I received my AGM proxy form. I was interested to see that the...

I received my AGM proxy form. I was interested to see that the table for Resolution 6.5 has been changed from the document of the same name published on the ASX. The ASX version is more detailed and meaningful. The table for 6.5 in the mailed papers have two odd things. One, the shares BEFORE conversion are not consolidated yet the column on the right, the shares AFTER conversion, are consolidated [divided by 20]. It might appear that Empire loses equity, when they clearly do not.

The second interesting thing is comparing the 'Existing shareholders' value of 90.8 % BEFORE conversion with the figure AFTER conversion of 92.75 %. We are talking about different cohorts of shareholders. BEFORE conversion the existing shareholders are us, the current shareholders (less Empire). But the AFTER conversion figure of 92.75 % includes current shareholders at 6 % and the 'Qualifying Financing Event Shareholders', that is RGM shareholders, with 87 % (the 6% and 87 % coming from the ASX version.).

Well that was an unexpected and stunning announcement yesterday about GEM. More dilution, again, but a big boost to the reputation of RGM and validation of the merger deal. Interesting timing coming only one day short of the close of proxy voting. No wonder BOS was keen to delay the AGM.

If Resolution 6 is approved thereby agreeing to the convertible Notes deal for $900 000 Empire and Chalmsbury get shares in BOS. The interesting thing is how many shares they get, and that depends on when they convert the Notes. If the notes are converted PRIOR to the merger (or other Qualifying Financing Event) Empire and Chalmsbury get the rights to 1.2 billion shares (all shares and options times nine. Note 1 Item 6.5). Empire gets 15.95 % of Bos and Chamlmsbury gets 75.34 %. Together they will have 91.29 % of BOS. Importantly they get their shares in Bos for $0.0007 each. ($900 000/1.2 billion).

If the notes are converted UPON the merger Empire and Chalmsbury get their shares at one third of the Issue price. Bos has put a pre-acquisition valuation on Bos of $0.0387. If the Issue price for the merger remains somewhere about that at three cents Empire and Chalmsbury get their shares at a third of that, or about $0.01 each. The announcement of 25 September 09 says the Noteholders get 5,400,000 consolidated shares (135 m shares un-consolidated. $900000/135m = $0.007 per share).

That is a huge difference depending on when the Notes are converted. Prior to merger Empire and Chalmsbury get 1.2 billion shares at $0.0007 and UPON the merger 135 million shares at $0.007. The question that's been bugging me is why wouldn't Empire just convert as soon as we approve Resolution 6. Then I realised noticed in the 'Key terms of the Empire convertible note' the notes can't be converted by Empire until between 5 March 2010 and 5 August 2010. So we have until the 5 Mar to get the merger done. When the merger is done Bos can ask that the conversion is done UPON Qualifying Financing Event and get the better price. I would be a lot more comfortable if the valuation for conversion PRIOR to a merger wasn't in the contract.

The last thing bothering me was that the directors were placed by Empire so perhaps they might delay or abandon the merger and Empire and co get 91% Bos on the cheap. There was nothing appealing about the merger as such. We have been told little about RGM and there's been no due diligence.

Then out of the blue came the $20m funding deal. That added a lot of clout to RGM. It's as appealing as due diligence if some large player is interested. Of course, the merger could still fall over, but it looks more likely to proceed with the investment fund GEM.

Heaven knows what our shares are going to be worth through all of this.

By the way I got a reply email from Peter Steinberg. He hasn't looked at Bos for months and said if the sale of IP to CBTE and the RGM merger failed the company and the IP were dead.