I suggest Ozbecool that you read your 18 December thread that answers one of the questions raised in your last thread also have a read of some of Buffets sayings where he states that he only invests in companies where he has a knowledge of the industry and that they have experienced and professional management. Have a look at the background of the Directors.
It is suggested that those interested in trying to understand the current financial situation that they analyse the Annual Report where a net current asset deficiency of $4.565m was reported. There was a negative cash flow from operations reported of $2.53m. They reported net assets of $221.19m of which $163.07m was intangibles and goodwill.
If they raise $60m and write off $99.5m then according to my calculations they will have net assets of $117.2m. Based on a share register of 426.79m shares that results in an asset backing of about 27cents a share.
At this stage we do not have sufficient information on the write off or asset valuations or trading results since 30 June 2010. If it is assumed that the write off is against Intangibles and Goodwill then there could easily be a further $63.5m sitting there that wouldn't realise any cash in the event of liquidation, if this is the case then the asset backing would be reduced to 12.5cents a share.If the write off applied to other assets then the net asset backing would be much less.
This also assumes that the directors have made a realistic assessment of asset values. If they have struck a price of 5 cents then it is obvious they have burned a lot of cash since the end of last financial year.
Hopefully all this will be revealed on Monday and don't forget that one of the contributors to this forum has written to ASIC expressing the concerns of investors.
NMS Price at posting:
8.4¢ Sentiment: None Disclosure: Held
