has anyone spoken to campbell smith this week?, page-7

Pet,

I AM interested in PIE, which is why it is on my watch-list and I have looked into the company. I just won't buy based on a trial. PIE is seriously exposed if a deal with TLS does not come off. Less than $1.5m in cash would suggest another capital raising later in the year - just to keep the head above water. IF a deal does come off, then I will value PIE accordingly, taking into account the reduced risk.

I am not trying to attract investors 'over there', as I know that one or two 'stragglers' will not make a difference to the price, much in the same way that the price here will not move in a meaningful way without news - which is precisely why I don't understand the cheering of every tick up.

I am thinking that there are a few investors on here who understand the risk vs reward scenario. Then there is also a small group of desperate small-time (young) shareholders who just do not understand their investment at all). I am just wondering, has anybody here actually tried crunching the numbers, looked at the hurdles that PIE has to overcome, and decided the impact on the shareholder returns?

For example, we all know that a TLS roll-out would entail a substantial outlay of capital. $1.5m will not get PIE very far. This would suggest a capital raising of some form. I am guessing that this would be at $10m per 1000 webphones if the cost if $10k each. TLS would certainly not enter a supply agreement with PIE unless they were sure that PIE could fulfill their obligation. So that begs the question 'where will the money come from?', considering that capital will not be able to be raised post TLS deal announcement.

I see the following scenarios:

1. A TLS supply agreement with a placement of $10m per 1,000 Piephones @$10k each. Therefore at 2c per share - 500m shares (Dilution of 50%). Exclusivity?

2. A Joint Venture with TLS - TLS to fund provision of phones, but on TLS's terms. Definite exclusivity limiting PIE's market. PIE will be squeezed on margins as well as total attributed revenue.

3. TLS go cold for the 5th time in 12 years

4. TLS buy PIE Australia rights freeing PIE to be cashed to target other countries.

5. TLS buy PIE entirely at a 30-50% premium to 30 day VWAP.

I see scenario 2 as the most beneficial for shareholders. It mitigates risk of PIE not being able to supply. The dreamers who think that PIE can supply TLS in a meaningful quantity, should look at point 1 again to see the horrendous effect it could have on the share price.