Smiles Inclusive runs a group of dental practices. Photo: iStock
Smiles Inclusive runs a group of dental practices. Photo: iStock

Smiles falls into administration

GOLD Coast dental group Smiles Inclusive has called in administrators after failing to meet multiple deadlines to pay the NAB back more than $12 million.

The Burleigh Heads-based company on Monday announced it had appointed Luci Palaghia and Tim Heenan of Deloitte Restructuring Services as voluntary administrators to Smiles Inclusive Ltd and Totally Smiles Pty Ltd.

The Bulletin understands staff and joint-venture partners were told at a 5pm Zoom meeting on Monday.

The move followed its main lender NAB cancelling its credit facilities and demanding full payment.

Smiles Inclusive Chairman David Asasz.
Smiles Inclusive Chairman David Asasz.

Smiles had previously agreed with the NAB to pay back more than $12 million of $19 million owed by November 3 but missed the deadline.

Chairman David Usasz said it had been unable to refinance the NAB debt in the required time frame.

"The Board will work with the Voluntary Administrators to put forward a Deed of Company Arrangement proposal for the benefit of all stakeholders," he said.

CEO Michelle Aquilina said they made the decision to call in administrators to "secure the future of Totally Smiles".

The Australian Securities & Investment Commission has prevented Smiles from issuing a “reduced-content” prospectus.
The Australian Securities & Investment Commission has prevented Smiles from issuing a “reduced-content” prospectus.

"Industry demand for oral health services remains strong and we will continue to provide services to the community across our network as we work through this process," she said.

Ms Palaghia said they will be seeking expressions-of-interest for the sale or recapitalisation of the business.

Smiles listed on the ASX in March, 2018 with a network of dental clinics in an IPO that valued shares at $1 each.

Since then it has been beset by difficulties including poor financial results, boardroom battles with former dentists, legal cases and a revolving door of executives.

Shares were suspended from trading on the ASX in March this year when they were 3.5c after the company failed to deliver its half-year results.

Smiles announced in August a plan for the recapitalisation of the company and repayment of its NAB facilities.

However, the plan has been plagued with difficulties.

ASIC was forced to intervene to prevent the company from issuing what is called a "reduced content prospectus" for an $8 million capital raising and then Smiles' own auditor refused to sign off on its half-year accounts when they were finally issued.

 

EARLIER: NOVEMBER 4

 

EMBATTLED Gold Coast dental group Smiles Inclusive has failed to update the market on whether or not it met Tuesday's deadline to repay NAB $12 million in outstanding debt.

On October 28 Smiles announced through the ASX that it had agreed with the NAB to pay back more than $12 million of $19 million owed to the bank by November 3.

This involved the NAB forgiving more than $6 million in debt upon receipt of the $12 million-plus payment, which included credit card and JobKeeper facilities.

In the same announcement on October 28, Smiles' auditor KPMG refused to sign off on its half-yearly accounts for FY20.

Smiles Inclusive runs a group of dental practices. Photo: iStock
Smiles Inclusive runs a group of dental practices. Photo: iStock

KPMG refused to issue a conclusion on the half-year report because it was unable to gather sufficient evidence to support assumptions upon which Smiles claimed to be a going concern.

Part of the reason for the disclaimer was that Smiles had flagged potential financiers would fund the repayment but failed to provide KPMG with information to back up its claim.

"A binding written agreement regarding the quantum, timing, terms and conditions of this arrangement was not available to us," KPMG said in its report.

"Additionally, evidence regarding the ability of the potential financiers to honour the commitment, in the timeframes required by the Group was not available to us."

On Wednesday Smiles did not update the market on whether or not it was able to make the payment.

A Smiles Inclusive spokesman said: "The Company will update shareholders in due course via ASX."

If Smiles has failed to repay the NAB, it won't be the first time it has missed a deadline.

On August 20 the company said it would pay back the NAB by September 11.

That deadline was later moved to November 9 before being moved forward to November 3.

Smiles shares have been suspended from trading on the ASX since March 2.

