There are plenty of examples of company CEOs and boards backing a large deal, or the presence of a certain board member, to the detriment of the share price. On the contrary, there are also plenty of examples of impatient shareholders removing a perfectly sound board member because they expected faster and more profitable growth earlier, also to the detriment of the share price.
Those voting on whether to keep the Chairman better understand the risk to the MCAP of ID8 if the move, regardless of what it is, isn't taken favourably by the market. Is a chairman worth another 30% drop in MCAP? Or would a replacement Chairperson signal a great fall in MCAP? Sometimes the share price and the "market sentiment" is more important than a singular board member, or the firm belief of the other board members wanting to keep him/her in place, as a drop in MCAP as large as 30% completely changes the bargaining position of the company.
The Chairman may well be the perfect person for the job, as put by the CEO, but his duty is to the shareholders first. However, a drop in share price from IPO can just as easily be assigned to poor execution by the investment bank managing the IPO, and may be not at all related to the governance of the company. The CEO did correctly mention that B2B contractual negotiations take much longer than B2C.
In the end, I think people need to be open to the fact that the Chairperson may be the right person for the job, and that the company is still going through an unstable growth period where we can't expect constant growth every quarter. Shareholders in publicity listed companies are often guilty of being impatient, whilst failing to see the bigger picture. But that is the risk that companies, (that haven't full grown yet), take, particularly when they list on an exchange to obtain a cash injection in order to fund their ongoing activities. The shareholders who are surprised by the cash-burn clearly failed to do their due diligence.
The last financial report is not pleasant reading: $2 million in revenue (and only $700k of this from actual receipts from customers), $10.2 million in expenses (including $5.6 million, so almost triple the revenue, in salaries plus consultants fees alone), so a loss of over $8 million for the year. But what did you all expect for a tech company wanting to list on the ASX? Why do companies list? Most of them to raise cash as they are loss making. Only very few that list on the ASX are actually profitable (such companies list on the ASX simply to expand market share by obtaining a large cash injection).
In this case, given the fact that the board and CEO had to write a letter in support of the Chairperson, perhaps indicates that the board is to blame for their inability to quell the rumors and assure the shareholders earlier, particularly with such a large loss for the last FY, and income from revenue from contracts with customers of less than $700,000 (which is 75% less than the cost of the salaries paid, and more than 90% less than their expenses).
I don't think this stock has a large following on Hotcopper, as no one even bothered replying to the Annual Report thread. I gather the letter to the shareholders was mainly aimed at the institutional shareholders.
ID8 Price at posting:
27.5¢ Sentiment: None Disclosure: Not Held
