Ann: Revised Payment Arrangements with DIAsource Vendors, page-150

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18/07/17

20:25

Post #: 25940772
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Originally posted by dubspec ↑

Ok. Ive had a little read over the announcements. Here is my summary.

> Purchase Price of €15.4m + earn out (ended up being €4.322m).
> to be paid 50% in cash up-front (€7.7m) and the balance (€7.7m) to be paid via a deferred payment plan of Eight (8) instalments, each equal to €962,500
> Earn out was to be paid Jan 11th. Was deferred to July 11th. As part of the vendor agreeing to the defereal, they reduced the amount of the earn-out that could be paid via equity from 20% to 15% and now to 5% (as in diasource wanted cash not ADO shares). the earn out was for 2015 and 2016. Was the earn-out at the floor price of 15c? if so, Anteo are giving up a lot just to survive.
> Now the earnout payment also attracts 8% interest (ie, more cashflow pressure). Has to be paid by October.

I also trawled the Annual Report and cant really see what diasource contributed to the bottom line. It looks to me that if Diasource is making a profit then all of it and more is being sucked up in Anteo expenses. Last cashflow report shows that even if ADO didnt have the ~€962k repayments the business would only be wiping its face (ie, no free cashflow). I would love to know more details about the earn out as it seems very high.

With more repayments due, cashflow would be getting awefully tight and i wonder how close they are to calling in administrators (cash at end of qrt was €1066k and they had €962k to pay back). If I were ADO, id either try and sell some of the MnG business pronto. or i'd totally stop unnecessary expenditure. When I mean unnecessary, I mean any expenses that don't contribute immediate to cashflow (more than the expense).

They have to pay back €4.322 (with only 5% being able to be repaid with equity) and another installment payment by Oct 2017. So as I see it, they effectively need to raise ~€5.0m by Oct with ~€200k to be paid in equity.

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In the ann on July 12th, they left open the possibility of paying by July 31, although I don't see that happening personally.

The comment I made around the ADO BOD not having control of revenue was based on conversations and some assumptions on my part. I could be wrong, but I don't think so.

ADO Price at posting: 1.8¢ Sentiment: Hold Disclosure: Held
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