 

EARLIER: OCTOBER 28

 

GOLD Coast-based dental group Smiles Inclusive has finally announced its half-year results for FY20 close to eight months after they were due to be released.

The results showed a net statutory loss of $13.6 million for the six months to December 31 - up from a $1.6 million loss for the previous period.

Included in the loss were non-cash items including impairment of goodwill, property, plant and equipment totalling $5.5 million.

Auditor KPMG refused to issue a conclusion on the report because it was not able to gather sufficient evidence to support assumptions upon which Smiles claimed to be a going concern.

Smiles Inclusive has released its half-year results nearly eight months after they were due.
Smiles Inclusive has released its half-year results nearly eight months after they were due.

KPMG said these assumptions included Smiles flagging potential financiers to fund the repayment of its NAB facility and raise additional working capital.

"A binding written agreement regarding the quantum, timing, terms and conditions of this arrangement was not available to us," KPMG said.

"Additionally, evidence regarding the ability of the potential financiers to honour the commitment, in the timeframes required by the Group was not available to us.

"Accordingly, we consider to not have gathered sufficient appropriate evidence regarding the implications of this on whether the going concern basis of preparation is appropriate."

Smiles said it was in advanced negotiations with potential funders to repay NAB $12 million plus credit card and other expenses by November 3 - a deadline six days earlier than previously announced.

KPMG also raised concerns about a proposed rights issue where Smiles was seeking to raise $8 million ($7.6 million net of fees) to pay back NAB.

It referred to ASIC's move to prevent Smiles issuing a prospectus for its capital raising without offering potential investors comprehensive information on its financial position.

KPMG said there uncertainty on whether Smiles could successfully raise the minimum amount of funds to complete the capital raising.

 

EARLIER: OCTOBER 20

 

MORE pressure has been heaped on the board of embattled Gold Coast dental group Smiles Inclusive with news that is has slightly more than two weeks to pay back NAB $12 million.

The company issued a statement to the ASX this morning announcing that under revised terms the NAB has agreed to discharge Smiles facilities totalling more than $19 million if it receives $12.347 by November 9.

Smiles missed the original deadline of September 11 announced as part of a broader plan to recapitalise the company by raising funds.

The company, headed up by CEO Michelle Aquilina, said the new agreement remained part of its recapitalisation plan and it is in "advanced negotiations" with funders to facilitate payments to NAB.

Smiles Inclusive has slightly more than two weeks to repay $12 million. Photo: iStock
Smiles Inclusive has slightly more than two weeks to repay $12 million. Photo: iStock

It follows action taken by ASIC earlier this month to prevent Smiles issuing a prospectus for its upcoming $8 million capital raising without offering potential investors comprehensive information on its financial position.

ASIC restricted the company from issuing what was called a "reduced-content prospectus" to raise new funds because of its failure to lodge the half-year results.

Smiles previously flagged plans to raise $8 million from investors fully underwritten by Aitken Murray Capital Partners by "on or around" December 7.

The plan was conditional on AMCP accepting the prospectus.

Smiles Inclusive Chair David Asasz.
Smiles Inclusive Chair David Asasz.

Smiles shares have been suspended from trading on the ASX since March 2 and ASIC has filed documents with the Magistrates Court seeking orders for the accounts

A hearing has been set for November 10 although ASIC has confirmed it would withdraw the case if it lodged its accounts no later than a week before the hearing date.

Smiles' last cashflow report for the month of August showed positive cashflow of $42,000 although this was partly achieved through $671,000 in JobKeeper payments from the Federal Government.

The NAB deadline comes after former dentists at the company - Dr John Camacho, Dr Philip Makepeace and Dr Arthur Walsh - cancelled a planned meeting on October 23 where they were seeking to dump the current board, including chairman David Usasz and CEO Michelle Aquilina.

The Australian Securities & Investment Commission has prevented Smiles from issuing a “reduced-content” prospectus.
The Australian Securities & Investment Commission has prevented Smiles from issuing a “reduced-content” prospectus.

