Is the negativity justified??, page-230

Great question @hotmustardsauce . I actually really appreciate you being on this thread I think you ask the correct questions.

The reason why I believe it is not already priced into the current share price is that a performance fee of $14M will make this firm unprofitable for the full year, not just the half-full.

Why?

They received the raised capital on 28th August. By November there estimates were for Revenue of $5.8M and profit of $1.3. Now that profit figure likely did not include a Performance Fee. But let's even assume it did. The share price at that time was $0.33 so the fee was minimal. That means they made $1.3M in profit in three months. Let's even assume they make $1M profit every month before performance fee. That still won't hit the target. The assets are not strong enough yet to offset the intense share price.

Why does this mean the share price is likely to fall?

The Performance Fee on 31 Dec 2015 was calculated at $0.48. It came in approximately at $14M. It was assessed but not paid until 30 June 2016.

Why is that relevant?

The performance fee can be offset by capital losses in the second half. If by June 30 2016 (second assessment of Performance Fee) the stock is below $0.48 the amount that it has fallen will be deducted from the $14M.

When is it most likely to happen?

Surrounding the second VWAP or when the directors finally disclose that the first performance fee was $14M. The long term institutional investors are unlikely to let this performance fee (and dilution) go through when the assets are yet to be proven they can perform.

They will try to keep the share price contained. And take a temporary hit on their 'paper gains' to ensure that the financial statements remain strong.