On 28 June, 2018 LWP Technolgies held its Annual General Meeting.
The Chairman’s address to Shareholders confirms our view that there has been a systematic regulatory failure by both the ASX and ASIC in allowing the many instances of misconduct to go unpunished and to take little or no action against the directors involved.
In his address, the Chairman confirms that ASIC is making investigations into this company. This investigation is on the back of a Shareholder meeting with Steve Irons and subsequent update of ASIC Investigates LWP Technologies. This is the first time that the company itself has acknowledged that an investigation is ongoing. This investigation would not have occurred without pressure from shareholders and the assistance of MP Steve Irons.
The Chairman also confirms that despite Milestone shares being issued to the vendors and shareholders of EcoPropp which included former LWP directors Siegfried Konig and David Henson, key steps to formalise the proposed Joint Venture had not occurred. Representatives form Hallmark Minerals in India visited Australia to discuss the Joint Venture with LWP Technologies and advised they wished to withdraw. If these key steps, including formulation of a Joint Venture company and certain investment milestones, have not occurred then just what was the $933,000 of expenditure for this Joint Venture actually spent on?
At LWP’s May 2015 EGM, a variation to Milestone 3 was approved:
In the July 2015 announcement regarding the agreement with Hallmark Minerals that triggered Milestones 2 and 3, a Heads of Agreement is referred to, not a Joint Venture.
This is a key difference as a Heads of Agreement is a non binding agreement that is a preliminary step to a Joint Venture. According to company announcements, the Joint Venture agreement was not finalised until some 12 months later. Subsequent company announcements have highlighted that conditions precedent to this agreement were never completed. In addition, by using an incorrect VWAP to calculate the number of shares to be issued through these milestones, in excess of $400,000 of shares were incorrectly issued to vendors and shareholders of EcoPropp. The independant director to the EcoPropp transaction was former LWP director Sean Corbin.
Complaints were submitted to ASIC in early 2016 regarding the incorrect awarding of Milestone shares as well as the wrong price being used to calculate the number to be issued. This was also reported to the ASX a number of times throughout 2016 with no action taken other than a remedial sale of shares by Siegfried Konig and David Henson requried.
Advice from the ASX at the time was that it was up to the company to determine whether these Milestones had been completed.
The chairman also mentions social media in his address. In this instance social media and the ability to share information and research has been crucial in getting to the point we are now at where ASIC is investigating. ASIC does not take the decision to investigate based on rumours and innuendo, they rely on facts and evidence. LWP blamed the share price performance on social media a number of times: in February 2016 where there was a sell off by shareholders who had discovered the illegal director trading using shell companies which preceded the trading suspension in April and also in July 2017 where LWP again blamed social media for the sell off following shareholders uncovering serious issues with the Graphene battery Joint Venture. Not long after, the photos of the ice cream machine laboratory surfaced.
The Chairman is correct in his reference to ASIC Information Sheet 152: Public Comment. ASIC do not make public comment on investigations and at this stage, all we know is that they are investigating.