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BOS Global: Something smells wrong here - a few questions for Mr Travia

By Cynical Bear | Tuesday 6 June 2017


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


A number of things have been bugging me about BOS Global (BOS) for a couple of weeks as certain acts and omissions have had me scratching my head, so I thought I would raise some of these questions here and perhaps Michael Travia, CEO, can provide some answers.

Before I start, it is worth noting that Gary Newman called the top here quite accurately in his piece a couple of weeks ago and highlighted why it was a dog of a stock on a fundamental basis. The share price has plummeted since then closing last night at 11.25p, down 40% from its peak close on 23 May at 19p. However, away from the fundamentals for a moment, I have been puzzling over a few questions arising from the various recent RNS’s.

First, how is the business funding itself at the moment?

At the time of the admission of BOS Global following the RTO last year, the intent was that it would be funded in the short to medium-term through a drawdown on a convertible facility provided by CEO Michael Travia, with drawdowns scheduled to take place on a monthly basis. The last we heard was that over £1 million remains available to be drawn down and that it was going to be used for the cash element of the Call Design deal, but there has been no recent announcements of any drawdown.

Secondly, what’s going on with the recent board changes?

It is quite a rare occurrence for a Chairman to suddenly quit the Board and on 31 May BOS Global announced that both its Chairman, Larry Shutes, and another Director, Murray Bergin, were stepping off the Board.

Why? Incidentally, I don’t like the fact that there isn’t a CFO either.

Thirdly, who is selling?

The share price has taken a pasting in the last couple of weeks; in fact, ever since the Call Design deal was completed. One can see from the share trades that there are some significant sales going through which appear to be too large to be the average PI. However, who is selling as the two large shareholders, Michael Travia and Graeme Hopgood, are locked in for the moment as is Call Design…..or is it?

In the initial acquisition announcement on 20 March, the RNS stated that:

“Subject to successful completion of the Investment the Company's equity holding in Call Design will be subject to a 12-month lock-in from the date of issuance.”

That’s just nonsense; it’s not a lock-in for Call Design at all. That merely states that BOS won’t sell its shares that it is acquiring in Call Design for a year! Is that just another intentional spoof to mislead investors? To be fair though, the more recent deal announcements have been much clearer stating that a lock-in is in place for the Call Design shareholders, so I presume it can’t be them either.

The only other chunky shareholder is Capresi which we last heard had 2 million shares left, so it could be that it is getting out while the going is good. The only other alternative I can think of is institutionally-organised pre-placing selling.

All these questions got me thinking and I can’t help but wonder whether any cash has actually changed hands in the Call Design deal or whether the cash proceeds have somehow found their way back in to the company and transferred back to BOS Global as part of a commercial deal as BOS has stated that Call Design has subscribed to all its software in a three-year deal. In my view, this would be a bit dodgy and could easily lead to a board fall-out.

I accept that this is all supposition, but it all just smells a bit funny to me. I’m clearly not the only one not quite so keen on the business either. Perhaps Mr Travia could start calming investor nerves by answering some, or all, of the following questions:

  • What are the terms of the commercial three year subscription deal with Call Design?
  • Did money move when the Call Design deal was completed or did funds just move round in a circle?
  • Please re-confirm that Call Design is locked-in and prevented from selling? If so, which significant shareholder has been selling?
  • Please provide some financial information on Call Design to enable investors to understand a fair value for the 40% acquisition.
  • Why has the business not drawn down any further cash recently from your convertible facility? Do you have those funds available to invest, Mr Travia?
  • Why did the two Board Directors suddenly step down from the board?

That should do it for starters; in the meantime, I suggest you get out while you can.


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