Just a reminder that Paul Peros is not a director of OBJ. He is...

Just a reminder that Paul Peros is not a director of OBJ. He is the CEO of the beauty technology division and reports directly to the BOD (as per the ASX announcement on 5 June). So he may well be buying on market, but there is no requirement for this to be reported to the ASX.

As part of his salary package, Peros gets 6000EUR worth of shares per month, at a 10% discount, given every six months. At the current run rate he may well have somewhere around 8.5m shares in 12 months time, which will be enough to put him close to a Top 20 shareholder. This is on top of his 24,000EUR (~A$40,000) per month in cash, plus performance bonuses (but the actual bonus was not disclosed), so he is hardly working hard for "relatively little". I am not sure he has any real compelling reason to be buying OBJ on the market at this point. The ASX guidelines and rules regarding directors buying, insider trading and continuous disclosure do allow directors (and others) to buy, or sell, at pretty much any time, within certain requirements. OBJ have already told the market that there are continuing discussions with P&G regarding product development, so this doesn't exclude the directors from buying or selling shares,unless there is something very much from left-field and of a material nature.Trying to argue that directors are not buying because they can't due to ASX rules might work for a short period of time, but not for months and months.

You said: "I imagine there is a compelling reason why two guys who could buy a crap load of shares at 1.5c in the company they’ve chosen to lead - are not actually buying right now."
I actually thought you were referring to the possibility of some type of capital raising coming or some other way to get cash into the company to fund the BodyGuard, Little Green Pharma or the new beauty technology division. OBJ had just $2.25m in the bank at the end of June 2019, compared to $4.17m the same time last year. Peros salary is close to $500k cash a year, plus who else is he employing for his division? OBJ have not reduced their expenses, so you be the judge to see how long they can go on the current cash (or how close they want to run the bank down to zero).

Lookingat the June 4C, their forecast of $750k of cash outflows for the next quarter is lazy reporting and clearly inaccurate (and should probably be called out for this).This are the same number that they have used in at least the past four 4C forecasts.The actual cash outflows have been $860k, $1,015k, $983k & $1,093k, giving a total of $4.0m in outgoings. And outgoings are increasing with more R&D, more work on getting Kneeguard prepared for market, the new beauty technology division wages, etc.This actual cash outflows does not include the $390k spent this year on “investing activities”, which is likely the capitalized amount on developing their own product for market.The last two months of revenue from P&G was $503k and $488k, so there is not a great rise in this last quarter. Plus there was $758k in R&D tax incentives received.If you take a high-level view on this, with outgoings being at least $4.5m ($4m, same as last year plus Peros cash salary component and I think this $4.5m is conservative), revenue of $2m and R&D tax incentives of $750k, that means a reduction in the bank account $1.75m over the next 12 months. Expenses may well be more considering what is happening with the company, the partnerships and the new salaries. Add the fact that revenue is an unknown, so you can plug your own figures in to come up with what you think. Which every way you cut it, with $2.25m in the bank account at 30 June, you don’t want to wait until you really need the money to go trying to find someone to give it to you.

It should be noted, that the above are all cash items – there may well be revenue or expenses that haven’t been received or paid for.More will be know when they release the 4E and Annual Report.

Reading the most recent update there is not much money coming in, and in fact the directors are saying that they are only increasing spending in the next 12 months:
1. BodyGuard - targeted launch of Kneeguard in Q2 2020 (subject to regulatory approvals). They are using Parafix, a very small manufacturer, not the billion dollar ones they were initially in discussions with. So more costs with no revenue and there is no point thinking that Q2 is anything more than a target date. Add to that it is proposed a "targeted commercial launch", so it may just be in just one country or even part of a country.
2. Little Green Pharma - 50/50 joint funding of R&D. On the upside some of this might come back in R&D rebates, I guess. But revenue would seem a long way off, if ever.
3. Beauty technology division - headed up by Peros. This needs money to move forward for all the salaries and development that is required. Lots of water to flow under the bridge here before revenue starts and I guess everyone will just continue with the speculation of how exactly this will happen. Also, it's not just revenue OBJ needs, it actually needs to make a profit or they will face another capital raising situation in the future.
4. P&G - well, this is still a bit of an unknown. The cash in this quarter was disappointing for everyone, surely. The "second technology" has gone quiet and they are still discussing "product development", so this could mean anything. Remember that P&G don't need OBJ. If something isn't fitting in to their marketing, they can just drop OBJ technology and move on. It has to be remembered that P&G is a multi-billion dollar machine and it will do whatever makes their bottom line better. There is just a large question mark right over this deal with P&G. I really do think things could go either way, but I don’t think that the deal will make OBJ million each quarter over a long period of time.

Overall, to me, OBJ is still the same company it has been for the past few years - a speculative investment with some promise, but little actual progress. But it has now found that licensing its technology is not the golden path and now is trying to have its own products.Money in the bank from its licenses/products is what OBJ needs, but this is just not coming in the amounts needed. The beauty technology division is a step forward, but there is a long way to go before anything actually hits the bank account in any meaningful way. 1.4c today is not good news for a shareholder. I sold somewhere around 3.7c (from memory) and was told I would be missing out and regret it. No, I haven’t regretted and I just can’t see a time that I ever will.But I am a continuous student of the ASX just trying to learn as much as I can from the good, the bad and the ugly.Each time I have checked back in (I like to read the 4C and market update) I see the same thing from posters "it's looking good for the next 6 months" or "next year is looking exciting" or "I added" or "I topped up" or whatever. These were all said 1, 2, 3, 4 years ago, sometimes by the same posters, at share prices 1, 2,3,4, 5 times higher. The focus seems to be on all the things that could possibly happen (lots of dot-joining and some pretty interesting leaps of faith), rather than the facts of where the company is actually at and what is most likely to happen in the short term given the current facts.

The annual report is due in September. I wonder if there will be a proper update, conference call or something else before then or they will wait until the AGM at the end of October. I don't think they will wait until the AGM for any big surprises, so the next two months will be pretty telling in the future of OBJ.

The fact remains that OBJ is a speculative investment and should as such by any investor. It's still not cashflow positive, is increasing expenses, has $2.25m in the bank and still has a market value of around $25m. Share price is 1.4c now, so how much lower can it go? Well, I am sure there are those that said the same thing at 2.1c and are now down 33%. Many are in the hole a lot more than this, or have "topped up" at as the price dropped, so their average is down, but their amount at risk has increased and in the process have lost even more. I am not sure how those who are currently invested can continue to buy a further 500k or 1m lots when the cash position of the company has such a large question mark over it. Good luck to holders and I won't be buying anytime soon, but I will come back again when there are some ASX updates and have a read to see where OBJ is going.