Ann: MBE Increases Shareholding in Award Winning Clipp, page-18

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retiredyoung

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27/02/17

17:55

Post #: 22945637
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Originally posted by Ildsrud ↑

A $550k investment for 66% values the business at $833k, which is peanuts for a tech company. I assume the founders or Senior Management own the remaining 3% (value at $25k) which is absolutely nothing and not great to incentivise them to grow the business.

They've stated half year Gross Transaction Value at $4.3m, however revenue to clipp will only be a portion of this amount, as the vast majority will be paid to the venue for drinks. Clipp's take on that GTV may be somewhere in the order of 1-4% (I have no idea).

To date Clipp has raised $6.3m via external capital raisings (I'm taking that directly from one of the founders), $1.5m in November 2013 and $4.7m in June 2015. I can only now assume the business is massively cashflow negative and they had run out of funding sources (i.e. no one else was going to put any further cash in via a capital raising). Assuming the option was to buy out the previous shareholders and not acquire new shares in Clipp, it seems the old shareholders are walking away with mere cents in the dollar and will have huge capital losses.

Yes MBE has taken control cheaply, but turning the Clipp business around will take time and may prove costly (having experience first hand from being involved in a tech-startup). I'm not sure I view this further investment as a big positive for MBE. If anything, it could be a distraction for their internal resources and potentially drain valueable cashflow at a time the business should be focused on doing the exact opposite.

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Hi lldsrud

I suspect that MBE may end up being the biggest loser.

MBE acquired a non-controlling stake of 31% of Clipp Pty Ltd from existing shareholders through the issue of 4,594,665 fully paid ordinary shares at 26 cents and the granting of unlisted options for 2,297,334 ordinary shares exercisable at $0.39 each and expiring 10 June 2017.

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MBE has a $3.5m convertible note facility where Clipp can do quarterly drawdowns over 18 months.

$2.3m was drawn down as at 30 June 2016.

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I think Clipp used to receive 2% of total bar tab revenue.(Visa/Mastercard)(3% American Express).

MBE Price at posting: 6.7¢ Sentiment: None Disclosure: Held
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Ann: MBE Increases Shareholding in Award Winning Clipp, page-18

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