We have still not seen a half yearly report from Epsilon....

We have still not seen a half yearly report from Epsilon. Looking back at last years half yearly, there is a statement that the analysis assumes the company is a going concern as a basis for financial reporting.




If the auditors cannot currently agree that Epsilon is a going concern, potentially we haven't yet seen the half yearly report because the auditors can't sign off on the analysis.

I understand the very latest the half yearly report can be put out is the end of this month, otherwise Epsilon risks suspension from trading.

It is easy to understand this concern if we assume a burn rate of $500,000 per month. This brings bank balance at the end of October to $1.1 million. At this point we also assume, until Epsilon says otherwise, that around $3.5 million is payable to clear the loan facility as this is due 31 October.

This leaves a deficit of $2.4 million.

If capacity to raise funds is at 10% (around 20 million shares), this requires a raising price of $0.12 per share just to break even, not to be a going concern. A raise price of $0.12 per share is not guaranteed, it could be lower.

We can say there is more fund raising capacity than 20 million shares, but this may require an EGM and one has not yet been called, also 21 days notice is required for a vote, so an answer would arrive past the end of this month when suspension may occur.

We can have sell-off of assets with funds realised before the end of October, but none has been announced, and it now appears that Southport cannot be sold due to the deal with Valens.

We can also see the debt refinanced, however it is far from clear that the asset base of the Southport facility can be considered as large as it previously was - see previous post (link). It is possible the deal with Valens has influenced the ability to refinance the debt.

IMHO it will be helpful for the directors to now clarify the status of Epsilon as a going concern.