Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from [Bob Poole - Brickalor Capital].
[Bob Poole - Brickalor Capital]
Is the 900,000 shares that are subject to the earn-out, what do you actually have to do to achieve the earn-out?
Amir Phillips
We have to perform. We have to sell over $18 million and the cap is at $22.5 million so that’s 200,000 shares for every million of revenue we bring from Optibase products to the deal.
[Bob Poole - Brickalor Capital]
During what time period?
Amir Phillips
It’s a year from closing.
[Bob Poole - Brickalor Capital]
And you said it was from $18 million to $22 million?
Amir Phillips
Yes, meaning there is a range of revenues that we are being looked at so if we perform, first we have to do the $18 million. For the $18 million we’re being paid the $26 million. There’s no drawback but in order to compensate further, the earn-out mechanism goes from $18 million and above or like I said there’s a cap of $22.5 million and this is the range. But once we over-perform from $18 million and on, we get compensated for that.
[Bob Poole - Brickalor Capital]
I missed the $22.5 million. I needed an extra half a million to understand how 200,000 shares per million.
Amir Phillips
How the 900,000 divides into the 200,000.
[Bob Poole - Brickalor Capital]
I got it now. If at the closing of this transaction as proposed you would own something like 7.7 million shares, right?
Amir Phillips
5.1 million, I think that’s the exact number plus $2.6.
[Bob Poole - Brickalor Capital]
Yes, so about 7.7 million and you have your $12.4 million of cash. Those shares and that cash would be the only assets of Optibase at the time of closing?
Amir Phillips
No, we have a couple more assets that maybe not significant in our portfolio but we do have some holdings with Mobixcell Networks and with Vbox. These are two private companies which we hold so we are going to keep on holding to these businesses as well.
[Bob Poole - Brickalor Capital]
How are they valued on the balance sheet today?
Amir Phillips
They’re at $0.
[Bob Poole - Brickalor Capital]
They’re at $0?
Amir Phillips
Yes, because we have devaluated the value. It’s two start-ups that spun off from Optibase ages ago.
[Bob Poole - Brickalor Capital]
- To read the full transcript on Seeking Alpha, click here »
