Ann: Acquisition of XINN and successful institutional placement, page-8

Now that I’ve had more time to reflect and scan the announcements, here is my attempt at assessing this current move in the context of *considering* an exit:

Positives:
1. Strong support for the placement via instos, a good chunk of placement stock going into voluntary escrow (1 yr). Very good.

2. The revenue for FY20 is already up 20% on FY19. This will make for nice headline numbers in reports & presentations over the next year, will get some attention.

3. Revenue growth from FY19 to FY20 is $4.4m; given $3m of this is forecast from Xinn, this means they have already added another $1.4m ARR from other sources. A chunk of this (maybe $1m) is likely from the Nike deal, so it looks like another $400K-$500K ARR has been added from other sources. Organic growth?

4. I’m only seeing $5m cash consideration for Xinn (unless I missed something) so they are banking $15m from this CR and from memory already had over $20m on hand. Significant war chest.

5. Will this open up sales enablement contracts in the financial sector? This appears to be the objective and if it works BTH could benefit nicely.

Negatives:

1. See point 4 above, not sure why they needed/wanted to raise $15m surplus not necessarily a negative but could burn a hole in their pockets.

2. Lots going on in terms of corporate, integrating acquisitions etc. and I do worry that manpower will be stretched and/or perceived synergies can be lost if not managed effectively. Lots of balls in the air.

I’m now actually feeling OK with where this is at & where it is going, everybody can take their fingers off the sell button because SW is staying alongside you in the trenches.

Hold IMHO.