Ann: Appendix 4C - Qtr Ended 31 March 2020, page-9

"If you want to invest in a company that can meet forecast budgets within 5% I suggest you look elsewhere".

Lol, that’s an easy out, awg. I’m surprised you’ve gone to that level. It’s the old favourite of Hotcopper posters - read a post you don’t like so tell the poster this company is not for them, they should simply cut their losses, sell out & move on.

So instead, how about we just invest large amounts of our own hard earned into a company we believe has great potential but not ask questions of the company we are investing in when things aren’t going well.

Lets not ask for corporate discipline, accountability of management or ask for compliance of basic accounting principles.

Lets not ask questions to challenge management, so they can respond and improve.

Lets just sit back and let them go on their merry way, cause they have been doing so well for so long, with such great results.....

"To be out by 13% of forecast budget for a R&D business that is commercialising their technology is very understandable".

I’m sorry, awg, but for me, given BLG’s cash burn over a long period of time, their performance is unacceptable, not 'understandable'.

It’s a required, published and measurable benchmark over a three month period we can all use to judge the performance of a company such as BLG. Actually, given BLG release it 30 days into the quarter, its actually a one month actual plus two month forecast.....

So these Quarterly estimates of cash outflows aren’t rocket science. They consist of up to 7 expense categories that BLG are required to forecast for the upcoming quarter by ASX. Typically, BLG have only utilised 5 of those categories being -

• Research & Development
• Advertising & Marketing
• Leased assets
• Staff costs
• Admin & Corporate costs

I’ve even excluded the separate purchases of property plant & equipment to make it simpler.

Are we really saying that BLG's management and board collectively lack the financial skills to prepare a forecast (remember, 1 month actual plus two month forecast,,,,) with a greater degree of accuracy? Some of the quarterly overspends were $500k.....

So their average of exceeding these quarterly estimates for the above 5 x categories over the last four years was 13%. Or let me put it simpler - BLG only met their quarterly estimates on 20% of the quarters reported on. In the remaining 80% of the quarters they spent more than they estimated, just 2 months before.

Now in MY working life, accountability has always been one of the fundamental job requirements and benchmarks. It is for most companies/organisations.

If I put to you that a particular benchmark is missed for any role or position over a four year period 80% of the time, what would your response to that be?

Would you not be asking for a change of behavior, as an absolute minimum, or would you be showing someone the door?

Or would that be just 'understandable'?

So essentially, 'Doing what you say you are going to do' is another less formal measure of corporate credibility that BLG have failed on in 80% of cases over the last four years.

Don’t get me wrong I’m always up for spending a $ over a budget to make a $ (or ideally $2, $3, $4 or $5.......) but clearly that measure isn’t being met by BLG either.....

One of my favourite sayings in business is "Results and achievements are a great wallpaper". When those results and achievements are being met, one can easily look though shortcomings. But when they aren’t being delivered one must strip away the wallpaper and analyse the cracks underneath.

BLG’s failure to meet this simple, 1 percenter benchmark is essentially a metaphor for the position they are in more broadly - not delivering on their commercialisation goals.

Simply BLG’s spending of OUR money needs to more tightly controlled. The junket earlier in the year to the USA was one small recent example of this - there are many others. When things are going well and the $$$ are rolling in, organisations can get away with those little luxuries. When things aren’t going well the rose-coloured glasses need to come off and questions need to be asked by management, AND by shareholders.

BLG has great tech potential but has been trying to commercialise it for many years. They are now on a new path, which I am happy with and have taken up my RI accordingly. But they will more than likely need more funds next year. The RI was really their only option for the quick cash required last month. If things stay the same what will be BLG's options next year in that regard?

In the end I just want to see a company that I have had a long association with develop and flourish, as I believe it is more than capable of, in the right hands.

At a time of change for BLG, I would think that adopting a principal of being more financially disciplined, is a simple and sound business practice, and one that all shareholders would privately believe should be a non-negotiable.

GLTAH.