Morning all. I'm full of flu so the commentary is limited, but...

Morning all. I'm full of flu so the commentary is limited, but here are my notes from the AGM. Points 3-7 were interesting and I found director Vaz Hovanessian to be very knowledgeable. He is happy to answer any shareholder questions and can be contacted on (02) 9954 4200

1. All resolutions were approved.

2. Consolidated shares (25:1) to reopen @ 0.125c

3. Current market cap of $5mill is undervalued based on current business revenues from 32,000 rooms @785 per room. Should be approximately $25 million

4. Target roll out of another 25,000 rooms this year @ approx $785 per room– brings total rooms to 57,000 and annual room revenue by my calculations to $44.7mill

5. The company is now fourth-largest provider of in-room digital hotel entertainment in Nth America, with more than 30,000 rooms installed. Even though their market share is still relatively small, their opportunities are substantial based on the deals they’ve done with hotel chains to date and the potential 450,000 rooms that subsequently land in their laps as they come due for renovation in the next 12 months – of which ETC are targeting 5+% for installation.

6. They are currently looking to float the US business for approximately $20 mill

7. Broker presentations to begin within the month.

8. Salaries confirmed as: Dykes $150K + car; Directors $50K each. (Dykes’ package is still too steep in my opinion).

9. According to Vaz Hovanessian, his friends and family contributed $650K to the last raise and will be participating in this final stage of pre-cashflow funding.

10. The company has racked up $7 mill in losses over the past four years, cash flow has been negative for five years. No small part of their losses has had to do with the telecoms division and the winding up thereof. As of April 2005 ETC has executed a vastly different business model and strategy, focusing on roll out of their own in-room IP and hardware.

11. As ETC owns the digital equipment that it installs in the rooms (from which it receives rental income), it's a cash-flow business but requires capital expenditure up front. Directors want to raise approx $4 mill (as per approval of 80 million securities at AGM) to clear debt and fund aggressive push into the US market.
12. Approved: up to 5 million shares (post consolidation, currently 12.5 cents, or 125 million at .005 cents) per director at not less than 80% of market price (to be in line with the rights issue). Pierponts comment about “directors hold 9 per cent of ETC and are proposing to dilute the existing ordinary shareholders from a 91 per cent holding in the company to less than 33 per cent, while the directors' stake will be increased from 9 per cent to 27 per cent” only applies if the directors stump up the cash to fund the next phase of roll outs – they’re injecting required capital and paying for their equity stake. I don’t know why they went on about “repayment of debt or unpaid remuneration” as they’d be getting the same discounted deal as any ordinary shareholder who participated in the raise – and if that also clears any outstanding debt then fine with me.