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By Cynical Bear | Monday 11 September 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.
Readers will know I’ve never been a fan of BOS Global (BOS) and the opaque nonsense emanating from its CEO, Michael Travia, especially as its suite of workplace analytics software is as cutting edge as Snake on the old Nokia. I last asked for transparency on a few key points last month (HERE) but today, instead of answers, I have more questions as Mr BOS Global himself, Michael Travia, has suddenly left the building!
As one would expect from these guys, the announcement this morning didn’t tell the whole story but what we do know is that Michael Travia has stepped down from the board and his executive duties, seemingly with immediate effect, and his role will now be shared by Bill Brooks and Mark Uren.
Why so sudden? What has happened here? It is very rare for a CEO to step down so suddenly from any company, let alone one in which he is the major shareholder with about 40% and is the sole funder of the business in the medium term.
There must be more to this and, yet again, the board has made the wrong call of going down the minimum disclosure route as investors will come up with their own theories which are unlikely to be positive and then leave the scene pretty quickly. As I write, I note that the share price is down about 6% at 7.375p. Not bad all things considering.
However, other than the simple why, there is another key question around funding. Today’s announcement goes on to say that the convertible funding agreement for £1.875 million with Mr Travia is still in place and that £370,000 has been drawn down to date, although not yet converted.
This is the first that investors have heard of any drawdowns so at least we know how the business has been funded but why haven’t the loans been converted? Under the terms of the agreement, the conversion was meant to happen immediately; surely Travia hasn’t lost faith in the BOS Global equity? Is this the reason for the fall-out? More importantly for the short-term, is Travia really going to continue funding the business when he is no longer involved?
The other potential reason for the falling-out relates to Call Design as the statement today also references that Call Design has announced that it intends to try to IPO in Australia with an accompanying statement from its Chairman, er, Michael Travia.
BOS owns 40% of Call Design with a right of first offer over the rest. It is not clear how this right would work with an IPO and obviously that point isn’t clarified today; however, perhaps Michael Travia has decided to hitch his wagon to the Call Design train rather than BOS Global leading to an irreconcilable conflict of interest.
You can see I’m floundering a bit to explain what has happened here but it isn’t my job to solve the puzzle. Nevertheless, whatever the reason for this departure, I think that the BOS 360 business will crater pretty quickly from here as it was Michael Travia – it was his baby and his alone. I wouldn’t be surprised to see other departures from the senior team.
Accordingly, I see the share price dropping further from here as this fall-out has some way to play out just yet; however, I don’t think it’s necessarily a zero as I do think that there could be some value in the call centre business, Call Design, and if BOS stopped the software business altogether and just held say 25% of that post IPO dilution, that would be worth something.
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