You need to focus on the massive conflict that has been created by management in issuing themselves debt when the prospects of recapitalising the business are low. I say low because of the cash burn rate, the excessive high fixed cost base, the 30June balance sheet (they have delayed paying creditors), no cashflow, and some worthless assets (that they say have value but I doubt it, see what the auditor says).
The IPO failed most likely because new equity can see these problems as plain as day.
Management should not have issued themselves debt the way they did. Remember also that they reneged on their commitment to the Feb 23 placement and issued themselves debt instead. THEY ARE STEPPING AHEAD OF YOU!!!!!! That is a major governance red flag WHEN THERE IS NO MAJORITY OF INDEPENDENT DIRECTORS TO PROTECT MINORITY SHAREHOLDERS. It's mind bending to me that people don't see this problem.
So my bet is that the possible outcomes are:
1. wipeout capital raising eg 2 for 1 at 5c
2. administration with debt for equity swap which is a better outcome for management
3. sale process i.e. they give up
No 3 works for all investors. But I suspect the CEO's ego wouldn't fathom this as he could do better under 2. 1. is where most people's heads are at ... but really needs institutional support which won't happen IMO unless the equity is given away. Even then it will take a unique insto/HNW to back this CEO given what we've seen.
Think about this ... management structured their converting notes so that they don't convert unless the company raises >$5m ... why?
As I've always said, this company will continue, just with different majority owners.
All my opinion of course ... let's wait and see what transpires over the next weeks.
I'm actively interested as I'd back this coy with new management, a strong independent board, more sensible cost structure and a proper funding plan.... but sadly I can't see any of this.
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