on me
MXC Price at posting:
4.1¢ Sentiment: Hold Disclosure: Held
(20min delay)