PET had cash of $10m as at 30 June 2023 however there is some...

PET had cash of $10m as at 30 June 2023 however there is some important info that the company didn’t disclose.
Seasoned followers of PET like Shortblack pointed out that cash expenses for the June quarter looked very low compared to previous quarters. So PET probably held back paying creditors until July - this increases cash but added to creditors. The haven’t told us the creditor number, but eventually these creditors need to be paid plus new ones.
If you assumed that the held back say $1m of June creditors paid in July and then estimate the cash burn from 1 July until now - say $1.5 to 2M, then PET cash balance would to today close to $7m.

Now here is the big piece of information that the company is now disclosing to us - how much of the cash is sitting in Chinese bank accounts. It’s easy to get money into China but really hard to get it out. I would expect all the Chinese debtor payments received in 2021 and 2022 - well over $5m at that time, could be lower now, is still sitting in China.

For a company purporting to be about full disclosure, they leave out important information. So, making some assumptions, if total cash is today around $7m and say $4m is in Chinese bank accounts, the company has less than $3m in accounts that it can use!. Some of this $3m is required to pay out staff and other liabilities. With a cash burn of over $1m a month you can see why the Board has pushed the panic button.

The route cause of PETs problems is its inability to make sales. Sales for 2022 were $3m and estimate of $1.5m for the first half of 2023. The company has spent around $20m over the same time period. One large sale could turn things around. The Board clearly doesn’t have confidence that management will deliver. Maybe a capital raising at a deep discount - 1 billion shares at 0.5 cents raising $5m less costs. It would give the company say 6 months to survive to make the promised sales - but based on this managements performance to date, this money could go down the toilet very quickly.