Member Info for nanostory

@Tornadotony

“There is a risk of communicating at cross purposes. Yes one can put positives in the past as well regarding the East Texas law suit venue and it would be wrong of me to say your opinion is untruthful which I am not. However, it does not change what I wrote which is incidentally true. Neither you or I were a party to the direct conversations the judge may have given to both Samsung and Nanoco. We are also not party to all the internal risk assessment discussions that took place. There was a high probability of course of an appeal following a trial and it could have dragged on for ages as well being considered.”

This is what I mean by blind loyalty. You are giving the board the benefit of the doubt by hypothesizing why the board might have acted/decided that way and questioning the widely accepted view in the industry that Texas is a great venue for patent owners. Similarly, you are trying to justify their decision by assuming a long protracted appeal process. Yes, there is a probability of appeal but you can mitigate the delay by buying insurance (receiving money in advance at ca 10 to 15% discount from the insurance company or buying a judgment preservation insurance at ca 10 to 15% premium so that if you lose, they will pay you the full amount of the verdict). The board should have explored all options but didn’t. BTW, KAIST went to trial against Samsung with just one patent and obtained a $203M verdict from same judge Gilstrap. Samsung ended up settling 9 months (not years) thereafter.

“Secondly, You have claimed I have made accusations about the untested Board members of what they would have or not have done. That is of course a theoretical argument. I do believe the Board would have acted in a manner as to be aware of what Samsung would observe and think. I suspect they may have also used rhetoric to argue a strong case and be careful how they did it with caveats when they discussed with shareholders. What none of us know is whether your new Board would have arrived at a different risk assessment decision taking into account all of what we currently do not know.“

I said this before and will say again. Samsung already knew the damages amounts Nanoco was seeking because they already received a copy of Nanoco’s damages report. How would simply announcing the damages amounts to shareholders with inflated expectations jeopardize the board’s negotiating position? Damages amounts are clearly inside information requiring immediate disclosure to shareholders per MAR.

“I also wrote where I believe the current Board needs to improve so I am not married to them in some kind of blind loyalty. However, I remain unconvinced with the proposals that have been raised here. Selling the Runcorn manufacturing facility would generate little money and take away a potentially good asset. It reminds me of Liz Truss selling off the UK gas storage

@warren1907

“Hamoodi's CV is almost exclusively short-term interventions - insolvencies, distressed investment opportunities, one-off funding etc.”

You are putting your own spin on this background. His Linkedin profile states, “Strong focus on litigation funding, asset tracing, enforcement, and other special situations opportunities with a legal catalyst. Provider of capital for complex and usually contentious situations involving corporates, UHNIWs, or sovereigns.”

Litigation funding, legal catalysts, contentious situations are merely what triggers his investment and don’t necessarily mean he is looking for short-term gains. Using your logic, the proposed chairman must be looking for short-term gains too as his business revolves around patent litigation/licensing, which is of limited duration, yet he grew his public licensing company exponentially in 8 years (not short term) from $110M MCap to $2.1B. How is that short-term focused? Besides, Hamoodi is just one of the proposed board members and won’t be running the board. The nominee directors are not his puppets, have their own identities/successful careers, and would look to maximize long term value for all shareholders.

“Rather than for people to disprove that he's no worse than the unknown, surely it's for him to convince investors that his vision and/or the expertise of his team is remotely investable.”

I think his vision is set forth in the presentation and will probably be further expanded/explained once the EGM is called. In terms of expertise of his team, why not review their individual Linkedin profiles, which look impressive and are not any less detailed than the current directors? What expertise do you see in the current directors that make you feel investable despite their unproven track record?

@Tornadotony

“Part of your story of self interest by the Board is probably true. There was also quite a lot of wordsmithing that allowed different people to draw different conclusions. However, what evidence do we have that your selected Board would behave any different in the circumstances. After all anything being communicated would have the visibility of Samsung staff. Furthermore, nearly every document or interview conducted by Nanoco staff has a set of disclaimers and forward statement guidance.”

What evidence do you have the new board will behave badly? None. On the other hand, you have seen the evidence of the current board’s bad behavior but want to disregard. That’s not fair. That’s blind loyalty. The board should have announced the damages amounts (inside information requiring immediate disclosure per MAR) they were seeking in litigation as soon as the damages report was filed with court (20 May 2021) but decided against it until after disclosing the financial details of the settlement. The damages amounts are just “facts” already known to Samsung, do not convey the board’s willingness to settle for any amounts, and could not possibly undermine or jeopardize anything except the inflated shareholder expectations/share price when disclosed.

