from page 4 of the notice of meeting - so the chair has paid...

from page 4 of the notice of meeting - so the chair has paid himself over $300k and not told the market? treating company money as his own? no response from the chair? what is going on here?

Undisclosed payments to an entity controlled by Mr Cui (Watercrest Asset Management Pty Ltd)

I have become aware of payments that Mr Cui authorised and/or approved and which have been made to Watercrest Asset Management Pty Ltd (Watercrest).

Based on ASIC records, Mr Cui controls 100% of Watercrest through a series of holding companies.

The payments to Watercrest have not been disclosed to shareholders.

The quantum of the payments is unclear to me. I recently became aware that Mr Cui had submitted invoices for $28,000 per month (which piqued my interest, given that would represent $336,000 on an annualised basis, which I consider excessive for a non-executive director of a small ASX listed company).

In order to understand the quantum of payments to Watercrest and any other entities controlled by Mr Cui, I have sought, but have not obtained, full financial records for EPN. The limited financial records that I do show invoices of $28,000 were issued by Watercrest / Mr Cui in November and December 2022.

I have also recently obtained financial statements from one of EPN's bankers which identify payments of over $105,000 to Watercrest in the period from 13 July 2023 to 15 September 2023. I am aware that the Company has accounts with a second bank, but I have not been able to obtain the Company’s bank statements with that bank over the same period. However, I am aware based on a quarterly financial material I have received that there are additional payments to Watercrest / Mr Cui, but I do not know the quantum of those payments.

When I wrote to Mr Cui, I expressed my concerns that the payments not only were not disclosed, but they were, as far as I am aware, never approved by the board of EPN and I was not aware of any agreement to support the payments. In his written response, Mr Cui said to me that the payments "have been made pursuant to a consultancy agreement dated 5 December 2022, executed by Stuart Cameron as director on behalf of EPN". I have consulted my records and I am not aware of any board meetings held at or around that time to approve a consulting arrangement. I have also made enquiries of the company secretary who has informed me that he does not have any minutes of such a meeting nor does he have a copy of any such agreement, in the company records held by him. I have sought from numerous persons a copy of the consultancy agreement and, at the date of this notice, have not received anything. Mr Cui's response also referenced that legal advice was sought and followed "in carrying out this arrangement". I have made enquiries of the EPN solicitor for copies of any such agreement and details of any advice provided – at the date of this notice, I have not received any response to my request. Given I received no notice of a board meeting to approve such an agreement, I am uncertain on what basis Mr Cameron signed any agreement. I confronted Mr Cui recently in a board meeting about the payments. I am concerned, based on his response in that meeting, that he believes the payments were justified on the basis that he subscribed for shares in the Company at a time when it was difficult to raise equity capital. In essence, what I believe Mr Cui was saying to me is that this was payment for the investment risk he took. I was shocked that Mr Cui did not seem to distinguish between his positions as a director and shareholder of EPN.

Mr Cui's response made no comment in relation to the fact that the payments had never been disclosed.

In my letter to Mr Cui, I sought an account of all payments to him and any entity he controls and details of the basis on which the payments were made – none was provided.

I am deeply concerned about this. For a 'micro-cap' with a market capitalisation of less than $10 million, I could never in good conscience approve a non-executive director receiving what is, on an annualised basis, $336,000 per annum (if the $28,000 is a monthly fee). Quantum of the payments aside, how this arrangement was ever entered into without a formal board meeting and then not disclosed to shareholders, is symptomatic of the governance concerns I have with the current board of EPN.