One of the reasons for the cancellation according to the three dentists was Smiles issuing 10.271 million shares at 2.5¢ per share to raise $256,000 for working capital and to pay back debt.

The dentists said this was not disclosed to shareholders and had been done to help shore up support for the board prior to the meeting.

They say they intend to reschedule the meeting no later than December 21.

Smiles said the meeting was an unnecessary and costly distraction from efforts to turnaround the business.

It said it had enough proxy votes to defeat the resolutions to replace the board meaning the result of the meeting was a foregone conclusion.

 

EARLIER: OCTOBER 20

 

THE hits just keep coming for embattled Gold Coast-based dental group Smiles Inclusive.

The company had its shares suspended from trading on the ASX in March after it failed to deliver its first-half results for FY20.

Then in September corporate regulator ASIC served it with documents filed in the Magistrates Court seeking orders for its half-year accounts in line with the Corporations Act.

The latest development on Tuesday involved ASIC intervening to ensure the company releases comprehensive information on its financial position when raising capital.

ASIC restricted the company from issuing what was called a "reduced-content prospectus" to raise new funds because of its failure to lodge the half-year results.

Smiles Inclusive Chairman David Asasz.
Smiles Inclusive Chairman David Asasz.

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Smiles previously flagged plans to raise $8 million from investors fully underwritten by Aitken Murray Capital Partners by December.

The plan was conditional on AMCP accepting the prospectus.

ASIC said the ability to issue the reduced-content prospectus, described as containing information relating only to the particular offer itself, was a privilege and not a right.

"Where a company fails to comply with its periodic disclosure obligations in a full, accurate and timely manner, ASIC will intervene to ensure that retail investors are protected," the regulator said in a statement.

"In such circumstances, subsequent fundraisings should occur only with the benefit of a full prospectus so that there is adequate disclosure of a company's prospects and financial position."

ASIC is taking court action against Smiles Inclusive.
ASIC is taking court action against Smiles Inclusive.

A Smiles spokesman said: "Smiles Inclusive can proceed with the planned capital raising on the basis of working with the regulators and releasing a more detailed prospectus."

The development followed former dentists at the company - Dr John Camacho, Dr Philip Makepeace and Dr Arthur Walsh - cancelling a planned meeting where they were seeking to dump the current board, including chairman David Usasz and CEO Michelle Aquilina.

Dr Makepeace said they cancelled the meeting, scheduled for Friday, because Smiles had failed to provide an up-to-date share register ahead of the EGM and had failed to disclose the issue of more than 10 million new shares.

Dr Walsh said the meeting would now be held in December, which would provide time for shareholders "to make a properly informed decision".

However, Smiles said that the company had already received enough proxy forms to defeat the resolutions to replace the board meaning the result of the meeting was a foregone conclusion.

Smiles reported a loss of $31 million for FY19.

 

EARLIER:

 

UNDER-SIEGE Gold Coast dental group Smiles Inclusive has denied accusations it issued 10 million shares to stack the deck in its favour ahead of a crucial boardroom battle next week.

On October 15 the Burleigh Heads-based company published a statement to the ASX saying it had issued 10.271 million shares at 2.5¢ per share to raise $256,000 for working capital and to pay back debt.

The share issues did not require approval from shareholders as it was under the 15 per cent threshold of total shares allowable under listing rules.

The announcement brought forth accusations from former Smiles dentists Dr John Camacho, Dr Arthur Walsh and Dr Philip Makepeace that the share issue was intended to shore up support for the board ahead of a key vote on October 23.

The three dentists were seeking to have the board replaced at next Friday's meeting saying it had let shareholders and, in particular, dentists down by failing to live up to its promises in the company prospectus.

Dr John Camacho.
Dr John Camacho.

Since listing in March 2018 the company had been plagued by problems, including lawsuits, poor financial results and boardroom battles.

Shares had been suspended from trading since March and ASIC had taken legal action against the company for its failure to release its FY20 first-half results.

