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OBJ LIMITED
INVESTOR CONFERENCE CALL ON 5 APRIL 2018
QUESTIONS FOR THE BOARD OF DIRECTORS POSED BY INVESTORS
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Question Number
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Question
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Number of Persons Who Want Question Answered
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Questions Concerning Procter & Gamble
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1.
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The Procter & Gamble relationship has yielded much less revenue than shareholders expected since the launch of the first OBJ-inspired product in 2014 (the SK-II magnetic wand). After almost 4 years, 4 products, and over 1,000,000 product sales, the revenue derived from this relationship is commercially trivial for an ASX-listed company. Can the Board please explain why shareholders’ expectations have not been met in this regard? Are the revenues derived from the Procter & Gamble relationship going to get any better?
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109
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2.
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Can the Board advise, based on current active projects with Procter & Gamble, when it expects the Company to be cashflow positive?
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95
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3.
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The Company is in receipt of the following data that may be analysed using conventional accounting and mathematical methods to forecast projected revenues derived from the Procter & Gamble commercial relationship:
· 4 years of micro-array purchase orders;
· the rate payable by Procter & Gamble per micro-array unit and/oor consumer unit.
Can the Board please explain why the Company has not extrapolated this information to make reasonably-based and qualified revenue forecast projections in circumstances where:
· the Company is accurately characterised as a “speculative” investment;
· as a publicly listed Company, the provision of such revenue forecast information would significantly impact on the market's current assessment of whether the Company remains “speculative” and, accordingly, on the market value of the Company;
· the provision of such information is unlikely to breach any express confidentiality contractual obligations to Procter & Gamble if there is no attribution made by the Company to the specific source of the projected revenue streams.
Can the Company please now proceed to provide such revenue forecasts?
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71
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4.
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Under our Master Licensing/Product Development Agreement with Procter & Gamble, does Procter & Gamble have a responsibility to produce a royalty earning report within 15 days after the end of each quarter? If so, can the Board adopt a practice of advising the market within a few days of reviewing the report how much in royalties were earned for the quarter just past?
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40
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5.
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Definitively, and unambiguously, on what calculated basis does the Company receive royalties from Procter & Gamble on any products associated with the Company’s technologies? For example, if there is an applicator (e.g. Magnetic Booster) containing the Company’s magnetic micro-array, to be used with a skin care product developed by Procter & Gamble and re-formulated for optimal use with the applicator (e.g. SK-II RNA Eye Cream), does the Company receive royalties:
(a) from sale of the applicator only?
(b) from sale of the applicator and cream? or
(c) calculated on some other basis?
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44
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Questions Concerning Other Projects (i.e. non-P&G related)
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6.
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Can the Board please justify exactly why there appears to be no urgency in keeping shareholders informed as to the progress of certain commercial programs including the following partners/programs who have been referred to as potential partners in previous announcements but now appear to have disappeared off the radar:
· GSK/Stiefel
· Nestle/Galderma
· L'Oreal
· Pfizer
· Coty
· Advanced Packaging/Voltaren
· Novartis
· Beiersdorf
· Johnson & Johnson
· Mentholatum
· Unilever
· DCE
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96
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7.
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Given that:
(a) the Board has said previously “I would be surprised if Bodyguard/Surface Hygiene/Integrated Packaging is not taken up shortly”; and
(b) the Company has had its credibility boosted by the relationship with Procter & Gamble,
could the Board please explain why there appears to be such difficulty in getting another FMCG company to develop products using OBJ's technology?
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51
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8.
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The Company reported on 15 March 2018 that it has recently negotiated a “carve-out” of three critical product sub-categories from the original Procter & Gamble Product Development Agreement, namely “colour cosmetics”, “haircare” and “shaving (specifically the cutting of hair rather than associated skincare)”. The Company stated that it sees “a substantial amount of potential” in commercializing this technology globally. Specifically, what commercial opportunities has the company started to explore in relation to these areas, how much revenue is expected to be gained, and when can shareholders expect to see revenue flowing into the Company's accounts from these new projects?
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46
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9.
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On 14 June 2016 the Company announced via the ASX: “OBJ is working with award-winning Sydney based industrial design firm Design and Industry in developing the prototypes. These will initially focus on devices for the homecare and hospitality sectors ahead of further partnering discussions with various fast moving consumer goods (FMCG) companies.” Is this a Surface Hygiene project? Can the Board provide an update about this project?
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39
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10.
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Following the expiration of the Royalty agreement with Procter & Gamble for the Eye Wand, have there been any discussions with other Cosmetic companies for the eye wand to be manufactured for a royalty fee per item manufactured?
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38
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Questions Concerning Corporate Performance
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11.
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Can Mr Schapera please provide short-term (1 year), medium-term (3 year) and longer-term (5 year) outlooks for the corporate and commercial affairs of the Company? Where does Mr Schapera see the Company heading under his stewardship and that of the anticipated new directors? What do they plan on doing differently that hasn't been done by Company in the last 10 years?
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76
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12.
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The share market’s opinion of OBJ share price performance over the last 20 months has been one of failure and disappointment. Price sensitive announcements over this period have not produced any maintainable or sustainable price appreciation in OBJ’s share price. Apparently, the market has lost all confidence in OBJ. What positive quantifiable measures is the OBJ Board planning to instigate and implement, in the short to medium term, to reverse the current negative market sentiment to regain share market investors faith and support?
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72
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13.
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Many shareholders consider that the Company fails to communicate effectively to the market about its commercial progress. Shareholders have repeatedly raised this issue with Company management. However, public announcements about the Company's commercial relationships, agreements, and progress more generally, continue to be expressed in language that is often vague and sometimes unintelligible. Consequently, the investment community is often denied the ability to identify tangible potential value arising out of a particular announcement. Confidence in the Company's ability to communicate meaningfully to shareholders is at a low ebb. The current share price and the “strike 1” result at last year's Annual General Meeting reflect this lack of confidence. For a publicly listed company, the situation with respect to how the Board communicates with the investment community remains untenable. What is the Board going to do about this within the next 6 months?
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56
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14.
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Can the Board please answer the following questions?(a) What is so great about the Company?(b) If it's so great, why has the share price dropped nearly 60% in the last 12 months?(c) If the explanation is that the investment community just doesn't understand and appreciate the Company's worth, what action is the Board going to take to remedy this problem?
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37
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15.
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In the last several years, the Board under the stewardship of the previous chairman awarded directors a significant amount of performance shares. With the benefit of hindsight, it is the view of many shareholders that the Company has obviously not “performed” and that the directors were not deserving of the shares they claimed. A significant amount of shareholder distrust has been generated as a result. How does Mr Schapera propose to rebuild that trust?
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32
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Questions Concerning Revenue & Financial Affairs
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16.
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Should shareholders expect to see a significant revenue increase each quarter this year and moving forward?
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58
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17.
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Assuming the Company will be declaring regular and increasing profits within the next 2-3 years, has the Board contemplated what to do with those profits? Will it:
(a) develop or expand the business;
(b) declare dividends;
(c) buy back shares; or
(d) a combination of the above?
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40
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(20min delay)