A number of he resolutions which are being put up for voting by shareholders at the May 30 AGM give an interesting insight into YPB's money problems.
We know that they began the June 2024 quarter with cash equivalents of just under $300k, and how bad would it had looked in JFHH didn't put up the $250k loan on March 30. At this stage, YPB hasn't secured funding to see them through this quarter and the funding proposals being put to the AGM don't appear to provide to provide that immediate funding relief-it probably means JFHH will have to provide another short term loan to get YPB through this quarter.
The revenue and profit projections provided by YPB and tabled on page 35 of the Nexia Australia report project YPB to be significantly profitable for year 2025 but this is at odds with fund raising proposals included in the resolutions to be passed at the May AGM.
For instance, Resolution #3 is about a $4m CR to be launched within 3 months of the AGM. Resolution #4 is for the equity/debt swap clearing YPB of the $2.250M loans provided by JH, rather than any cash payback in order to preserve whatever cash YPB has for their working capital needs. JH also has 500m share options as part of this settlement at 0.3c and if that is exercised, it will swell YPB's coffers by $1.666m. Resolution #10 is about getting shareholder approval to raise $500k of debt and taking such action if, and when needed.
Doesn't this focus on CR and funding suggest that they will be cash flow negative for some time beyond 2024 despite their projections that they will have an EBITDA in 2025 of +$1.377m?
As for Resolution #4 which is the retirement of the $2.25m of loan provided by JH and his related entities, they get 1.5b shares. Allowing for $29k of interest this means the actual price per share conversion rate is 0.15c, representing a discount of 25% on the current share price.
This clearly is not an arm's length settlement term. The original bottom price in the convertible note issue ("CNI") announcement was set at 0.2c so why now the 0.15c conversion rate? The ASX as part of waiving the need for YPB to get shareholder approval for the CNI with a Deed of Security over the assets of YPB required YPB to announce to the public the terms of the CNI. This announcement on March 18, 2023 had a maturity date of October 3, 2023. The announcement did not include any announcement on the right of each party to extend the term of the CNI, but as part of the Resolution # 4 narrative it states that " JFHH has agreed to allow the Company additional time until 30th June, 2024 to repay the convertible notes". To me, this seems like a conflict of interest when the issuer of the CNI and the receiver are one and the same person. I think the ASX should investigate, especially given that JFHH was given a Deed of Security over the assets of YPB, against the interests of all shareholders, and it probably remains in place at this moment.
On Resolution #7 which is to secure shareholder approval for a 10:1 share consolidation is behind what I have maintained for a long while that with the amount of YPB's debt, the share price flat-lining at 0.2c and the consistent over-promising/under delivering record of YPB was a major deterrent to any successful meaningful CR. These share consolidations have had a devastating impact on shareholder's investment in YPB. For instance, if an investor, including the 'professional and sophisticated investors' who also have been truly burnt by YPB's manipulations) had invested $1.0m at the IPO in 2015, at $0.20 per share to buy 5m shares, after the 2022 share consolidation those 5m shares became 200,000 and with the proposed 2nd share consolidation, that number of shares drops to 20,000 and with the projected share price to go to 2.0c, the 5m shares bought in 2016 then are worth $400!
On Resolution #9 to seek approval for a name change, I am of the opinion that it is no more than to hide 'the skeletons' in YPB's closet. YPB's consistent failures to deliver is behind the name change, not that the new name reflects the new directions and solutions such as the ConnectQR.
YPB Price at posting:
0.2¢ Sentiment: Sell Disclosure: Not Held
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