No images? Click here The Ever Stranger Saga of Smiles Inclusive Ltd [Smiles]. Smiles was suspended from trading on The Australian Securities Exchange [ASX] on 2nd March 2020 having not satisfied the requirement to lodge half yearly audited financials on time. Despite having raised a modest amount of additional capital on 11th March 2020 it remains suspended. It last traded at 3.5 cents per share, a huge fall from its IPO subscription price of $1.00 per share in April 2108. We may assume that its auditors will need to be very sure indeed of its continuing viability before they sign off on its financials, a pre-requisite for the ASX to lift its suspension. According to a press release by City Public Relations of 17th April 2020: “Leading senior dentists responsible for overseeing two-thirds of Smiles sales quit the company with immediate effect”. The press release quotes Dr Makepeace, Dr Syed, Dr Walsh and Dr Camacho who have made scathing criticisms of Smiles senior management. Smile’s recent CEO, Mr Tony McCormack, resigned suddenly on 14th April 2020. No reason was given and we note that Mr McCormack had been granted 2.7 million share options recently on 28th January 2020 suggesting that his sudden departure on 14th April was unusual. No mention was made of his contractual entitlements in the announcement to the ASX. Ms Michelle Aquilina has stepped up from deputy CEO to CEO. She was unwilling to speak about Mr McCormack’s sudden departure when spoken to on 18th April 2020. She disagreed with the claim in the City Public Relations press release as to the number of leading senior dentists who have quit but did not state what she believes the actual number to be. She indicated that an unnamed investor is prepared to invest an unspecified amount of new capital into Smiles on unspecified conditions. When spoken to, Dr Camacho and Dr Arthur Walsh both confirmed that they had quit their employment/contractor relationships with Smiles claiming breach of contract and indicated that they were in agreement with City Public Relations press release. Dr Camacho indicated that he had taken legal advice and that substantial material had been forwarded to ASIC. Dr Walsh indicated he had met personally with Smiles chairman, Mr David Usasz, on 15th April 2020 and advised him directly of significant concerns as to the conduct of the company. Synstrat also spoke to veteran dentist Dr George Nicholls who sold his two Brisbane practises to Smiles and who has only 6 weeks of his work out contract with Smiles to complete. He indicated that he would not be continuing beyond his contractual obligations. He indicated that the two practises in which he did a combined 55 hours of clinical work per week, pre COVID-19, produced nearly $4 million of fees per annum of which he produced the lion’s share. When he retires it is unlikely that the fee level can be sustained. While there are many dentists seeking employment those who can produce well above $1million of fees per annum are rare and invariably are operating their own practises. Dr Nicholls indicated the staff had taken long service and annual leave accrued entitlements which had been financially adjusted on sale of practises. Discussions with Dr Camacho, Dr Walsh and Dr Nicholls, indicated a pattern of late payments to laboratories, dental suppliers and contractors consistent with a lack of adequate cashflow. Smiles succession of announcements concerning various capital raisings, the sale of two of its practises and the closure of two weak practises, as well as the previous delay in having its auditors sign off the 2019 accounts [Refer to the company announcements to ASX] all point to a company which has been unable to trade profitably. Michelle Aquilina may have made a courageous decision to accept the role of CEO as well as appointment as a director of the ASX listed company Smiles Inclusive Limited and of its subsidiaries. Announcement to ASX refers. At this stage Smiles Inclusive Limited’s long term survival as a viable dental services business post COVID-19 appears to be doubtful. There has been no indication that a legal class action has been terminated, indeed it would be surprising if it did not continue. Who it might embrace is as yet unclear but the lawyers will certainly have checked statements made in its prospectus inviting subscription to its Initial Public Offering and any statement made by investigating accountants, stock brokers, directors and company office bearers inducing investors to subscribe to its Initial Public Offer or to subsequent capital raisings. Checking the History. For previous commentary on Smiles Inclusive Ltd from the issue of its prospectus to its Initial Public Offering and subsequent events visit www.synstrat.com.au and go to Dental Publications beginning in March 2018. Best Wishes to all dentists, Graham Middleton Services offered by Synstrat to dentists include practice valuation, practice accounting, strategic advice on practice acquisition, sale, partnership or associateship, financial planning including self-managed superannuation fund administration and advice and other services. The Synstrat Group are Australia's most experienced Dental practice business advisers, accountants, practice valuers and licensed financial advisers. The information contained herein is of a general nature and no specific action should be taken without individual advice. 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