He attended the last meeting and gave us all a great summary.
Thanks again Charles.
Post #: 20987000
Ok, I must admit, if I was a shareholder that didn’t attend the AGM today, I’d be pretty disappointed in what was released in the announcement today. But because I was there, I can share with you guys some insights of what was said during it and my thoughts towards it, please don’t quote me on this and I wrote down 3 pages of notes and it’s all a bit messy.
John Bumgarner – Our CTO presented that PowerPoint to us, the ones with all the technical pictures. John has 15-17 years working with MEMS, and he’s worked at Stanford Uni, UWA, Intel (involved with Pentium 4) and a lot of other experiences, and from the way he presented, the enthusiasm and passion he showed, you could just tell that he loves working with our technology, and I really feel like he IS the bridge between R&D and commercialisation that we needed, he is a “God sent” said Terry.
In John’s presentation, in the first couple of slides, it is the wafer chip that PSY has produced, back when John started, when he told the people in the US (where he is from) that PSY can stretch one of the components in the chip and keep it flat (or something), they went “wow”.
John said “We are actually building devices that are working” – Can’t 100% remember what context that was, MAYBE it was about the P1 prototypes.
UWA is currently trying to find new applications for the spectrometer.
For commercialisation, it is easy to make 1 device (which the students at UWA do when they graduate), but it important for us to be able to create 100 and for them to all function the same without any defects.
In the “Mirrors” slide in the PowerPoint, PSY is currently trying to improve the resolution ASAP. They have went from 1 layer mirrors to 3 layer mirrors with no problem, it works well. They have tried going from 3 layer mirrors to 5 layer mirrors, I think he said it works but “not moving”, I think he was meaning, the chip works but haven’t tried in a device yet.
In slide “Optical Filter Module”, that is the “heart” of spectrometer.
They are currently trying to work out alternative options to the cantilever design in the LumiMEMS.
When asked which product/sensor is done or ready. LumiMEMS = not yet. Spectrometer = “Good to go right now” but only for certain requirements as they are still trying to improve it. But we have what it takes to produce a device that our current partners need.
We are trying to get the Government on board so our R&D can be fully funded by them, which I believe that is one of the reasons why we are creating a US subsidiary, as it allow us to get the support of the US government in projects.
In slide “Tunable Fabry-Perot Optical Filter”, there are hundreds of chips in that 1 wafer, we produce 15 (wafer or chips, forgot) and all yield 100%, all working.
A massive spectrometer machine could cost $34,000 to build, our device costs less than $5,000 to build.
With technology, a working model (P1) is more sellable than a PowerPoint on screen, hence why we built P1, as a proof of concept.
P1 didn’t have our little filter/chip in it, as it was just a proof of concept, they are currently build P2 with the filter/chip and ETA for that is June. But just because it takes this long to build P2, doesn’t mean other projects will take this long to build, because the changes will happen much quicker, as they’d just need to tweak it for other applications that is similar.
Terry was asked the question of what happened to the promised commercial contract within 12 months of last AGM. Terry’s response was that “we could license the chip today”, but it would make more sense to sell them a whole device. I think we don’t want to be seen as a chip supplier, but we want to be seen as a solution provider, that’s why Terry didn’t sell us short and license the chips by itself, but instead, hold out for selling devices, so we can reap in more of the reward. While companies do rather buy devices, because it would have been field tested and tested for its longevity.
In saying the above, licensing is not 100% off the table, as if Apple or Samsung approaches PSY and say we wanted to license the chip into our phones, PSY would, IMO purely for the recognition and massive way to get their name out, but they wouldn’t really want to license it to smaller companies. *cough ERJ*
Things are taking time because they’d want to do it once and do it right, IMO, if Terry had the option to cut 2 weeks off the time frame but have an increase chance of failure, then he wouldn’t take the short cut, because if it fails, it ends up wasting shareholder’s money and time.
Terry admits that with the appointment of John Bumgarner, progress of the Spectrometer is “light years faster”, and they are about 1 year ahead on the chip.
Our chip reads the blue range spectrum, and many agricultural companies like vineyards requires the blue spectrum, which we can tune our chip to read it. Our chip is like the radio, it can be tuned to requirement. But if we do want to read another colour spectrum, we’ll need to create a new chip.
A question was asked about competitors and time to market; it was quickly put to bed that, the people who claims they have a plug and play spectrometer that can plug into smart phones, their spectrometer’s spectrum range is low, it can’t take measurements to say it’s “definitive”, and as Terry said “they don’t work”.