@Tornadotony

“Part of the narrative of course was not included in your listing. I know from personal experience of when I lived in the USA of how folks based outside of the USA can be done over in a proceedings in a USA Court. Samsung were investing in East Texas in a big way. They were creating significant job numbers and we do not know if that was made known to the judge. The judge might have also had a friendly golf partner with political connections for example putting pressure on having this case run forever. Lets assume Samsung applied no pressure the fear of getting stitched up may have been on the minds of Nanoco staff and their legal team. The phrase often given by big companies to smaller ones in a confrontation is hey bite on this bullet and take it or leave it.”

Absolutely not true. Quite the opposite. Eastern District along with Western District of Texas is the most popular venue for patent owners as they are more likely to not only win but also receive large verdicts. Samsung settled a $203M verdict with a Korean research organization (KAIST) and lost to Netlist (California company) with a $303M verdict. Judge Gilstrap (the judge for the Nanoco case) presided over both cases with willful infringement.

“Another factor is that the technical sector despite all the AI excitement is set up for a big retreat. By agreeing a settlement the Board have guaranteed finance when cash next year is king. Interest rates are like kryptonite for the tech sector and there is little sign at this time of rates going down soon. To continue the legal fight and running low on cash as we continued throughout this year also has risks.”

By agreeing to settle the board have guaranteed finance for their compensation until retirement. Nanoco had a strong case with all five patents with 47 claims surviving the IPR institutions, which virtually never happens. https://www.uspto.gov/sites/default/files/documents/ptab__aia_fy2022_roundup.pdf The probability of a claim surviving an IPR institution is 16.5%. The probability of all 47 challenged claims surviving IPR institution is practically nil (16.5% ^ 47). Nanoco also had strong evidence of wilful infringement (potential for 2 to 3X damages) in the right court in front of the right judge, who has a good history of awarding enhanced damages for wilful infringement. I suspect Epstein ($5M fee contingent on settlement), Edelman ($1M fee contingent on settlement), LOAM/RG ($5.7M bonus contingent on settlement) were all putting pressure on the board to settle, and the board became risk averse and did not want to proceed with trial (even if there were a high probability of a large enhanced verdict) or explore judgment preservation insurance. Seeking settlement advice from advisors who receive huge payments contingent upon settlement is inherently problematic and a stupid way of making a decision.

@ddubya

“I have concern some would like to relieve us of much of that potential.”

Why do you think replacing the board will destroy the potential? The proposed interim CEO co-founded QDVision with Steckel (currently Director of Imaging Technology at ST) and probably knows him far better than Tenner or Pickett does. Changing/replacing jobs/roles/positions happens every day at Fortune 500 companies without disruption.

“BT seems to be doing his best to that end but Hamoodi could be the same or worse?”

Whether BT is doing his best or not is irrelevant. What matters to shareholders is the share price. I don’t understand why you start from the negative perspective that Hamoodi could be the same or worse? What has he done to make you think that way? His team is well qualified with track records, is independent, is not known to misrepresent and could be far better. The incumbent team has no track record at Nanoco and elsewhere, not independent and known to benefit related parties at the expense of other shareholders, and known to misrepresent repeatedly. Repeated misrepresentations are not unintentional but deliberate.

I meant "good question" instead of "yes indeed".

@Kooba,

"What has been the strategy of the company since inception? To commercialise the technology they have developed …have they ever received commercial orders for their technology ??"

Yes indeed. The problem here is trying to finding a home (new application) for a technology already developed (CFQD), instead of developing a technology (including making it cheaper and better quality) to meet market demands (current or anticipated). Nanoco and ST don't even know what the applications will be for commercial orders allegedly 6 months away. I have no idea if Nanoco's CFQD tehcnology has improved over time (as the company keeps almost everything under the rug). If so, what improvements?

@intrusivethought

“8 years of lost commercialisation, primarily due do their technology being stolen by the entity accounting for 90% of the market. You might have missed it.”

1. Shame on Nanoco for partnering with Samsung without a contract and significant upfront and milestone payments. It is shocking to say the least. Worse yet, Nanoco let Samsung off the hook again by paying pittance for their blatantly wilful infringement. So what’s Samsung’s take on all this. It turns out to be cheaper to steal. Indicative of the management’s complete lack of experience and business acumen.

2. If Nanoco’s CFQD were better in pricing and quality, Samsung might have used them for their QLED TVs. Even LG tried making CFQD TV with Dow (Nanoco’s licensee) in 2015 but decided to go with OLED instead. Quality and pricing issues?