In a statement Dr Camacho, Dr Makepeace and Dr Walsh said the share issue had only been disclosed after they asked for a copy of the register ahead of the meeting.

"Smiles directors are digging themselves an ever-deeper hole," they said.

"The Smiles fiasco is doing untold damage to the hard-earned reputation, credibility and market values placed on the dental industry. We are committed to holding the perpetrators to account."

Smiles investors can be forgiven for a serious case of toothache since investing. The company’s shares were listed at $1 in 2018 and were suspending from trading at 3.5c.
Smiles investors can be forgiven for a serious case of toothache since investing. The company’s shares were listed at $1 in 2018 and were suspending from trading at 3.5c.

A Smiles spokesman denied the company had breached ASX disclosure rules.

He said the statement from the dentists was "misleading and deceptive".

"The shares issued by Smiles were part of the capital raising program that Smiles has previously announced," he said.

"This raising is for the purposes of funding the turnaround program adopted by Smiles' board, which is now seeing results.

"The number of shares issued total approximately 6% of the shares in the company. The proposition that the issuing of the shares was designed to defeat the resolutions to be proposed at the EGM on 23 October is simply not true."

Earlier this month Smiles announced Aitken Murray Capital Partners (AMCP) had agreed to fully underwrite a rights issue raising $8 million at 2.5c per share, which would be used to pay back its main lender NAB owed more than $12 million.

Smiles said it expected the rights issue to completed "on or around" December 7.

The raising would see the number of Smiles shares triple with 320 million new shares issued.

 

EARLIER:

 

UNDER siege Gold Coast dental roll-up Smiles Inclusive has announced a new $8 million rights issue to pay back its main lender amid a looming board battle with rebel ex-dentists and court case with the corporate regulator.

The Burleigh-based company, which announced an FY19 loss of $31 million, today announced Aitken Murray Capital Partners (AMCP) has agreed to fully underwrite a rights issue raising $8 million at 2.5c per share, which will be used to pay back NAB.

Smiles said it expects the rights issue to completed "on or around" December 7.

The raising will see the number of Smiles shares triple with 320 million new shares issued.

The company has already failed to meet two deadlines agreed with NAB - the first on September 11 to pay back NAB $12.347 million and the second to close its accounts with the lender by September 30.

Smiles Inclusive Chairman David Asasz.
Smiles Inclusive Chairman David Asasz.

Smiles said while NAB has not granted an extension to the repayment dates, it remains in "productive discussions" with the bank and expects to provide an update in "coming days".

It said it is working to refinance the $4.347 million the balance of the NAB debt and ensure it has working capital to "meet its objectives going forward".

Smiles said it has repaid its temporary JobKeeper facility held with NAB for September.

Chairman David Usasz said the progress the company has made in turning around the business "has been instrumental" in enabling the company to sign the underwriting agreement.

AMCAP has agreed to subscribe to any shortfall in the rights issue and will take a 5 per cent fee of about $400,000 plus GST for undertaking the rights issue.

Smiles investors can be forgiven for a serious case of toothache since investing. The company’s shares were listed at $1 in 2018 and were suspending from trading at 3.5c.
Smiles investors can be forgiven for a serious case of toothache since investing. The company’s shares were listed at $1 in 2018 and were suspending from trading at 3.5c.

"Conditions to the Underwriting include AMCP being satisfied with due diligence and the Company's prospectus," Smiles said.

A prospectus will be lodged with ASIC and the ASX "in due course".

News of the capital raising comes as the Smiles board, including Mr Usasz and CEO Michelle Aquilina, faces a challenge from ex-Smiles dentists Dr Camacho, Dr Philip Makepeace and Dr Arthur Walsh at an EGM on October 23.

The three are proposing to replace a board they say has not delivered on its promises.

The dentists also say there is a need for a forensic accounting firm to go through the books to ascertain a "true state of the finances".

Dr John Camacho is one of three dentists aiming to dump the board on October 23.
Dr John Camacho is one of three dentists aiming to dump the board on October 23.

