Hi again Trade,
I can see how you would come to that view based on your conversations with SKN for the reasons I outlined previously.
I would like you to consider the following,As of 30th June 2018 - 86,053,001 shares on issue
As of 31st December 208 - 144,332,590 shares on issue
As per recent Chinese announcement – additional shares will be asfollows,
“Investment amount of $500,000 by way of an unsecured convertible note(convertible into 31,250,000 fully paid ordinary shares (A$0.016 per share)”
“Investment amount of $1,000,000 by way of unsecured convertible note(convertible into a 62,500,000 fully paid ordinary shares (A$0.016 per share)”
“Investment amount of $900,000 by way of placement of 56,250,000 fullypaid ordinary shares (A$0.016 per share)”
In addition, HHHM will also be entitled to be issued with an aggregateof 115,000,000 performance shares to be issued in 3 tranches (for no additionalconsideration)
So this Chinese company will receive a total of 150,000,000 +115,000,000 = 265,000,000 shares
Hence,
Minimum total shares on issue will be 409,332,590 (not includingoptions)
If you include options, it will be circa 521,833,090 shares on issue post $2.4minvestment.
Through these debt structured instruments (share issue(s) for aconsideration in effect) detailed in the “china” deal, SKN has circumvented allASX rules regarding the number of shares that can be issued per annum and soldthe company to Mr Li Zeling if this deal were to go ahead. To go ahead the dealmust be put to shareholders and SKN are virtually putting a gun to existingshareholders heads as part of a shareholder approval process which the boardhave the majority control of existing shares on issue in any case. I am surprisedthe ASX have not twigged, I am considering writing a letter to the ASXregarding this.
In respect to the $20m order over 3 years, without clarity on knownmargins for SKN products, basically means diddly-squat if SKN can't make aprofit.
I would expect most of the margin would have been coveted by Mr LiZeling in the detail of the deal. The Chinese aren't stupid when it comes tonegotiating terms with a company on their knees.
It would not surprise me if Malone promised him the share price wouldkeep going up on this deal and that Mr Li Zeling would kill the pig onunsuspecting Australian retail investors. However, Australian retail investorsare quite aware of how Malone operates and not as stupid as he thinks they areas can be seen by the languishing share price.
Just have to look at previous companies they have run into the ground.SKN will take the $2.4m and burn through it and achieve nothing, as they havedone to date, all the while seeking to raise even more and diluting further,IMO.
Get out now whilst there are still ill-informed retail investors taking a punt on the buy side.
All IMO
Please DYOR
