The Future

To add to Digital Sport's posting, here is mine.


To put the meeting into perspective, I arrived 5 minutes late and it was already over...

This was to be expected as I had already talked to Bob Mennie about it a couple of weeks ago and he said it was purely an LSE rules thing and that the shorter the meeting, the better it was for the beleagured board.

So take it as read that the resolutions were passed.

Now on to question time.

I did ask a number of questions to satisfy my own curiosity on a number of issues, as did a couple of others. We were given only a limited amount of time for this and they closed the meeting after about half an hour.

So this is my synopsis of the event.

1) Earthport's building had the look of dereliction written all over it as I approached it on foot. Sure enough, once inside it was obviously not a place where throngs of people are working anymore.

2) There were about a dozen people in the room. A far cry from the last AGM. From what I could gather, at least 4 of these people were staff and two were apparently from potential financial backers. So there couldn't really have been more than 6 shareholders there! Not a good way to impress your new backers.

3) I was informed that the AGM was over as I arrived 5 minutes late so I can only assume that all resolutions were passed.

4) The company is not yet insolvent and is still actively seeking financial rescue. Vanrennen (who did not have the greatest grasp of details as Bob had to correct him a number of times) said that the company is working to the deadline of the 4th of Jan 2002 as this is obviously the 6 month deadline after which the shares would be de-listed if they have not been lifted from suspension.

5) There is still confidence that the shares will be lifted from suspension but that this requires the funding to be resolved. It is a chicken and egg situation because both of these are dependent on each other. I wasn't there in time to hear the whole of this point but my guess is the following (and apologies if incorrect): Earthport have applied to have their suspension lifted and the application has been considered by the LSE. One point was raised by them which is a legal matter and Earthport's lawyers are working on it. It is not thought to be a show-stopper. So it is last chance saloon for the LSE. If it all comes together on Thursday, the legal issue will be resolved, the funding will be available (presumably from the two gentlemen who attended the AGM), and there will be an announcement on Friday that the suspension is lifted.

Judging by their previous track record of pulling this off, I wouldn't bet my house on it.

6) If the deal is not pulled off and suspension is not lifted on Friday, then the alternative is to go back to Ofex. I had a feeling that they would probably take this course of action if it came down to it because Vanrennen and Lars still believe they can pull the dream off.

7) I asked why they hadn't raised an extra £20 million by a full listing rather than an AIM listing. The answer was that they would not have been able to raise the money at anywhere near the share price of £1.60. They were quoted prices more like 20p. So fair enough I guess.

8) There was unfaltering belief by Vanrennen that had the payment platform not been delayed by 6 months then they would not have run out of money. There was reluctance by EPO to accept INGs advice that they would have to suspend the shares. Vanrennen believed that the revenues would come in with the completion of the payment platform but he could not convince ING. Another chicken and egg situation as it meant that deals were put on hold.

[I believe this is naivety on Vanrennen's part. I would rather accept an independent view (eg Nomura, ING) on cash positivity projections and they all said this would not come until 2003]

9) There are apparently some good deals waiting in the wings and at least one major deal that is all but signed except for the suspension. This is with a major player but I am not allowed to divulge who. However, the major player is as exciting as a damp squib in my opinion.

10) Vanrennen said the cash burn situation up to the completion of the payment platform was about £1 million a month but that it would only be about £200k per month for continuing operations. Key staff were still loyal to the cause and there was confidence that these staff would rejoin the operation once funding was secured.

[nb there wasn't enough time to delve into this one but it is obviously bending the truth a little (ok it is a whopper). You don't need to be a mathematics genius to work out that £25.6 million would last two years at £1 million per month, rather than the 6 or so months it did last]

At least Vanrennen had the sense to admit that it hadn't all been spent wisely. "We didn't need quite so many computers" etc. My guess is they squandered at least half of it on believing they were running rather than still taking off their tracksuit bottoms. No point going on about it - I have already made my feelings known about the management.

11) Vanrennen (gallantly) said he was even putting his own money in to keep the thing going. I was looking for an opportunity to ask if he and Lars were still collecting salary but it was over too quickly.

12) I spoke to Bob about the appalling communication of information to private investors. He said that he had been advised by the company advisors that there was nothing to say and therefore nothing should be said.



Well I may have missed something but I think that was a fair reflection on what happened. It was a pretty sorry affair really considering this was once a £100 million + company. I've been to enough board meetings/AGMs to know that the only thing missing from this one was being offered packing crates to sit on in a room without furniture. Well hopefully you get my drift.

Give them their dues. They get full marks for producing quality concepts and ideas. They get zero marks for marketing, selling and financial control. But they get high marks for persisting when it looks pretty hopeless.

Only 4 days to wait and we will all know. What I will say (to B&B especially) is that I still consider this to be a write-off because the value of my 20,000 shares will be so trivial compared to what I paid for them. It is not enough to say never give up etc. The point is that if they do come back at say 5p or 10p we could have bought our current holdings out of petty cash, rather than real money. Nothing can change that and I have only myself to blame.

Happy New Year!