on the right trail!
the LWP reply to ASX says:
"...2. ASX has had regard to the 30 June 2016 accounts in forming a particular assessment of whether the investment made by LWP Technologies Limited (LWP) in Franchise Retail Brands Ltd (FRB) was required to be mandatorily disclosed under LR 3.1 to the market.
Respectfully, the appropriate time for determining whether a disclosure issue arose under LR 3.1 was at the time of investment and ought not to simply be considered by reference to a certain state of facts or circumstances at some earlier time such as, for example 30 June 2016.
On the 2nd September 2016 LWP closed its funding facility for $6m with Lanstead following its approval at the EGM on the 26th August 2016. Disclosure was made to the market.
On the 13TH September 2016, LWP committed to invest $500,000 into FRB, a company that will operate in the franchise sector which is progressing an initial prospectus offer with the intention of Listing on the ASX within the 2016 calendar year.
At the time of that commitment by LWP, allowing for the proper accounting treatment to be applied to the Lanstead funding facility, the net assets of LWP would in fact based on the disclosure in the audited accounts, as amended for the investment have been in excess of $10m .
In our respectful view, the level of commitment to invest in, being less than 5% of net assets at that time, would fall below usual and accepted tests for “materiality” with respect to financial matters, and as such, we have some difficulties in seeing or understanding how it could be said that a reasonable person would expect that information to then have a material effect on the price or value of LWP’s securities at that time."
yet A/R says:
"Deposit
LWP deposited $500,000 on 12 May 2016 in 1AA Investment Group Pty Ltd. This deposit was reduced by $100,000 on 22 June 2016 to a net deposit of $400,000. The deposit has been held on trust for facilitating the future investment in Franchise Retail Brands Limited that was finalised after balance date. The directors and shareholders of 1AA Investment Group Pty Ltd include Siegfried Konig and Sean Corbin".
so LWP argued its $500k investment in FRB did not require any exemption or s/h approval, because the $500k investment was less than 5% of total assets.
It told ASX that its total assets were around $10m at time of FRB investment.
It questionably claimed it had $10m total assets because it had completed the Lanstead deal for $6m and thus included the $6m in total assets (which imho is total baloney).
So it says total assets on 2 Sept 2016 were $10m (which incl $6m Lanstead)
FRB deal it says was "committed" on 13 Sept 2016. So therefore they say the $500k FRB deal only represented about 5% of total assets of $10m.
Because LWP says in A/R that LWP actually paid The $500k deposit way back on 12 May 2016. So they had already paid the funds over for the deal months earlier to "facilitate" the deal. They had spent the money. They had made the investment. It does not matter whether it was "committed" or not - the funds were dispersed! (And they were disbursed to a company Related to directors, and from there the funds were again disbursed to another Related entity namely FRB) - but that's another issue!)
The ASX or ASIC need to look at the documentation to determine the facts.
The ASX gets fed rubbish, and do not seem to follow-up.
The total assets claimed of $10m is more baloney.
Based on what very little info we s/h have, I think LWP claims the Lanstead deal works like this.
LWP issues 1,185m shares.
Lanstead pays $6m for the shares, and the $6m is then handed back to Lanstead under the Sharing Agreement. In the accounts of LWP, the $6m is called a deposit or similar - ie an "asset".
But of course that is rubbish (if that's how LWP claims to have the $10m of assets).
Because whilst LWP has issued the shares, it does not have the $6m of funds, and never could claim to have access to $6m, because it is contingent upon the LWP SP staying at $0.0067 or better, And of course it never has since the deal was written.
Also, at the time of the ASX query and reply, the SP was about $0.003, or half the required base price. At SP of $0.0067 LWP would get the full $6m. At SP of $0.003 LWP only gets $3m.
Make no mistake, at every turn we s/h of LWP have questions.
At every turn, LWP itself needs someone independent to ask the same questions.
At what point will ASX or ASIC say "enough is enough"?
Just WHO of any independence is looking after the interests of s/h?
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