Ann: Convertible Notes to Fund Payments Processing Growth Plans, page-2

G'day everyone!!

What do you think about this Convertible Note structure for NOV?

I have had fairly limited dealings with CN's, so it would be great if someone could please give their thoughts on why NOV would raise money via Convertible Notes (as opposed to debt / issuing new shares etc)?

I really like the reasons outlined for the CR (growth in payments processing / larger clients etc), and the details of the CN were:

• Aggregate funds raised amount to $2.275m from the issue of 2.275m notes
• Conversion price at lower of 25 cents or the lowest capital raising price prior to maturity
• Convertible at the election of noteholders at any time prior to maturity
• Maturing on 30 July 2021, subject to 12 months roll-over at the noteholder’s election
• 9% per annum coupon, which may be capitalised at the election of noteholders
• One free-attaching option to be issued for each $1 note with a 25 cent exercise price expiring 30 October 2022
• Secured over Novatti's share capital in its wholly-owned subsidiary, Novatti Inc, which owns the basis2 business

Peter Cook, CEO of Novatti noted, "We have high aims for both our payments processing and bank divisions. We have recently been able to access large opportunities by extending our licencing and relationships such as the Visa Issuing licence which will drive us into larger payments markets. This funding will enable this growth for the payment processing division."

So the investors get paid 9% on their funds, they can convert at 25 cents per share (or at lower price if more capital is raised), and they also get a "free attached option" with a strike price of 25 cents?

But NOV (noteholder) can repay the money early if they get rich from trading / other, or they can extend the notes for another 12 months if required - and the security is the share capital in the subsidiary?

Thanks in advance for any thoughts.