The unique point of PSY’s spectrometer is that we have the LARGEST amount of scanning range out there.
There are millions of opportunities out there, but we are not big enough to pursue them all, we want to focus on one, then build up the relationship and expand from there.
To make the wafers, it takes 2 weeks to run, 2 weeks of testing, which takes 1 month, but we don’t need to make more of them, as “what we have works”.
This is an important point as Terry was asked about people leaving and the high turn over rate. Terry’s response was along the line of, PSY needs a team of people that will work together and have the company’s interest at heart, we need to find people that are passionate about what they do or about our project (which is CLEARLY the case with John Bumgarner), and we don’t want to hire “mediocre” people and say well they’re alright… Certain people’s aspiration was not aligned with the company, their goals weren’t aligned, therefore, some had to go. Because the team IS important, even if we are showing high turnover rate, it still needs to be done.
Asked about if we are worried ex employees or other companies stealing our IP; for ex employees to do it, it will be highly illegal and the company doesn’t think any of its past staff will do it. As for companies, well… PSY certainly doesn’t have the money to spend on lawyers for as long as the bigger company, which is why PSY will continue to be on the edge of innovation, always trying to come up with new innovations or products. But in saying so, we have patents in place.
US subsidiary next year; because our currently chips were built using University of Florida, it would make more sense to have us closer to them. Other reasons being: recruitment, finding people with the skillsets is limited in Australia, therefore, going to the US would make more sense, finding contractors there. If we build a foundry, it could cost us $2bil, therefore, it makes more sense to have a subsidiary in the US, finding production facility will be easier and also, finding customers there will be more likely than it is in Australia.
So after all my messy notes, here’s my thoughts about management, product and the future:
After speaking to John King today and listening to Terry explain about the staffing situation, I now believe Terry has been the spine of PSY for the last few years, putting in the shift to cover the workload of 3-4 others, just to keep the company moving forward. He was well under staffed for some time. I could totally understand where he was coming from when he said the team needs to work together and have the same vision and passion is very important etc. Without a good team, the product will go nowhere. Now PSY is slowly building a team that has the right culture in mind, with Terry leading by examples and I believe Terry is absolutely the right person to be leading us to success.
Terry has the backing of John King, our major shareholder, and I think rightly so. IMO, John King and Terry goes hand in hand, they have each other’s back and have faith in each other to stick it out during the rougher and darker times, and most importantly, they believe in each other to do the right thing by the company.
Being a freelance designer, I could straight away tell when someone actually loves their job, which John Bumgarner does, and there is a gulf of differences between himself and say… Jason Cheffy. John is literally burning with passion, the way he talks and explains to us on the project that he is in charge of, is very pleasing to see. You can easily tell that he is not at PSY because of the money, but it’s the fun and kick he gets from making these chips. IMO, he will be that bridge that PSY has been crying out for, he is definitely not short on commercial experience. I have 100% faith in him to take PSY to the next level.
As for Nigel, all I can say is that, I’m very glad he is gone. Company has and will move on now that he is gone.
As for our spectrometer, I think we are closer than ever to having a product/device to sell, it gives me confidence that the “worldwide household name” that we are working with, searched all over the world to find someone that could partner with them on this project but they eventually landed on PSY. I know they have been saying “we are in discussion with other companies”, but I somewhat feel different this time, maybe because they have created a “working device”. From today’s meeting, I’d say I’m fairly confidence that our spectrometer will be commercialised, as long as John Bumgarner is CTO, with the off chance of being wrong or the project being a fraud.
I think for a major re-rate, we don’t even need to see a dollar of revenue, we just need to see a purchase/commercial agreement between us and the “worldwide household name”, because that will prove to the market that we have a project that works, then it will just be a matter of time before we spread ourselves to other companies/sectors.
At the end of the day:
Am I disappointed that we don’t have a contract yet? Yes
Would I be disappointed if I didn’t attend the AGM? Yes
Do I think we are closer to commercialisation? Yes
Do I trust Terry? Yes
Would I keep holding for the next 12 months? Yes
Disclaimer: all of the above are from my messy notes, some points may or may not have been taken out of context, happy for anyone else that attended to correct me on any of the points. None of it is financial advice, but just my own opinion.
PSY Price at posting:
5.8¢ Sentiment: Hold Disclosure: Held
(20min delay)