participating in the SPP ?, page-124

Serena,

this is why it is a lot easier to get a CN than to issue a placement - because the terms are so much better. Effectively, the moment that the CN is released, the profit is locked in for the lender. The company has the money, to them it makes no difference from that point on, it's only the shareholders that get scorched.

Just like a personal loan at a bank, you draw the loan ... have a look at your statement the next day. It will tell you the total amount owed, with the full value of interest over the expected loan period already added. It makes no difference if you pay the capital back a day later - that interest has been billed to you. That's the position that shareholders are in once a company has signed them up to a credit note. (lesson: always borrow against a mortgage )

Sometimes they work out well - if the SP looks like it is going to go through the roof, the lender will convert the bulk of their shares as soon as they can, and then sit on them, gently trickling them into the market to support an escalating share price. They make more that way. Early on though, what has happened here does often occur, because the lender is not certain of a return.

It is not all bad. I have pointed these things out since the conversion to try to make everybody aware of what goes on ... it is not a disaster, and if Xped fulfils even part of its promise, all will work out in the end. It will take a little longer, but - let's do some maths. Sit down and work out how much Xped has to earn to get to a target price (of say 10c) to justify that market cap with the number of shares issued in three years.

3,000,000,000 shares x $0.10 = $300,000,000 market cap

Lets look at a PE ratio of 20 for a conservative value for a company still growing:

$300,000,000 / 20 = $15,000,000

That's EBIT, and I would expect that the margins should be very high (if we stop giving the CEO ridiculous pay rises), as mostly income would be from licencing agreements (say 60% margin) -

$15,000,000 x 100/60 = $25,000,000 revenue

So .... can the company be in a position to be turning this over in a couple of years?