3. The remaining 10% (now believed to be 30%+) are using cadmium-based QDs because they are cheaper. Smart experienced management would have looked into turning them into customers a) by making cheaper CFQD, b) improving CFQD quality so that higher price is justified, c) supplying cadium based QDs (if you can’t beat them, join for now), etc.

@NGR

You have a tunnel. You can never achieve breakthrough improvement with the same people using the same process that has not worked for 20+ years. When your doctor prescribes medication and you don't get any better year after, do you keep seeing the same doctor and continue the same medication? I am not convinced that Nanoco's problem is all due to external issues beyond their control or that the current D&O has the necessary skillsets/experience/acumen/etc to succeed (if they do have, show me).

@ddubya:

"On the other hand, I fail to see that we can trade below cash forever, provided that orders (even small ones) are received."

I think you are expecting too little from your investment. Look at the track record of the proposed chairman at Acacia in the presentation. $4M revenue growing to $251M, loss turning into $50M net income, $110M market cap becoming $2.1B. Just imagine NANO's SP becoming 20x. Whist past performance doesn't guarantee future performance, I have no doubt the new board has a far better chance of drastically increasing shareholder value than the current one.

@intrusive,

I cannot respond to this type of nonsense comments. Why don't you select specific points in my post (I numbered them for easy reference) and take them apart based on facts?

"The full settlement amount was $150m. Sure that included sale of IP, but unlikely that IP was of value to Nancoco going forwards anyway as from what I could observe it revolved around putting the dots onto film rather than the actual dots themselves."

Are you suggesting the board is cooking the books as the 118 patents are likely of little value? I also infer from your statement that one of the 5 patents litigated against SS and validated by PTAB is of little value and should not have been included in the lawsuit. If they are of little value, the board must have misrepresented when they stated last oct that a core of 503 patents/apps with the most commercial potential were kept while removing some 80 with no such value or in territories of little interest.

"The LOAM/RG loan were related to keeping the company solvent whilst they await commercial traction it had nothing to do with pursuing the case against Samsung”

Yes, the loan had nothing to do with litigation but then why did they get a huge bonus from the litigation settlement?

You need to look at the big picture in my post and see a pattern of repeated decisions that ended up benefitting LOAM/RG every time, while screwing other shareholders.

@nanonano:

"The full settlement amount was $150m. Sure that included sale of IP, but unlikely that IP was of value to Nancoco going forwards anyway as from what I could observe it revolved around putting the dots onto film rather than the actual dots themselves."

Are you suggesting the board is cooking the books as the 118 patents are likely of little value? I also infer from your statement that one of the 5 patents litigated against SS and validated by PTAB is of little value and should not have been included in the lawsuit. If they are of little value, the must have lied when they stated oct last year that

a core of 503 patents/apps with most commer

"The LOAM/RG loan were related to keeping the company solvent whilst they await commercial traction it had nothing to do with pursuing the case against Samsung. So with the second payment due in a few months looking at about $90m less some tax, which I believe is what was stated. "

Along with 16 others covering the same invention (aka “patent family”). Chris Richards states that “the settlement value is almost three times our own low case damages model” and “a transformational amount of value has been generated for shareholders”. This statement makes no sense. First, how the same settlement value can be both “almost three times” Nanoco’s own low case damages model and “the lower end of the range of expectations for a successful jury trial outcome” in the 9/1/23 RNS? Second, 21.5p (share price on the filing date of the Samsung lawsuit) + transformational settlement value = 18.24p as of 30/6/23. £55M enterprise value (on the filing date) + transformational value = negative £10M. Amounts payable from $65M settlement/license = $5M (Esptein as advisor) + $1M (Edelman as advisor) + $5.9M (bonus to LOAM/RG) + $55M (GLS for litigation financing) = $66.9M = $1.9M loss for Nanoco.

9. 20/10/22: Nanoco releases unaudited preliminary results for the year ended 31/7/22.

10. 4/11/22 – 3/1/23: LOAM sells 9.6M shares during the two month period.

11. 5/1/23: On the eve of trial as the term sheet is being finalized for settlement with Samsung, the board secretly holds a private phone call with representatives of LOAM and RG. According to Chairman Chris Richards, the call took place in the context of “negotiating with a bunch of parties with a view to concluding a deal with Samsung”.

