Ann: New strategic shareholder, page-31

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Redpapa

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31/03/16

12:23

Post #: 17390692
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Originally posted by BorisYeltzen ↑

Let me spell this out for you guys - hopefully you will learn something about interpreting an announcement.

Here are key details of the original convertible note agreement:

1. The original agreement provided $15 million in 3 separate $5 million tranches as described above. Axiom have only used the first tranche of $5 million.
2. The conversion to equity price has been lowered to favour InCor by close to 20%. (37c down to 31c)
3. If InCor had not terminated the agreement then AVQ could have drawn down the second $5 million tranche. By terminating the agreement now before the other two tranches are accessed InCor have significantly reduced their risk in not getting their money back ($10 million outstanding).
4. With this termination InCor are no longer offering the remaining $10 million in funding. This is not a sign of confidence in any way from InCor.
5. At the end of the last quarter AVQ had negative cash flows of $-4.186 million
6. At the end of last quarter AVQ had $2.45 million in cash (this is after they have already drawn down the first $5 million tranche)

This means AVQ are in high danger of running out of cash this quarter. This also means a likely capital raise with no revenues forecast for the next quarter with the recent court decision. Even though exploration has ceased they still burnt through over $700,000 last quarter in just administration costs (they will still have payment obligations to employees).

This announcement and the change in conversion price to 31c is important from a strategy point of view to act as an illusionary base cap on the price when it relists tomorrow. However the truth is the convertible note agreement has been terminated because of the increase in risk and difficulty AVQ would face trying to pay the money back.

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now that you have taught me how to read an announcement let me teach you about financial risk management 101

when a lender takes a stake in your company as a shareholder they have confidence in management and the direction of the company. And their investment is unsecured. The end

AVQ Price at posting: 38.0¢ Sentiment: Buy Disclosure: Held
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