asset stripping : a classic example

Asset Stripping in progress
Following note “16” was extracted from the accounts of the a public company who submitted a report to the ASX today. The company is OZ Brewing Limited and the Directors in my view have undertaken certain procedures to defraud shareholders.
The jargon spewed by Directors of OZB in Western Australia attempts to justify their “Asset Stripping” procedures. The practice of “Asset Stripping” is illegal but the ASX and the ASIC do not act in a timely manner to prevent these occurrences from happening. It is a bit late to shut the gate when the Mob has bolted.
These regulatory bodies the ASX and the ASIC were originated to interpose themselves between the Investor and the Marketer to ensure Confidence, Accountability and Governance in justice and in law.
Yet complaints have been registered begging an investigation but it still happens because of the regulatory compliancy of our regulators to act in a timely manner.

14 Other significant information
Going concern
The financial statements have been prepared on the going concern basis which assumes that the assets and
liabilities of the Group will be realised and discharged in the normal course of business. As at 30 June 2008, the
following matters are considered pertinent when considering the ability of the Group to continue as a going
concern.
The Group recognised a loss after tax for the financial year of $3,346,093 which included an impairment expense
of $1,801,214. At 30 June 2008 the Group had a net asset deficiency of $914,689 and a net current asset
deficiency of $1,621,749. The result for the year and the net liability position at 30 June 2008 have been adversely
affected by:
􀂃 Recognition of an impairment expense of $1,801,214 related to the leasehold improvements of the Mad
Monk venue;
􀂃 Operating losses of the Mad Monk venue amounting to $678,207.
Other significant information (continued)
The application of the going concern basis, despite having a net deficiency is appropriate in the opinion of the
directors, due to fund raising and business activity rationalisation subsequent to the balance date, as follows:
􀂃 On 31 July 2008 the Board announced that it had raised $500,000 by the issue of convertible notes;
􀂃 On 18 August 2008 the Group announced the sale of a 49% interest in the share capital of the
subsidiary company Mad Monk Pty Ltd, which holds the Mad Monk venue. As part of the sale
agreement, initial consideration is the cancellation of $515,000 existing convertible note debt. Also the
transaction requires that all profits/losses derived from the trading of the Mad Monk venue from 18
August 2008 are no longer attributable to the Group, and as such the Group is not exposed to further
accounting or cash losses from trading from that date. In the event that the option to acquire the
remaining 51% of the share capital of Mad Monk Pty Ltd is exercised, the Westpac loan amounting to
$427,083 will cease to be a liability of the Group;
􀂃 There is further capacity for the Company to review the operating cost structure;
􀂃 There is reasonable belief that key shareholders will continue to support the Company in future capital
raisings.
Should the Company not be successful in raising additional funding by capital raisings or other alternative funding
arrangements fail to eventuate, there is significant uncertainty as to whether the Company and Group will be able
to continue as a going concern.
If the Group is unable to continue as a going concern, it will be required to realise its assets and extinguish its
liabilities other than in the normal course of business and at amounts that may be different to those stated in the
final report.
15 Foreign entities
N/a
16 Commentary on the results for the year ended 30 June 2008
The main activities of the group for the year ended 30 June 2008 have been the completion of the development of
the Mad Monk Café venue in Fremantle, Western Australia, and the commencement of the Group’s trading in
October 2007.
Due to a result of the decision to increase capacity, design amendments and to address unforeseen costs arising
from the original budget the group raised a further $1 million through the issue of convertible notes in August
2007, and entered into a 4 year bank loan agreement with Westpac Banking Corporation Limited raising a further
$500,000.
The Group has net cash used in operating activities of $844,514, included in which are receipts from customers of
$2,081,414 and payments to suppliers and employees of $2,892,854. Payments made to acquire property, plant
and equipment, comprising leasehold improvement costs and kitchen equipment, amounted to $1,774,528. The
Net cash outflow for the Group of $1,533,976 was partially funded by the receipt of $675,000 on the issue of
convertible notes and $500,000 proceeds from bank loans.
At 30 June 2008 the group had $57,529 in cash reserves, and net liabilities of $914,689.
The loss for the year ended 30 June 2008 of $3,346,093 is after gross profit from trading of $232,961 less an
impairment expense of $1,801,214 in relation to the capitalised leasehold improvement costs, and other non direct
venue related costs of $255,734. Loss per share for the year then ended is 8.88 cents per share.
There have been no dividends or share buy backs paid or proposed during or since the reporting period.
An assessment of the trend in performance of the group is not considered relevant as comparative trading
information is not available as this is the first year of trading activity.