Ann: Cleansing Statement, page-3

The company has an obligation to inform the market within a certain timeframe of the conversion of notes to shares, I'm sure the company released this within the acceptable timeframe.

You will notice a couple of us have been sounding the trumpet about convertible notes being the absolute worst way to raise capital. A lot of investors don't realised how it works, so let me break it down:

• In return for $2m the company issued 1,322,200 convertible notes each with a face value of $1.15 USD
• Converting to AUD this currently equals a total value of $2.36m AUD (using 1.53 as exchange rate)
• Obsidian can convert the $2.36m they hold in notes to shares at a discount to the lowest VWAP
• Because the conversion price is not fixed if Obsidian sells the shares issued to them for the conversion they will force the price down and therefore VWAP resulting in even more shares being issued next time they convert
• This cycle continues whilst notes are on offer. CAN can continue to issue notes in return for up to $13m in total funds from Obsidian
• Only way out of it is for CAN to stop drawing funds from Obsidian which is a shortcut to adminstration given their current financial predicament or they can do a large capital raise to buy the outstanding notes back. If they do a raise they must also raise enough to fund operations and make debt repayments to CAN

Ugh