To Japon and others who are still fuming over the Milestone Shares and revenue basis…
I’d like to provide what I believe to be clarity (and maybe a different perspective) regarding the SFI milestone shares.
A recent RTO I have invested in commenced trading with:
21% retained for the existing shareholders of the PubCo shell (with cash),
24% for new investors (multi-million dollar raise)
55% for the vendors of the revenue generating technology business
In the case of SFI’s RTO of WSR –
60% retained for the existing WSR (PubCo shell) shareholders, however this also includes a placement
20% to new cornerstone investors (same sized multi-million dollar raise as mentioned above)
20% to SFI vendors upon commencement
Because SFI was pre-revenue, the deal was back-ended with performance milestone shares based on revenue or share price within the 4 to 5-year time period.
For simplicity; let’s say the SFI technology consists of two parts: ‘hardware’ and ‘software’ – the hardware being the camera system and the software being the image processing. Revenue defined as sales of either or both. If the company achieves the performance revenue milestones, surely the inventors of the technology/patents deserve their additional share equity – although it can never be as good, nor as much as receiving it at vend (they dilute themselves).
In the case of pre-revenue businesses that enter the capital markets, everything must go right from the get go. Technology development cannot stall otherwise more capital is required which impinges on time to sales revenue. SFI’s business required significant capital (aerospace is akin timewise to biotech and medical breakthrough businesses) and the Board made the right decision (a lower risk/lower reward strategy) to licence the technology for royalties based on area capture, sales revenue as well as purchase of hardware and software. EVT also contributes to R&D. The deal underpins and secures SFI well into the future.
SFI need to receive those royalties, make sales, establish new markets and repeat again and again.
SFI Price at posting:
4.7¢ Sentiment: Buy Disclosure: Held
