thoughts on the agm

Following are my comments on the AGM……

For what it is worth, here are my thoughts. I will start with the positives;
1) Good news to hear about the directors not receiving fees for the FY08-09. This is exactly what we talked about, but was not publicized at all.
2) I liked the fact they had attempted alternative financing at the beginning of the year. Shame it had to fall through twice. I can certainly understand them keeping “mum” about it.
3) Although Crosby is not receiving the huge salary, he is still on $600K. Unfortunately, I can’t see anything that says he also is reducing he pay to match the leadership effort by the directors.
4) They finally seem to have accepted the need to release regular updates. Lets see if that translates into action.

For the negatives;
1) I read the announcement released to the ASX around 12:00pm which contained the Chairman’s address. To be quite honest, initial impression is that its tone is very arrogant. I subsequently, thought about it and came to this conclusions;
a. I believe the board has received a clear message from their survey that SH will not participate in the SPP, and decided to dedicate majority of the AGM address to this topic. They also decided to “up-the-ante” and shock the SH by saying they will seek to sell the company, and if no buyers, then go into voluntary administration if they didn’t get the money they wanted. Its almost like a poker game, I will keep raising you and the first to flinch looses the pot!!!!
b. The board has as much to loose (if not more so) than the average SH. This is what they do for a living and if the company is sold or goes into voluntary administration, specially if they are this close, that is something the market will certainly take notice of, particularly if during their next appointment (if there is one after that).
c. So despite their saber-retelling, it is really in their best interest to succeed.
2) If you examine the reason for the SH discontent, it hinges on lack of information, example is lack of clear and regular updates and not notifying the market that the directors are not taking any fees. How many of us would have been as discontented if we KNEW from a public announcement that the directors are not taking any fees, voluntarily???

With respect to the SPP, as stated before, this is an individual’s decisions. For my money, I will not be taking part in it, simply because in the release to the ASX, they clearly stated that even post the SPP, they will still look for partners etc. My understanding is that the SPP and the subsequent one (June 2009) are to secure the financial future of the company until BTT approval by the FDA. If they get the money they are demanding, why are they seeking partners?? If they seek partners, what impact would that have on the price the partner (or may be even a T/O) will pay?? Especially, since the partner or T/O will KNOW they are cash-strapped??

From my perspective, it seems that I would be paying money to get more shares, with a possibility that the company would be partnered/Taken-over in the future. Again, as stated before, I don’t believe that we will need to wait until FDA approval. If the Early Look-in results are consistent with previous results, then FDA is a mere formality the any partners or T/O will emerge then.

The question is what price will be paid for the outstanding shares?? And there-in lays the gamble. I would be buying shares to help the company get to a finish line, and hoping that a partner or a T/O would NOT emerge, or, they start to be cash positive post the Early Look-in result, or, if a partner emerges they would pay a price per share that AT LEAST covers my break-even price!!!!

In summary, the news of the efforts to raise funds, POSSIBLY providing regular updates, and directors initiatives are a very much a welcome change. They should have made SOME, not all of this news (eg directors not taking fees) well known much earlier. I would have liked to see bow-tie lead by example and take an equal pay-cut. If his directors are doing it, why not him also???

Personally, I feel I have taken enough gambles with this company. Lets seem them deliver on their promises and some appreciation in the SP, then I will consider my options at the next SPP June 2009!!

Lets hope all goes well for the future. Like we are all saying, the product is nothing short of brilliant, shame about the leadership.