12. 6/1/23: RNS is released announcing agreement to a settlement term sheet without disclosing financial details (“inside information”), instantly boosting the share price to 72.6p. LOAM sells 12.5M shares (largest one day sale, representing 43% of the day’s trading volume) at the highest prices in recent years, causing the share price to decline to close at 55.8p. Had the inside information been disclosed as required by MAR, the share price would have crashed.

13. 9/1/23 (next trading day): Another RNS is released announcing that the gross settlement value provides “a fair outcome” and is “expected to be towards the lower end of the range of expectations for a successful jury trial outcome as previously guided by the Company”. How do shareholders interpret this statement? First, the board has never previously guided what the lower end of the range is but only stated repeatedly that the settlement value would be “transformational”. Second, the only semi-official guidance publicly available is $200-250M (sometimes $200-300M) from Edison and TPI, both paid by Nanoco, as low end damages estimates for a successful jury trial, covering past damages for the US only. Third, according to CEO Brian Tenner, “fair settlement” means global coverage (not just the US) for full life of the patents (not just past damages), whether to 2028 or 2035. Global coverage means 3 times the US, and full life to 2028 means at least 2 to 3 times past damages. $200-250M * 3 * 2 to 3 = $1.2B to $2.25B. For comparison, here is one third-party damages analysis showing a low estimate of $735M and a medium estimate of $3.68B based on public information from Nanoco, Edison and TPI: https://www.upsidedownsidecapital.com/p/nanoco-group-plc-us-trial-against

14. 9/1/23 – 17/1/23: The second RNS slows the price decline. LOAM sells additional 12.7M shares during the 9 day period. LOAM is done selling 2 weeks before the next RNS, crashing the share price.

15. 3/2/23: RNS is released announcing financial details of the settlement ($65M license/settlement for global coverage for full life of 350+ core patents plus unrelated $85M asset sale involving ‘’a number of non-core patents”), disappointing shareholders and crashing the share price to 27p, which continued to decline ever since to 18.24p as of 30/6/23. It is later uncovered that “a number of non-core patents” are 118 patents, including one of the 5 core patents litigated against Samsung alon

So much information, misinformation and disinformation. Here is how I connect the dots.

1. 15/7/20: Over-subscribed capital raise of £3.4M (including £2.14M from LOAM) at 17.5p. Compare with #3 below.

2. 20/5/21: Nanoco’s damages expert (Roy Weinstein) submits a damages report to court, including three damages amounts (“inside information”), low-end ($43.9M), medium ($136.2M) and high-end ($412M), under three damages models. MAR guidelines for when immediate disclosure of inside information is likely to prejudice the issuers’ legitimate interests (hence allowing delayed disclosure) and when delayed disclosure is likely to mislead the public (hence requiring immediate disclosure) are on pages 4 and 5 https://www.esma.europa.eu/sites/default/files/library/2016-1478_mar_guidelines_-_legitimate_interests.pdf. Whilst delayed disclosure of the damages amounts is likely to mislead the shareholders, the board decides against disclosure (until 28/4/23 in connection with responding to Hamoodi’s 10/3/23 letter).

3. 15/7/21: LOAM and RG have 38% in combined holding, which is sufficient to control the 2021 AGM with 45.8% voting rate. The company obtains a £3.15M loan exclusively from LOAM and RG, who end up realizing 179% return in 2 years and 67% IRR. There is no competitive bidding process for the loan, and there is no capital raise from the equity market (whilst the share price is 19.5p, 11.4% higher than 12 months earlier).

4. 19/8/21: Henry Turcan of LOAM (the largest shareholder with 27.04%) is appointed to the board effective 1/9/21: “The additional capital markets experience he brings to the Company will further support the Board's efforts as we work to deliver maximum shareholder value from our organic business activities and litigation against Samsung during a potentially transformational period for the Company”. What does capital market experience have anything to do delivering maximum value from the organic business or the Samsung litigation?

5. 1/9/21 – 12/9/22: As a board member, Turcan secretly participates in the company’s litigation sub-committee, managing the Samsung litigation with access to MNPI, including numerous settlement offers from Samsung. LOAM sells 13M shares during this period.

6. 1/7/22: The court publicly releases Nanoco’s damages report including the damages amounts after redacting sensitive Samsung information. The board again decides not to publicly announce the damages amounts or the availability of the report. To justify non-disclosure, CEO Brian Tenner claims in the 24/2/23 meeting with Hamoodi that he had never seen the damages amounts.

7. 12/9/22: Turcan of LOAM abruptly resigns from the board effective immediately (compared with 2 week advance notice for his appointment to the board).

