it's about time we got some publicity...lol

Caveat emptor for tech tyros

May 21, 2004
"WHICH journalist will get off their arrse and speak to MWC?" inquires the rather unique press release which has arrived at the Margin Call Bureau, so fortuitously.

Never one to look a gift horse in the mouth, we read on. This $625 million public float of Media World Communications was possibly "Australia's best ever invention", perhaps "worth more than Microsoft".

Ah, it was days like this which brought to mind the earliest references to the profession of journalism, inscribed upon papyri of the Egyptian Court, circa 2000 BC:

"Be a scribe, it saves you from toil, it protects you from all manner of labour.

"Be a scribe, your limbs will be sleek, you hands will grow soft, you will go forth in white clothes ...".

The Media World Communications product, which expects to exploit an, ahem, $524 billion global market, is the Adams Platform Technology.

This Adams "Revolutionary not Evolutionary" technology is claimed to pipe video down the phone line more efficiently than anything.

As the Margin Call Centre for Information Technology remains focused on fundamental practices such as working out how to turn the computer on at the main, we won't be examining the efficacy of the MWC product in this humble space.

However, in league with our confidante John -- the PR bloke who told the truth (once) -- let us proceed to the prospectus.

According to "that fat bit in front of the application form", MWC chairman Michael A. Ramsden has "great pleasure in presenting this prospectus and inviting you (you lucky devils) to invest ...".

The offer is 16.7 million shares at 43c apiece to raise $7.2 million, whereupon those who are hirsute enough to demand an allocation will find themselves with a monumental 1.2 per cent of the company.

That is because there will be 1.34 billion shares on issue - plus 33.4 million options (in the money), 1.24 million convertible notes and 466,666,666 (don't let those triple-six configurations scare you) RCPs (redeemable convertible preference shares).

The vendors - whose photos don't appear in the prospectus, presumably because they'd need a custom-built wide-angled lense to capture their smiles, are taking out $3 million up-front of the $7.2 million from charmed investors.

Transaction costs account for another $1.3 million but it's these vendors, and directors - Adam Clark (the inventor), Roger Velik, Paul Salter, John Tatoulis, Adrian Jensen, Michael Ramsden, Debra Allanson and Graeme Clark - who end up controlling 84 per cent of MWC.

Our heroes are presenting an exquisite balance sheet, replete with pro forma $24 million in intangible assets, complemented by $58 million in interest bearing liabilities for total shareholders equity (if equity is the apposite term) of negative $50 million.

Before you rush to your nearest stockbroker be mindful that MWC will be using your freshly cashed-up company to 1. fund the rehabilitation of an old mining lease from MWC's previous incarnation as Werrie Gold ($824,000), 2. Keep Adam Clark in the lifestyle to which he is becoming accustomed (Adam gets $11 million and 850 million shares from the process), 3. "Replace debts owed by MWC to Marshalls & Dent Lawyers and Lynch Mining (via in-the-money convertible notes) and 4. Satisfy "agreements with creditors to defer a total amount of $9.753 million" until next year.

You'd think the boys could have found a cleaner shell for the next Microsoft, let alone a customer.

What can one possibly say about this exciting opportunity?

Um, let's all bail it out before it goes under? The dotcom boom ended three years ago?

Ring the OneTel liquidator, get The Dude on the line and find out where Chris Tyler is?

Perhaps KPMG, the investigating accountant, should have the last word:

"Inherent uncertainties in relation to going concern and carrying value of intangibles and capitalised costs".

That's accountant-parlance for "duck for cover".