Taken from the latest Annual Report: "On 29 December 2012 the...

Taken from the latest Annual Report:

"On 29 December 2012 the Company entered into a new Loan agreement to replace the existing agreement that was due to expire on the 27 November 2013. The new loan expires on 30 June 2017. The loan is in the form of a convertible note arrangement with Mr.Robin Ormerod."

Looks like Robin reached into his pocket to fund the company through a new loan at the end of 2012. You really cannot blame him for converting his issued shares to some cash as his "paper share value" doesn't pay the bills and he took a large risk financing a company that was in a bad way at the time.

"The company may repay the loan earlier at its discretion. The effective interest rate of the loan is 11% including a 2% discount that applies while the loan is not in default. The Financier may convert some or all of the loan amount to shares at a share price calculated at the Volume Weighted Average Price for the three months prior to the signing of the Loan deed, subject to any necessary shareholder approval. The number of converted shares that can be traded is restricted to 10% of the issued share capital of the Company per year in each of the first four years"

Unfortunately it looks like the share conversion price does not track the current share price but is fixed to the VWAP for the three months prior to the loan creation. This conversion of course reduces an interest payment liability for the company but dilutes the share base at the same time.
Before the latest conversion there was $1,260,000 still owing on the convertible so now it is down to $900,000 or approximately 26.7 million shares at the same price of the latest conversion.

This Ann really doesn't throw any red flags, I think our attention should be on the Australian Technology Competition that announces its winners tonight!