Ann: CipherPoint Acquisition and Enhanced DSP Strategy, page-23

Further to this, if CVT are able to complete the purchase of CipherPoint by 25th of August, it's fair to say that the price of CVT over the coming week will be important as to where the first payment valuation is struck, which in turn will have an effect on the overall level of dilution to CVT shareholders for the proposed transaction.

As outlined in the announcement the price for the first payment of CVT shares will be at either 4.5c or the 5 day VWAP price proceeding the date of closure.


I've run a few scenarios based on a share price of 4.5c (base case), 5c, 6c, 6.5c & 7c to give you an idea of what this will mean in terms of % dilution. Easy to tweak the model once we have the firm VWAP price for the first leg of the transaction and then run some hypotheticals for the 2nd + 3rd payments.

At the end of the day it doesn't change the attractiveness of CipherPoint, it does however have an effect on current shareholders when CVT scrip is being used.

	Column 1	Column 2	Column 3	Column 4
1	$ Value	Share price	# of shares	% dilution
2	$ 510,760	$ 0.045	11,350,222
3	$ 1,000,000	$ 0.045	22,222,222
4	$ 1,000,000	$ 0.100	10,000,000
5	$ 1,297,740	$ 0.100	12,977,400
6	$ 3,808,500	$   0.0673	56,549,844	10.93%
7
8	$ 510,760	$    0.05	10,215,200
9	$ 1,000,000	$    0.05	20,000,000
10	$ 1,000,000	$    0.10	10,000,000
11	$ 1,297,740	$    0.10	12,977,400
12	$ 3,808,500	$   0.0716	53,192,600	10.28%
13
14	$ 510,760	$    0.06	8,512,667
15	$ 1,000,000	$    0.06	16,666,667
16	$ 1,000,000	$    0.10	10,000,000
17	$ 1,297,740	$    0.10	12,977,400
18	$ 3,808,500	$   0.0791	48,156,733	9.30%
19
20	$ 510,760	$ 0.065	7,857,846
21	$ 1,000,000	$ 0.065	15,384,615
22	$ 1,000,000	$ 0.100	10,000,000
23	$ 1,297,740	$ 0.100	12,977,400
24	$ 3,808,500	$   0.0824	46,219,862	8.93%
25
26	$ 510,760	$ 0.070	7,296,571
27	$ 1,000,000	$ 0.070	14,285,714
28	$ 1,000,000	$ 0.100	10,000,000
29	$ 1,297,740	$ 0.100	12,977,400
30	$ 3,808,500	$   0.0855	44,559,686	8.61%
31
32	# Shares on issue (undiluted)	517,611,000