Smiles previously said the meeting is an "unnecessary and costly distraction for the Company when the performance of the business is beginning to improve".

The Smiles board is also facing another threat from corporate regulator ASIC which has served it with documents filed in the Magistrates Court seeking orders for its half-year accounts in line with the Corporations Act.

A hearing is set for November 10.

Smiles shares have been suspended from trading on the ASX since March 2 after it failed to lodge its accounts.

Today Smiles said it expects to lodge its half-year accounts this month.

 

EARLIER:

 

THE corporate regulator is taking court action against embattled Gold Coast dental group Smiles Inclusive to force it to release its half-year financial results due more than six months ago.

On March 2, Smiles shares were suspended from the ASX after it failed to lodge its financial report for the six months to December 31. Since, the Burleigh Heads company had repeatedly said it was close to finalising the report.

On Thursday Smiles, to ASX, said the Australian Securities and Investments Commission had served it with documents filed in the Magistrates Court seeking orders for its half-year accounts in line with the Corporations Act.

A hearing was set for November 10.

ASIC is taking court action against Smiles Inclusive.
ASIC is taking court action against Smiles Inclusive.

Smiles said ASIC had confirmed it would withdraw the case if it lodged its accounts no later than a week before November 10. The company, working on a plan to raise capital and pay back lender NAB more than $12 million, said it expected to be in a position to lodge its accounts before the hearing.

 

EARLIER: SEPTEMBER 24

 

EMBATTLED Gold Coast dental group Smiles Inclusive has reshuffled its board again - this time replacing ex-Morgans executive Peter Evans with one of the founding directors from the Pacific Smiles Group.

Mr Evans is the latest in a long list of directors and executives that have come and gone from the Burleigh Heads-based company since it first listed in March 2018.

They include founding CEO Mike Timoney who was dumped from the board at an EGM last year, former deputy CEO Tracy Penn, who also left in 2019, and ex-CFO Emma Corcoran.

Mr Evans joined the board in August 2018 as an independent non-executive director following a 30-year career as a stockbroker.

Stockbroker Peter Evans pictured when he worked at Morgans.
Stockbroker Peter Evans pictured when he worked at Morgans.

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Mr Evans was in charge of the one-man independent committee that co-ordinated last year's EGM where shareholders voted on boardroom changes, including the removal of Mr Timoney.

Mr Timoney and allies including Dr John Camacho had called for the meeting to spill the board after Mr Timoney was removed as CEO following poor financial results.

They had criticised Mr Evans for not being independent due to his ties to Morgans, which backed the board during the spill saying it was disappointed with the company's performance under Mr Timoney.

The new non-executive director at Smiles is Dr Genna Levitch, who was an executive director at Pacific Smiles Group from 2001 to 2007.

Former Smiles CEO Mike Timoney. Pic Annette Dew
Former Smiles CEO Mike Timoney. Pic Annette Dew

In a statement on September 24, Smiles said Dr Levitch was one of Pacific Smiles' founding executives, co-director and shareholder in the company.

Smiles said he had developed the strategy to grow the company from three practices with an annual turnover of $5 million to 17 practices generating revenue of $35 million.

It said Dr Levitch had early on in his career started a dental centre in Morisset on the North Coast in NSW and opened a practice in Weston in the Hunter Valley before co-founding a healthcare design and construction, which he sold out of in 2013.

Dr Levitch has purchased four million shares in Smiles at an undisclosed price.

Smiles chairman David Usasz said welcomed the appointment saying it would bring "significant financial and strategic expertise" to the company.

He thanked Mr Evans for his service to the board.

The appointment of Dr Levitch is effective from September 23 and comes after Smiles announced October 23 as the date for an EGM where shareholders will again vote on whether to retain or dump the board, including Mr Usasz and CEO Michelle Aquilina.

The meeting has been called for by ex-Smiles dentists Dr Camacho, Dr Philip Makepeace and Dr Arthur Walsh who say change is needed as the board has not delivered on its promises and there is a need for a forensic accounting firm to go through the books to ascertain a "true state of the finances".

