Very interesting. I have no information other than what’s public...

Very interesting.

I have no information other than what’s public and it’s only my opinion, but it appears the creditor (Longreach Credit) has got one hand on the steering wheel.

Operating and investment cash outflows ($2.7 mill outflow) dramatically improved by $8.4 mill on prior quarter. $7 mill of that was manufacturing and excise tax reducing 70% (selling off inventory and collecting receivables). Business investment also down. Sales revenue down 29% on prior quarter.

The company can’t sell down inventory forever, as well as reduce marketing without some LT effects.

They need the $10 mill of remaining debt facility but might be struggling on the cash flow, revenue, market cap, and agave distillery completion hurdles and covenants.

Anyway, new CEO, who brings a different skill set (he’s not a former accountant), has a big challenge ahead.

As they’ve mentioned, sale and lease back of Eden Lassie (yep - they want to sell the farm) would help cash flow through this testing period, as well as monetising some of the agave crop valuation ($20 mill on the balance sheet), but you can’t harvest immature pina.

Watch this space. Auditor EY identified “Going Concern” as a key audit issue in FY22 Annual Report. Here’s hoping they can pull through.