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GOTCHA CloudTag! But now tell us about the loan conversion terms

By Nigel Somerville, the Deputy Sheriff of AIM | Friday 23 December 2016

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

And so AIM-listed ClieTag (oops) CloudTag (CTAG) duly ‘fessed up in the wake of my piece yesterday that it had not been telling the truth. Again. But it gets worse, as the company only dealt yesterday with hitherto undisclosed warrant exercise terms. It did still does not clear up the issue of the loan conversion terms and so, unbelievably, yet another confessional RNS statement is needed.

On Wednesday, announcing the conversion by L1 of the latest batch of loan notes into shares (and warrants) the company stated:

The terms of the Warrants are as stated in the Notes Announcements.  Both the conversion price in respect of the Notes and exercise price in respect of the Warrants have been rounded down to the nearest £0.005 in accordance with the terms of the relevant agreements.

Yesterday the company ‘fessed up to the fact that this extra little bit of discount for L1 had not previously been disclosed in relation to the warrant exercise terms. But rather than the announcement I had expected – that the terms had been altered in return for a few concessions by L1 – we were told that in fact all the announced warrant exercise prices in relation to L1 loan conversions were wrong, and had been overstated. This, of course, means that less money will be coming into the company’s coffers upon warrant exercises than the market had previously been told.

Yesterday’s “clarification” statement only dealt with the warrant terms. But I had asked about the terms of the loan conversions into shares: we had not previously been told of this rounding down in relation to that.

Go back to the quote above: Both the conversion price in respect of the Notes and exercise price in respect of the Warrants have been rounded down…..

So the loan conversion price is rounded down too, in contrast to all the previous announcements. Yesterday I pointed this out and the company’s latest confessional that it has been caught serving up the traditional dish of Melton Mowbray hasn’t gone far enough, for it only addressed the warrant exercise prices having been wrong.

So next up comes the loan conversion price clarification statement:

Since when were the terms of the issue price of the conversion shares issued to L1 that the lowest closing bid price over the previous three trading sessions would be rounded down to the nearest half penny?

Is it:

a)      Always, but the company didn’t bother to mention that bit,

b)      Since L1 waived the escrow release terms, but the company didn’t bother to disclose that, or

c)       Since the shares were suspended, but the company only disclosed it upon conversion

Over to Nomad Cairn Financial to force out yet another statement and then settle up the latest invoice from ShareProphets Nomad Services Limited, which is again pleased to be of service.  

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