HOW TO VOTE CARD, page-5

Brendan's reply, which includes some comments of interest to all shareholders, irrespective of who they may be voting for, is below.

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Dear Fellow Shareholders and partners of eSense-Lab Ltd, my colleagues and those of Otsana Capital

This short letter is necessary for me to correct the record and to respond to the false and defamatory statements about me and Otsana Capital released to the ASX by some members of eSense-Lab Ltd’s (eSense’s) board.  This defamatory personal attack on me appears designed by these Directors to attempt to damage my reputation to sway your vote in an effort to save their positions on the Board of your company.

Due to the generalised nature of the allegations against me, I have not responded to all of them but I reserve the right to do so.  My detailed response is as follows:
1 Firstly, the purpose of requisitioning an extraordinary general meeting (EGM) was to replace underperforming directors with competent, trusted directors known to me and other eSense investors.
Mr Cohen, Mr Saad and Mr Gilboa:
1.1    have spent more than circa AU$4.5 million in seed and IPO funding but have refused to provide your Australian directors - myself and Mr Quentin Megson - with details of the spending – an extraordinary breach of corporate governance;
1.2    have refused to provide your Australian directors with proper (or any) access to eSense’s financial and commercial books and records;
1.3    have refused to provide details of eSense’s Israeli operations to your Australian directors;
1.4    in over 12 months have delivered less than US$100,000 in revenue; and
1.5    lost the support and expertise of key technical employees including Dr Yaron Penn, the actual

Founder, former Chief Technology Officer and Key Intellectual Property developer.
I have made repeated requests for, and not limited to; bank statements and balances for eSense’s Israeli bank accounts, management accounts, commercial and employee contracts, documents relating to the performance of Allor Vaporizers and details of eSense’s payroll.  To date, Mr Cohen, Mr Saad and Mr Gilboa have refused or failed to provide them.

Having been denied access (and continued so to date) to the aforementioned Company documents, eSense’s Quarterly Activities Report released to ASX on 31 January 2018 was not approved by your Australian directors nor formally put to the Board for approval prior to its release.

2 Secondly, Mr Cohen, Mr Saad and Mr Gilboa’s defamatory allegations against me are unsubstantiated and no specific allegations have been made.   

3 Thirdly, Mr Cohen, Mr Saad and Mr Gilboa have grossly and self-servingly misrepresentedthe reasons for the postponement of the AGM scheduled on 29 November 2017.
As stated in eSense’s ASX announcement on 24 November 2017, the AGM was postponed to allow additional resolutions to be put to shareholders to ratify and approve the issue of CDIs and options upon successful completion of a capital raising in which I and Otsana Capital were intimately involved with little input from these directors.

4 Fourthly, the AGM scheduled for 29 December 2017 was postponed at the behest of Mr Cohen, Mr Saad and Mr Gilboa (who were up for re-election), on the basis that apparently approximately 30 Israel-based investors claimed to have not received meeting material, notwithstanding that:
4.1    eSense’s share registry service provider confirmed the materials had been sent out to these shareholders;
4.2    the Articles of Association deemed the meeting material to have been received;
4.3    on the closed proxy vote at the time, Mr Gilboa would not have been re-elected.
Mr Cohen, Mr Saad and Mr Gilboa caused eSense unnecessary delay, expense and inconvenience.  Instead of a short postponement to resolve to asserted issue, those directors insisted on delaying the AGM and the vote on their re-election until February 2018.

5 Fifthly, in February 2018 (after the requisitioning of the EGM to remove them as directors) Mr Cohen, Mr Saad and Mr Gilboa again used their Board majority to cancel the AGM (at which they were up for re-election).
The Israeli Court proceedings commenced by me and Mr Megson (at no expense to eSense) were an effort to tie-down a date for the AGM.  Unfortunately for eSense and its investors, Mr Cohen, Mr Saad and Mr Gilboa caused eSense to contest those proceedings (at its expense) and the Court found that the meeting had been postponed by Mr Cohen, Mr Saad and Mr Gilboa for so long that under Israeli law the AGM process had to be re-started, causing further delay.
Their ASX announcement trumpeting the Court findings as a ‘win’ for eSense was pure spin.