In a statement on September 23 Smiles said the meeting is an "unnecessary and costly distraction for the Company when the performance of the business is beginning to improve".

Smiles shares are currently suspended from trading on the ASX as it has failed to file its results for the first half of FY20.

The company is currently undertaking a plan to recapitalise the company through a capital raising and paying back its lender NAB $12.347 million by the end of the month.

 

EARLIER: SEPTEMBER 15

 

SHAREHOLDERS and creditors to embattled Gold Coast dental group Smiles Inclusive have been left in the dark about how it plans to pay back its lender $12 million and recapitalise the company, a boardroom contender says.

Dr John Camacho is one of three ex-dentists at Smiles who intends challenging for a board position of the listed company on October 8.

Dr Camacho, Dr Arthur Walsh and Dr Philip Makepeace want to address what they say are substantial financial and corporate issues at the company.

They say that the board has not delivered on its promises and there is a need for a forensic accounting firm to go through the books to ascertain a "true state of the finances".

Smiles shares have been suspended from trading on the ASX since early March after it failed to deliver its half-year results.

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The company's full year ­result for FY19 showed a loss of $31 million.

Last month the company announced a plan to close its accounts with NAB by the end of this month after paying back $12.347 million of its $19 million debt by September 11. Smiles said it was part of a broader plan to recapitalise the company through a capital raising.

It said it was in advanced negotiations with a professional underwriter with a view to finalising the raising by the end of the month.

However, on Monday Smiles said it had not been able to meet the September 11 deadline and had asked NAB for an extension.

Dr Camacho said shareholders and creditors had no clear view of how the company would pay back NAB.

"All we have been told for months is that they are in the advanced stages of a recapitalisation," he said. "Beyond that there has been no insight, no actual discussion around how that is going to happen."

He said any capital raising would involve a massive dilution of existing shareholders.

The shares last traded at 3.5c but the last recorded sale involved former CEO Mike Timoney selling off his stake at a record low of 1.1c per share.

Smiles has 150 million shares on issue. If it chooses to raise $12 million at 2c per share that would involve issuing 600 million more.

 

EARLIER:

 

SMILES Inclusive has admitted to another reporting blunder - this time for stating a loan was repayable by December and then changing the date to after June this year.

The admissions are contained in Smiles' response to another grilling by the sharemarket operator from Friday over its disclosure obligations.

The Burleigh Heads-based company was asked to explain why it stated in its annual report released in November last year that a $700,000 loan was repayable in December and then changed the date to 'after June 30' in its last quarterly cashflow report in July.

The ASX said it had received market intelligence that the terms of the loan agreement stipulated that it was repayable after January 31.

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In response Smiles said the loan was repayable after January 31, although it offered no explanation why the date was originally reported as December.

The company went on to say that the date was changed to after June 30 because that was the applicable reporting period covered by the cashflow report.

"Given the statement …(from July 31) relates to the balance date of 30 June, 2020, and given each of the loans is repayable upon agreement and had not been paid by that date, SIL determined that it was appropriate to disclose that the loans were therefore repayable after 30 June 2020," the statement reads.

"SIL does however appreciate in hindsight that this may have caused some confusion but maintains the statement … is correct."

Smiles said the loan was provided by "lenders associated with a dentist SIL has a long relationship with".

Earlier this month Smiles announced a plan to raise capital, recapitalise the company and repay its main lender NAB back $12 million by September 11.

In response to a question from the ASX about how it planned to repay the funds, Smiles said these details will be provided "in due course".

"SIL is still working to finalise and put into effect its capital raising and recapitalisation plan," Smiles said.

"While this has taken longer than SIL had hoped, SIL remains optimistic the final stages of the plan will be agreed in the near future."

Smiles said it plans to ask NAB for an extension to the repayment date, which it expects to receive.

Smiles shares have been suspended from trading on the ASX since March after the company failed to lodge its half-year accounts.

