I am down $10's of thousands of dollars on NOT, and was initially pretty unhappy with the announcement when I read it yesterday, but on reflection I suggest folks consider the following before coming to the conclusion that the BOD is acting against our interest.

First unless the share price exceeds $1.00 share there is no pay out for these guys. Plus there is a second requirement that NOT must outperform the TSX venture exchange index by 20% or there is no payout. Do I think that the bar is a little low? - yeah - but the options do require an increase in stock price for the BOD to see pay day and from that point of view their interests are aligned with our interests. Consider the Co-CEO's - 25,000 $0.80 options per month. If NOT sticks at $0.90 they are making $2500/month. If NOT goes to $4.80 they are making are making $100,000 per month. Certainly they have an incentive to get us to a higher stock price. Hopefully they find a single new CEO in short order and we don't pay out the entire 600,000 options. Unfortunately they might have an incentive to delay picking a new CEO as they accumulate options each month in the interim.

With regard to the private placement, flow through shares can have a huge tax advantage at least to Canadian purchasers. They are most advantageous to those who have made large one time gains or received severance payments as they allow one to defer the tax to a future year where marginal tax rates may be lower, plus the future payments are taxed at capital gains rates - 1/2 the normal tax rate. From what I have seen on average the lower capital gains rate payable at the end of the flow-through period typically (two years) about offsets the typical loss in flow-thru-share value. Flow-thru-shares are typically sold at the end of the tax year, to reduce the tax burden of the purchasers. Typically they sell for somewhat above the going share price, but in this market I suspect the judgment is that $0.80 is about all we can get. Flow through shares just don't sell in January or February - no one is looking for tax savings then. The window for flow through shares is pretty much the last quarter of a tax year. NOT may be running short of cash by the last quarter of 2009 so the BOD may have felt under the gun to get a PP out before the end of 2008.

I think that the news release could have been worded better. Key would be clarification as to who could qualify for the flow-thru-shares and what the minimum purchase would be. I suspect that most of the large stakeholders in NOT have sufficient losses this year and that flow-thru-shares would not really benefit them. In this environement I would think that the flow-through-shares would be most appealing to long term employees receiving severance pay on which they hope to avoid a big tax hit. The flow-thru-shares might actually bolster the number of retail investors. The devil is the detail and I haven't seen the detail yet. If it turns out all the flow-thru-shares are being offered on the open market to retail investors with some minimum purchase say $10,000 to $25,000 I might disagree on details as to price etc., but it could hardly be viewed as a conspiracy to defraud existing retail investors. If the PP is going exclusively to a few well connected individuals my comfort level with the BOD goes way down.

Looking forward to an update from Glorieux regarding discussions with NOT management.

I remain wary - but not disillusioned yet.