I thought I'd share my view of the General Meeting...

I thought I'd share my view of the General Meeting resolutions.

Resolutions 1 to 3 appear good for the company. New key investors seem to have a clear intention to secure contracts in Asia (China being the main focus). The performance target gives us some timing; i.e. $15m of revenue of a two-year period. But the company hasn't disclosed who it's targeting and its China office launch strategy. So IMHO, the market is not fully informed of the company’s plans – only the key investors (ZZL & MRGL) are.

But putting the lack of disclosure aside, I'm very positive on the company's outlook. I couldn't find when the two-year performance period commences, but two years isn't a lot of time in software/hardware development projects. Hence, I expect contracts to be announced soon.

ZZL Pty Ltd Is associated with Mr Zhigang Zhang. Zhang is the General Manager of BHZQ Environmental Engineering Technology which is 70% owned by Beijing Enterprises Water Group. He has form in creating value from ASX penny stocks by linking them to projects in China.

He did it with ASXET (see: https://hotcopper.com.au/threads/ann-zzl-pty-limited-becomes-a-substantial-shareholder.4525103/). ZZL became a substantial shareholder in PET when the share price was around 40 cents and he took it to a high of around $1.50 in mid-2019.

He is involved in ASX:EVS (see https://*********.com.au/envirosuite-partnership-enter-china-environmental-protection-market/). On ZZL becoming a substantial shareholder, the EVS share price went from around 12 cents to 28 cents in a very short time.

The other key party in the company's proposed transactions is MRGL Pty Ltd. MRGL is associated with Ray Malone and linked to ASX:AMA and ASX:MNY. A quick search demonstrates Mr Malone’s business building credentials.

https://www.smartcompany.com.au/startupsmart/news/how-freestyle-technology-landed-a-5-8-million-deal-with-south-korea-as-it-starts-preparations-for-an-ipo/

https://investors.money3.com.au/new/asx/29-06-2018-Ray-Malone-Appointed-Executive-Chairman-1815717.pdf

So overall I think shareholders have good reason to be positive.

On the matter of General Meeting voting resolutions, here’s my initial thinking:

Resolutions 1, 2, 3(a) and 3(b): For.

These resolutions set the scene for the company's way ahead.

Resolutions 4, 5, 6 and 7: Against.

The deemed issue price in the resolution is $0.007. Based on the current share price, the Explanatory Memorandum provides no justification for the generous uplift recipients would receive. It smacks of 'snouts in the trough'. The company should use its cash to pay these debts.

Resolutions 8: Against.

The Explanatory Memorandum does not provide any meaningful detail of its plan to attract highly skilled NEDs. However, the current workload does not warrant additional Board horsepower. The company should provide more specifics of a Board restructure and revisit this at the AGM.

Resolutions 9: Against.
I have no problem with company name changes when there's a good business case. However the Explanatory Memorandum does not provide any real cost/benefits - company name changes can be an expensive exercise. The Board should provide shareholders with its business plan and revisit this matter at the AGM.

Resolutions 10(a): Against.

The Explanatory Memorandum does not detail why this has suddenly become an issue. Has the company's Auditor been asked to investigate? Has there previously been circular resolutions which have not complied with the company's constitution? Are these resolutions rendered invalid? What (if any) are the ramifications of invalid resolutions? IMHO, more disclosure is required.

The company would know it can use technology to electronically sign circular resolutions - plenty of other companies do this. Changing the process so that not all directors are required to sign is not the answer. All directors should read and sign all resolutions. That's just good governance. The change to the constitution should be about ensuring the word ‘writing’ includes electronic forms/means of communication.

Resolutions 10(b): For.

The company should always comply with Listing Rules.