On 13 December 2018, Transaction Solutions International Limited (ASX: TSN) announced that it had entered a 100% binding agreement with a highly accredited cloud and cloud security service provider to acquire “Cloud Industries Pty Ltd.” The acquisition of Cloudten depends on specific terms and conditions which will depend on the shareholder's approval and due diligence.
Meanwhile, TSN has also received commitments from the sophisticated and professional investors for raising capital worth $2 million through placement. The company will issue around 235 million shares at 0.85 cents per share. TSN’s long-term shareholders will provide another $1 million.
Cloudten, on the other hand, had a very performance in FY2018. It has generated a revenue of $3.8 million with profit before tax worth $1.6 million.
To acquire Cloudten, TSN needs to pay a total fixed consideration of $8.6 million which the company will make in five installments. Each installment period is of 3 months. After 90 days of this agreement, TSN needs to pay $1.5 million. The amount remains constant after completing six months, nine months and 12 months respectively. After the completion of this acquisition another $3 million need to be paid to Cloudten.
The variable component remains uncapped which will depend on growing Cloudten’s performance in 3 years after its acquisition with specific profit targets for two years. It will also depend how TSN on the maintains the profit of the Cloudten for consecutive four years.
After getting listed on ASX, there is a continuous negative performance of the company. The ten years performance of the company is -30%. The five years performance of the company is -22.22%. The last 1-year performance of the company is -36.36%. The previous one-month performance of the company is positive.
For half year FY2018 ending 30 September 2018, the company made a net profit $70,865. The balance sheet of the company is healthy as the net asset of the company is $19,831,292 which highlights the company’s potential to meet its long-term obligations. The company holds a total current asset of $2,836,752 and total current liabilities of $850,980 which indicates that the company is in a position where it can meet the net-working capital as well as its short-term obligations. Also, there is a decrease in the accumulated loss which helps in gaining the confidence of the investors.
The net cash and cash equivalent available with the company by the half-year ending on 30 September 2018 were $1,754,634.
At present, the market price of the share is A$0.008 (AEST: 3:56 pm, 13 December 2018) with the stock holding a market capitalization of A$15.22 million.
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