Hey Pauly ... have you looked closely at the company’s...

Hey Pauly ... have you looked closely at the company’s financials? Off the back of the Ord’s report I was thinking of increasing my holding and figured I would run my eye over the numbers again. A couple of things have left me a little concerned.

1. Up until the most recent financial report they have been recording the increase in biological assets (ie fish growth) as revenue. According to the accounting standards it should be reported as other income. The upshot of this is that they have been inflating their revenue figure by approx 100%. In the 2020 annual report they have corrected this (It stands out when you look at the comparable 2019 figure) without issuing any announcement about the restatement.

2. Looking at the last 4c and taking into account the significant increase in fish stocks I think they are running into a cash crunch. They have $6m in the bank but burn approx $4m on operating costs. With the significant increase in fish stocks that will increase. The total cash used was approx $11m but that includes some capex on the new ponds which presumably they could pause that work.

Makes me wonder if the Ord’s report was intended to pump the price in advance of a capital raise (Ord’s did the last cap raise). if they need to raise capital to meet operating costs I don’t think the market would react positively.

I’ve been a supporter of the company and the macro factors around the aquaculture opportunity but the points above are making me feel a little uneasy.