6 Sixthly, Mr Karasik (who was not, in fact, the Founder of your company) has personal relationships with and is supportive of Mr Cohen, Mr Saad and Mr Gilboa.  Mr Cohen, Mr Saad and Mr Gilboa caused Mr Karasik to be added to the board in February 2018, when their positions as board members were likely to be lost. In my opinion, this was designed to shore up support for Mr Cohen, Mr Saad and Mr Gilboa as directors.

7 Seventhly, on 15 January 2018, Mr Cohen caused eSense to announce a ‘binding distribution and sale agreement’ with IC Access.  However:
7.1    the agreement was signed without the knowledge or approval of the Board;
7.2    the Board is yet to receive any details of who the Company is, the owners and people involved, and how they plan to commercialise our products;
7.3    IC Access is a ‘marketing’ company with NO website or online presence and NO involvement, clients or experience in the cannabis or terpenes industries;
7.4    relates to a company in the United Arab Emirates, a country with which Israel has no historical or acknowledged trade relations; and
7.5 Mr Cohen failed to announce an upfront “finder’s fee” of US$40,000 payable in respect of the IC Access agreement to a real-estate agent in Bulgaria which has NO involvement, clients or experience in the cannabis or terpenes industries, to my knowledge.
Mr Cohen has refused to disclose to me whether the agent is a related party of him or the other directors.  In any event, such a fee was not authorised by the Board.

8 Eighthly, on 19 January 2018, Mr Cohen, Mr Saad and Mr Gilboa voted to pass a Board resolution that the IC Access agreement triggered the issue of “Class C Performance Rights”, notwithstanding that they had a personal interest in the outcome of the resolution.  This issue was queried by ASX on 5 February 2018.
Mr Cohen’s response to ASX was released on 7 February 2018 and discloses that he, Mr Saad and Mr Gilboa considered that any CDIs issued to them could be voted at the AGM.  This suggests why the AGM had been adjourned.

9 Ninthly, I acknowledge that Mr Cohen, Mr Saad and Mr Gilboa have requested me to co-sign authorising the release of funds from eSense’s Australian bank account to its Israeli bank accounts.  However:
9.1    they have made several requests in respect of expenditure NOT included in eSense’s approved budget (including the IC Access “finder’s fee”);
9.2    I have requested but they have FAILED to provide me with documentation supporting the asserted expenditure;
9.3    I have taken advice that I would be breaching my duty to shareholders to transmit these funds to Israel when I have no knowledge of their spending and are denied access to financial reports.
As a director of eSense and co-signatory to the Australian account, I have acted and continue to act in the best interests of eSense in requiring the Board and management to be accountable for its expenditure and to produce appropriate documentation before releasing funds overseas.

10   Tenthly, in a previously drafted Notice of Meeting, that Mr Cohen, Mr Gilboa and Mr Saad, sought to be approved by the Board, contain wording to provide:
“that for votes not cast by Shareholders, rather than being classed as abstained, and thereby an uncounted vote, that these could be voted at the discretion of the Chairman (i.e. Mr Saad)”
This has subsequently been corrected, but highlights the intentions of the majority of the Board and their disdain for the voting rights of eSense’s investors.
Illustrative of these directors’ contempt for proper lawful corporate governance, Mr Megson tells me he received no notice of a Board meeting to be held to authorise the “Position Statement”.  I received no notice.

11   All actions on my part, Mr Megson’s part and that of Otsana’s, have been carried out in the best interests of eSense and its investors.
These Israeli directors act in a manner that disregards the interests, rights and entitlements of Australian shareholders and the Australian directors.  
Based on the above, it appears to me that Mr Cohen, Mr Saad and Mr Gilboa are more focused on protecting their own positions as directors of eSense than in running the company for the benefit of its investors.  Their deliberate attack on me is malicious and defamatory and I have commenced legal proceedings against them.
Needless to say and rightly justified, many investors have become aggrieved, disinterested and confused by the state of affairs of eSense.
Regardless of the outcome, to the extent I am legally able to do I offer my support and advice for any investors, individually or combined, so who wish to understand, explore and/or exercise their legal entitlements and rights as result of the majority of the Board’s conduct.

I encourage all investors to exercise their voice and their right to vote at the AGM/EGM.
Dr Brendan de Kauwe
Director, eSense-Lab Ltd