comments on todays agm

Hi all

It was an upbeat AGM with somewhere over 80 in attendance (compared to around 15 last year!). Questions were probing but good humoured and I came away with a very positive "vibe". I’m just back home now after a enjoyable lunch with kpool and his wife, and his friend John at Doyles at the Rocks. Caught up with paradigmshift, birdmanz, crustytheclown, 3H and others ... which was good! Here's my notes that add to what was in the presentations, as well as answers to some questions:

Production capacity: TZ has already contracted 5 CMOs that are now familiar with their products and able to ramp up production on demand .. 3 in the Americas (1 US, 2 Mexico) and 2 in Asia (Malaysia and China). And they are in discussions with at least one very large global manufacturer and distributor with whom a JV of some sort is likely.

Customers: They have more than they can cope with so are focusing on increasing their engineering and customer support staffing and capability. There are 90 customers that have made an application commitment (see presentation) in addition to the 12 early adopters. They want to service their existing and these new customers and convert them to volume orders.

Revenue Model: No update but management stated that the current numbers in the model are “absolute baseline�, and said that 90% of what was in the revenue model was the 12 early adopters only, so there is plenty of upside with the additional 90 customers that have identified applications. TZ is now getting the customers to do some initial engineering and then come back with customisation suggestions to meet their requirements.

Acquisitions: As the presentation says they are now so confident of their revenue stream and CMO capacity that there is no need for acquisitions to get manufacturing capability. There may be other smaller acquisitions.

Funding: As the presentation says they have secured additional funding to enable the growth strategy ahead of NASDAQ and we will be hearing about that in coming weeks. Could be debt (most likely) or placements (the recent placement was to a US institution).

NASDAQ: The process takes around 21 weeks = 5 months. This process will commence once they get large firm orders from 2 or 3 early adopters. One is expected soon (December) and the others by early 2008 (Jan/Feb). This means that the float will now be some time between late June (earliest) and probably September.

CS/Underwriting/standing in the market: I didn’t get a detailed answer to this one other than they said CS will act as underwriters do to secure the float and to ensure an “after market� post-float.

Delist/relist: It is not absolutely decided but their intention (and presumably Credit Suisse’s) is to keep TZ trading on the ASX to within a week or two of the NASDASQ listing … so there won’t be a big gap when TZ is delisted and waiting to list .. that’s good news!

Valuation and NASDAQ: The valuation will be based on received orders plus the expected backlog of orders over the following two years. TZ could list now (it meets the criteria) but they want to maximize the float price by getting in some big orders.

Current share price, placement at $4.50 and future expectations: I asked the question how is TZ going to go from a recent issue at $4.50 (and current market cap of ~ A$200m) to the expected much higher valuation on NASDAQ within 6-9 months (I think they and we are expecting in the vicinity of US$1b+or-)?: Management expects that once the 2-3 big orders come in and are announced and then the NASDAQ timetable starts .. the share price will rise. In other words they don’t expect all the rise to occur in the NASDAQ book-build and after the float (i.e. $4 here one day then weeks later re-emerging on NASDAQ at say US$15+). So we can look forward to a decent rise thru the first 3-5 months of 2008 by the sound of it.

Analyst coverage: Chris Kelliher agreed that they need US coverage and he is sure they will get it particularly once some of the big name customers sign up for volume orders and NASDAQ timetable is apparent. DF thought we might see some coverage by CS out near-term.

In conclusion it was a good meeting, and although the 2nd quarter 2008 target date for NASADAQ looks once again like it might blow out a little, the upside is that TZ is going it alone and is very confident of doing so successfully as are Credit Suisse. So there will be less dilution to fund acquisitions than there might have otherwise been.

I’m happy now to sit back and enjoy the ride!

Cheers

H