Ann: CipherPoint Acquisition and Enhanced DSP Strategy, page-19

I am not an expect in this area but here are my initial quick thoughts on the announcement:
* Good complimentary functional fit: data encryption security for unstructured data, EU GDPR ready, integrated Microsoft products
* Good IT industry fit with Covata's vision:  secure protection of data - onsite, off premise cloud(s), in transit, stationary
* Good complimentary technical fit:  addresses industry data security need regarding unstructured data, easy integration via APIs
* Excellent Tech partners:  Microsoft, Dimension Data
* High-profile / Large customer base:  Government, Defence, Space and Corporates
* Announcement doesn't mention their revenue/cost/GP profile but deal done on stretch targets. More than Covata makes today!!
* Max deal done around CVT share prices of $0.45 and $0.10 cents - could be less if CVT share price is higher than $0.10 at 31/12/2017 and $30/06/2018.
* Deal has already added $$$ value to CVT mkt cap far beyond A$$ value of the deal ... as long as the share price remains above $0.045.

My analysis of the $$ value of the deal - happy for people to correct if I have this wrong:

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6	Column 7
0	Description		$$ Value		Condition:
1	Completion of acquisition:	AUD	$1,000,000		Completion of acquisition
2	Milestone #1:	AUD	$1,000,000		Milestone #1 met	> US$300,000 by 31/12/2017	Key staff member stays
3	Milestone #2:	AUD	$1,297,740		Milestone #2 met	> US$500,000 by 30/06/2018	Key staff member stays
4	Closing out derivativee investors	AUD	$510,760			Pay out derivative holders
5	Closing out US Creditors	AUD	$192,308		= U$150,000 @ A$0.78
6	If M#1 and M#2 met	AUD	$4,000,808
7
8	If M#1 not met but M#2 met	AUD	$3,000,808
9	If M#1 met but M#2 not met	AUD	$2,703,068
10	If M#1 and M32 not met	AUD	$1,703,068

So the cost (today) / value (future) of the deals will greatly be influenced by:
* M#1 being met by 31/12/2017 => 6 month Reveue to Covata of at least U$300, 000 / A$385,000 @ A$0.78
* M#2 being met by 30/06/2018 =>  12 month Reveue to Covata of at least U$500, 000 / A$641,000 @ A$0.78

Not sure what the cost profile looks like but if less than the projected revenue to 30 June 2018, then any excess can be offset again the acquisition cost.  We may also be able to claim some R&D costs and obtain a refund in US and Aus?

I personally think this is a very good deal and fit with Covata's new vision.  I can see more complimentary acquisitions like this happening in the future.  The new management team know how to identify target acquisitions with global appeal, close out new strategic global business parners and build a business in a high demand technology market place.

Thumbs up from me on this acquisition.