 

 

EARLIER:

 

THE latest cashflow report from embattled Gold Coast dental group Smiles Inclusive shows the company continues to burn through cash at a rapid pace despite substantial JobKeeper payments.

The first of its monthly reports released this afternoon shows the Burleigh-based company had negative cashflow of $560,000 in July.

Smiles, which has had its shares suspended from trading on the ASX since March after failing to file its half-year results, had just $152,000 in funding available, barely enough for a few weeks.

Customer payments came in at $2.8 million - $400,000 higher than the previous month - despite an adverse impact from the State of Disaster in Victoria.

Smiles received $636,000 in JobKeeper payments for the month.

However government funding and improved customer payments were not enough to stop the company from bleeding cash.

The company is banking on a recapitalisation plan to turn the situation around.

This involves a fully-underwritten capital raising by the end of this month and asset sales being used to pay back its main lender NAB $12.347 million.

The company has used $115,000 of the proceeds from the sale of its practice in Miranda, Sydney, to pay off part of the NAB debt. It says it will replace bank guarantees with those of third parties.

The $12.347 million bank payment is due by September 11.

 

EARLIER: AUGUST 12

 

AN October date has been set for a showdown between Smiles Inclusive and rebel dentists moving to replace the board.

On Monday the three dentists - Dr Arthur Walsh, Dr Philip Makepeace and Dr John Camacho said the EGM will be held on October 8 at a time and place to be advised.

A spokesman for Smiles said: "The Smiles Inclusive board and management are focused on our strategy to turn around the business and achieve sustainable growth into the future. We will respond to any formal notice calling a shareholder meeting if and when it is received."

Last week Dr Walsh, Dr Makepeace and Dr Camacho issued a statement saying they are standing for election to the board to address financial and corporate issues at the company. They say they have the support of Smiles' largest shareholder, Dr Nguyen Thu Van Trinh of Canberra.

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Dr Van Trinh has a 16.42 per cent stake in the Smiles share register through her company entities Phi Long Investment Pty Ltd and CDentist Pty Ltd.

The meeting date is more than a year after the first EGM held on May 22, 2019, in Brisbane.

That meeting resulted in former CEO Mike Timoney being dumped from the board and Dr Camacho - the only dentist standing - failing to be elected.

Mr Timoney had called to spill the board after accusing the then management in place of being "renegades" and failing to follow proper boardroom procedure.

The meeting also resulted in defeat for former chair and Timoney ally David Herlihy.

Dr Makepeace, who was not involved in the first spill, said shareholders were faced with a different scenario compared to the first EGM.

"It is a different set of circumstances. Mike Timoney's involvement last time around was quite a block for a lot of people.

"He does not hold any interest in the company at all now (after selling his shares)."

Dr Camacho said the EGM is "one last opportunity to determine the state the company is in".

"Ourselves as unsecured creditors, as JVPs, have absolutely no clarity or transperancy around what has happened to the financials of the company, " he said. Since listing Smiles has been bedevilled by problems including profit downgrades, a falling share price, boardroom infighting, legal problems and a class-action lawsuit.

Smiles shares have been suspended since March 2 after the company failed to lodge its half-yearly accounts. Its FY19 result was a net loss of $31 million.

It released its four-quarter cashflow report recently showing customer receipts fell from $10.6m to $4.037m while at the same time operating costs declined from $5.7m to $1.4m.

Staff costs also fell to $2.154m net of JobKeeper payments, which came in at $1.3m.

The third quarter report, which initially showed positive cashflow of $500,000, had to be amended to negative cashflow of $614,000 after mistakes were found following questioning by ASIC.

 

EARLIER: SEPTEMBER 2

 

FORMER dentists from embattled Gold Coast dental group Smiles Inclusive are calling for the entire board to be removed in an extraordinary general meeting.

Dr Arthur Walsh, Dr Philip Makepeace and Dr John Camacho this morning issued a statement saying they are all standing for election to the board to address financial and corporate issues at the company. They say they have the support of Smiles' largest shareholder, Dr Nguyen Thu Van Trinh of Canberra.

