"Since we have not been supplied the loan agreement between APH and Charlie Mann, you have to assume worst case scenario (he can call in the debt at his election)."
It's almost certain the loan is owed for other reasons because the last 4C stated: "Loan facilities include commercial loans and finance lease loan facilities outstanding at the end of the quarter." So you can stop stressing about a loan that doesn't exist and therefore can't be recalled at the drop of a hat. I'm guessing that finance lease loans would be multi-year and re-payments would be included in expected cash outflows? I do agree that it would be good if the company was to provide greater transparency in relation to the debts. Maybe you could ring/email them and ask for it to be included in the next quarterly?
"I think it's time to search for a new RTO...."
Additionally, the last quarterly included: "The company projects that it will have at least $2.85 million in funds following the Company's listing." I'm curious, what do you know that the directors don't know? Considering they know the business plan, the company's financials and anticipated inflows.
"If Q3 is poor and Q4 is killed by Corona"
What makes you think Q4 will be killed by Corona... considering how well it seems the supermarkets have been doing? It appears retail food sales will not be impacted by Corona. Social Isolation won't stop the farmers growing crops nor will it stop the conversion of the raw product into something that can be sold. How is Corona going to kill off sales? If anything, consumers may become more health conscious and may turn to alternative products such as hemp seed/oil? I guess it will all depend if the economy enters a depression rather than a recession but it's far too early to make that assessment?
I don't know what APH makes per kilogram of hemp seed but the retail price is around $25kg. So factoring in significant discounts for wholesale purchases which will occur as per the sales agreements that commence later in the year, I figure $5 is a conservative amount to allow for gross profit? So 600 tonne @ $5kg = $3 million gross profit. Not spectacular but enough to fund expenses while the business establishes itself. Obviously things start to look better if the gross margin is better &/or the sell closer to the 2000 tonnes that they have options for (600 tonne @ $7.50 = $4.5 million &/or 2000 tonne @ $5 = $10 million).
I'm with Kar18na in thinking the current share price is cheap however we will need to see how the next coupe of quarterlies look before we know one way or the other.
APH Price at posting:
5.3¢ Sentiment: Hold Disclosure: Held
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