Solid analysis @Agent-86. I agree with your comments, plenty of...

Solid analysis @Agent-86.

I agree with your comments, plenty of synergies here for CVT as the products / services offered are highly complimentary. I like the fact that CipherPoint has market traction in the US generating revenue with significant end users, along with an embedded Microsoft relationship.

Ted is a smart operator and although he / we probably would of liked the share price +10c prior to making an acquisition, the reality is, the way this deal is structured, the majority of payments to be made are milestone based and will be using scrip at a 10c ~ $51mil market cap anyway. It's worth understanding that even if the first payment is made using CVT's scrip at 4.5c, this would be using an undiluted market cap of $23.2mil for a $1mil payment, where you are bolting on a business that will account for 90% of the revenue.

Just worked out quickly the average price / shares to be issued at the low end valuation, should all milestones be met and CVT's share price is not trading above the nominated share prices at where scrip will be issued. This comes in at 6.73c for the entire deal or using CVT's valuation of $35mil to make a purchase ($3.9m) in the order of 11% of the company's valuation. Hard to argue that this acquisition is diluting existing shareholders even at base case numbers.

The higher the share price, the less dilutive the transaction will become! As pointed out, if we see further deals drop for CVT and the revenue picking up, one can assume the share price will follow and the valuation for the scrip will be higher than 4.5c for the first payment and 10c for the subsequent payments.

Iam pretty sure that most people would understand the terms in the contract around a 'key staff member' still being employed at a certain date. This is to ensure that the guys at CipherPoint vending in their business, don't sign the contract and then parachute out of there with their cash + shares, leaving the business / revenue relationships at risk. Standard terms when buying a business that is relationship based.

All we need now for the cherry on top is an announcement in regards to being awarded the data security provider to the Microsoft + Australian Government cloud infrastructure project announced earlier in the week!