Vietnam-born Dr Van Trinh runs Gungahlin-based Shine Dentists, which she opened in 2004.

On May 5 she purchased 9.6 million shares in Smiles from former CEO Mike Timoney for 1.1c per share becoming the largest shareholder in the process.

This morning a substantial holder notice was filed with the ASX showing Dr Van Trinh has a 16.42 per cent stake in the Smiles share register through her company entities Phi Long Investment Pty Ltd and CDentist Pty Ltd.

In the notice she signs over power of attorney to Dr Walsh, Dr Makepeace and Dr Camacho for the purposes of voting her stake towards resolutions at a company meeting.

A 5 per cent share of the register is needed to call an EGM.

Smiles shares have been suspended since March 2 after the company failed to lodge its half-yearly accounts.

It released its four-quarter cashflow report on Friday showing customer receipts fell from $10.6m to $4.037m while at the same time operating costs declined from $5.7m to $1.4m.

Staff costs also fell to $2.154m net of JobKeeper payments, which came in at $1.3m.

The new call for an EGM comes more than 14 months after the last one was held and resulted in defeat for Mr Timoney who was dumped from the board and Dr Camacho who failed to get elected.

The three dentists calling for the new EGM have named their campaign 'page 33' - a reference to Smiles' income statement in its prospectus prior to listing on the ASX.

The three have consistently maintained that the promises in the prospectus have not been delivered.

They also say they have engaged accounting firm RSM Australia to conduct a "rapid independent assessment" of the "trust state of Smiles' financial condition and outlook".

"The key findings of RSM's assessment will be made public as a matter of urgency. We will also invite our JVP peers to provide feedback based on RSM's findings," Dr Walsh said.

Dr Makepeace said they take the lead from the "known fact" that the "best run" dental group in Australia is led by an experienced dentist - a reference to 1300SMILES founder Dr Daryl Holmes.

The three dentists last month delivered a submission to the Parliamentary Joint Committee on Corporations and Financial Services inquiry into litigation funding and the regulation of the class action industry.

They say class actions can provide a "meaningful deterrent" or "pragmatic remedy" to corporate governance and financial issues.

 

EARLIER:

EMBATTLED Gold Coast dental group Smiles Inclusive took four days to tell shareholders its chief finance officer had resigned - and another half-week to realise its cashflow had dropped by $1.1 million.

The admissions are contained within a response to questions the ASX put to the company this month and released on Monday.

ASX says Smiles' joint-venture partners were told on May 12 that CFO Emma Corcoran had resigned. It was officially announced three days later on May 15.

In response, Smiles said Ms Corcoran advised of her resignation on May 11, but it had not told ASX until May 15 because that was her "final formal day".

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"The company (SIL) received Ms Corcoran's resignation by email on 11 May 2020," the Smiles statement reads. "Ms Corcoran continued to work for SIL after this date to assist with the half-year audit review and other handover matters.

"Her final formal day was 15 May 2020."

Smiles said the resignation was voluntary.

The Smiles letter to the ASX reiterated the company position that it only became aware of the errors in its past cashflow reports on May 18.

Smiles lodged its March cashflow report on June 1, showing positive cashflow of $500,000.

However, the company later released a revised cashflow report showing it actually had negative cashflow of $614,000 - a difference of more than $1.1 million.

The company said the mistakes were a result of "transposition and flow through errors" made when the original reports were lodged.

The Bulletin has made multiple attempts to contact Ms Corcoran, but she has declined to comment.

The Bulletin is not suggesting Ms Corcoran is responsible for the errors in the March cashflow report.

An ASX spokesman said in general companies only needed to make announcements relating to senior leadership changes on the date it occurred, which in this case was May 15.

"The company in question appears to have advised the market when the change occurred, in compliance with this listing rule obligation," he said.

However, he said the exception would be if the resignation would be expected to have a material effect on the share price.

Smiles shares have been suspended from trading on the ASX since March 2 and last traded at 3.5 cents.

Originally published as Smiles falls into administration


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