8. 20/9/22: 8 days after Turcan’s resignation and 30 days before the announcement of annual financial results, “close period” begins, restricting stock trading by PDMR/directors for the next 30 day

Https://www.allenovery.com/en-gb/global/blogs/investigations-insight/the-fca-annual-report-for-2021-22-enforcement-highlights#:~:text=Enforcement%20investigations%20are%20still%20lasting,or%20just%20over%20two%20years).

Enforcement investigations are still lasting for an average of just short of 2.5 years, with 76 of the FCA’s current enforcement cases having been open for 800 or more days (or just over two years).

The fact LOAM has not taken any disciplinary action means nothing. If every firm is left alone to police its own staff, there is no need for the FCA, SFO, etc. Whatsapp and other private P2P apps are prohibited by the FCA but many are using them or otherwise don't record

@Maxi19:

“The fact is that it is extremely unlikely that any of the resolutions will pass give[n] LOAM and the board's shareholdings”

How do you come to that conclusion? LOAM’s 7.1% (13.1 – 6 they don’t control) + board’s 4.1% = 11.2%. Including the upcoming campaign, my guess is Hamoodi would probably get 3 to 4 times LOAM + board. Current shareholders who bought shares since the company went public in 2009 except June ’19 - Feb ’21 have lost money. Investors who participated in last year’s capital raise at 37p (all misguided by transformational/fair settlement) lost money. The current share price reflecting transformational value received from the settlement is lower than when the lawsuit was filed. All these aside, the current EV clearly indicates the shareholders (except for the few on this BB working for the board) have no confidence in D&O, whose negative value is the sum of £10M (negative EV) + organic business + 370 core patents. There is no hope for the board. It’s probably in their best interest to resign now and try to call for peace with Hamoodi et al if not too late.

“What I am proposing is that we vote in favour of the resolutions to remove Tenner and Richards, but vote against the others. Now is not the time to replace the board, so in the unlikely event that Tenner and Richards are actually removed the remaining directors are not going to do an asset sale.”

Why do you assume the new board will sell the business, especially when there are commercial orders by year end or breakeven on the horizon? It would be insane and breach of fiduciary duty to do so. Regardless, the new board cannot arbitrarily decide to sell without shareholder approval.

“the attempt to gaslight shareholders by saying that there was guidance and low end models, repeating the phrase "transformative", not acknowledging the share price carnage and generally being evasive in their responses has been really shoddy and unbecoming of the position of CEO and Chairman.”

Shoddy is an understatement. Those were blatant lies designed to prolong inflated share prices, enabling those with inside info to benefit. I suspect more details will come out in due course… it just takes time.

Posted by starr007 today on ADVFN

According to the Market Abuse Regulation, Edison's reports are inside information Nanoco is responsible for.

https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014R0596&from=EN

(28) Research and estimates based on publicly available data, should not per se be regarded as inside information and the mere fact that a transaction is carried out on the basis of research or estimates should not therefore be deemed to constitute use of inside information. However, for example, where the publication or distribution of information is routinely expected by the market and where such publication or distribution contributes to the price-formation process of financial instruments, or the information provides views from a recognised market commentator or institution which may inform the prices of related financial instruments, the information may constitute inside information [Edison reports = inside information]. Market actors must therefore consider the extent to which the information is non-public and the possible effect on financial instruments traded in advance of its publication or distribution, to establish whether they would be trading on the basis of inside information.

Nanoco’s annual report says the company provides liability/D&O insurance and “qualifying third party indemnity provision” to directors. So what's covered?

https://www.legislation.gov.uk/ukpga/2006/46/section/232

Under section 232 of the Companies Act, the company is prohibited from providing any liability coverage for negligence, default, breach of duty or breach of trust, with two exceptions: insurance and “qualifying third party indemnity provision”, neither of which covers fraudulent, dishonest or criminal acts, whether related to insider dealing, inside info sharing, misleading statements/impressions, failure to disclose, abuse of position, breach of fiduciary duty, etc. Fraudulent/dishonest/criminal acts can result in up to 10 years of imprisonment if convicted besides damages/fines. “Qualifying third party indemnity provision” does not cover 1) derivative lawsuits, 2) damages/fines/etc, and 3) costs of defending criminal or civil proceedings (if already paid, they must be reimbursed) upon conviction or judgment.

Lost value in shares purchased since mid March 2021 (95%+ of which lost value) based on expectations for a transformational/fair settlement, $5M+ in extra cost for the related party loan, $5M to Epstein, $1M to Edelman, etc. can add up to $110M+ in personal liabilities. This is an interesting time for shareholders. Let’s see how all this plays out.