Ann: Cellmid to Acquire BLC Cosmetics Pty Ltd, page-46

Just having a few second thoughts….

We only seem to be commenting on “Tranch 1” of the deal (ie - $1million in cash and 32,786,885 shares at 6.1 cents each). Does that mean we arenot expecting any “growth in FY2021’s EBITDA of $500k”??

For “Tranch 2”, assuming the worst (in $$$ outgoings) for CDY and thebest for HGL, CDY would be paying the following to HGL if BLC’s EBITDA exceeds$500k:

3 x the incremental growth between $500k EBITDA and the EBITDA ofFY2022, which would be;

· The first $700,000 in cash;

· The next in shares - up to 50,000,000 capped - issued at a price of upto 9c each (ie $4,500,000);

· Anything in excess of the above will be paid in cash; and,

· No growth in EBITDA = no Tranch 2 payment necessary.

Also, HGL will nominate one of their people to be on CDY’s Board as anon-exec Director.

I cannot understand why CDY agreed to pay HGL for an increase in EBITDAfor the FY2022 period. We are either buying 100% of the company – for better orworse, or we’re not. If the settlement date is October, how is any EBITDA afterthat date of interest to HGL?

On reflection, I reckon HGL certainly got the better of this deal. CDYare going the M&A way in order to buy some increased “revenue” and HGL –which are an investment company - are getting rid of an underperforming asset.They get $1 million for liquidity purposes, they get a decent shareholding inCDY and they get someone on the Board to keep an eye on things. Also, if thingsgo well next year – they will get a bite of that too!!

What maybe might be a good thing for CDY shareholders is, I noticed inHGL accounts they “terminated” their previous CEO!! And, the management took apaycut over the last year due to the under performance of the business. I hopeMaria has got those bases covered….

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