Hi AllAfter Greenearth Energy raised 30% of the capital they...

Hi All

After Greenearth Energy raised 30% of the capital they required recently, thought that I would revise share price liquidation previously completed. Please note that if Greenearth Energy are able to secure an investor to supply the remaining funds at a full price of 8 cents, then the previous analysis will stand. The previous analysis is:

ANALYSIS BASED ON FULL RAISING TAKE UP
After all capital raisings and new issues in lieu of payments, the total number of shares on issue will be 192,231,043.

The new share price value based on September liquidation is $0.0349 (assuming shareholders take up full entitlement).

Assuming that GER spends $600,000 per quarter in cash (last year they had negative cashflow of $2.4 million, not taking into account capital raisings), the following share prices will be applicable at each quarter:
2011 December Qtr $0.027
2012 March Qtr $0.024
2012 June Qtr $0.021
2012 September Qtr $0.018

On above scenario, GER would be able to survive up until July 2013.

ANALYSIS BASED ON PARTIAL RAISING TAKE UP
After capital raising and new issues in lieu of payments, the total number of shares on issue will be 132,751,057. GER received $1,224,071 in cash in September 2011. GER had cash at bank of $759,000 in the September 2011 quarter.

Potential shares and unlisted options to be issued over the next three months are an additional 59,479,986 (29,739,993 shares and 29,739,993 unlisted options). This would raise additional capital of $2,379,199.44 (shares at $0.08 each).

Currently GER have $1,983,071 in cash at bank. The amount of listed shares and options are 132,751,057. Based on cash at bank from the September quarter 2011, GER liquidation value was $0.015.

Assuming that GER spends $600,000 per quarter in cash (last year they had negative cashflow of $2.4 million, not taking into account capital raisings), the following share prices will be applicable at each quarter:
2011 December Qtr $0.0104
2012 March Qtr $0.0059
2012 June Qtr $0.0013
2012 September Qtr – Liquidation arrives in July, one month of cash remains

While I do not believe the above liquidation scenario will occur, it is a high risk due to the state of the capital markets at the moment.

The risk is greater for GER as a number of their large shareholders did not invest in the recent capital raising. GER’s largest shareholders make up 62.7% of the company, but only 30% of the capital raising was taken up. This indicates that not all large shareholders invested in the company and there is either going to be a large sell down of a current holding or the remainder of the shares will be discounted. This all adds to the potential downward trend of this company's share price.

As you can see above, GER will need to be put into liquidation in 7 months, unless it raises further capital.

Best of Luck
Lost