After reading some of the comments overnight and to today's announcement I decided to go back and look at some of the historical annual reports. Seems like the AGMPL Services agreement has been in place since the listing of the original company two names ago back in 2007. It was called Australian Gold Investments Limited. Back in 2008 the AGMPL fee was over $600,000, reaching almost $1,000,000 in 2012 and now $1.8m.
Accumulated over 12 years that services agreement represents a fair chunk of the $30m in carry forward losses. Gold Jerry, Gold!
What I did find interesting is our change to our registered office since 2012. Over the last two years it was 24 Birriga Road in Bellevue Hill which looks very impressive, it appears residential rather than commercial offices. In addition the location of the registered office in the annual report moved from the front of the report to hidden in note 36 in the 2018 annual report. The change in registered office to Bellevue Hill seems to be timed to the sale of our previous registered office at 67 Penkivil Street in Bondi, from our previous registered office in Level 34, Bridge Street in 2013. Not sure why we moved from a commercial address to a residential address. Rent did initially go down from around $140k to $60k but then increased to $168k in 2018 until the offices were moved back to corporate offices in Castlereagh Street in 2019. The overall costs of running this business have been very high since listing.
https://www.realestate.com.au/property/24-birriga-rd-bellevue-hill-nsw-2023
67 Penkivil Street Bondi is an even more impressive house which looks like it's going to give way to apartments. Pity... properties with that character should be protected. If only QBL had of invested in March 2015 for $2.475m and sold 18 months later for $8.4m. Maybe we should have gone into property development instead of cannabis!?
https://www.realestate.com.au/property/67-penkivil-st-bondi-nsw-2026
Unfortunately I couldn't find any explanation in the annual reports. Have I missed these discussions on another thread?
Even with $5m in cash and $1m in receivables, after deducting the $1.8m in services, that leaves $4.2m or approximately 0.0000000014 cents per share + of course any cash profits from products sold.
I come back to my original question as to whether we have the right people in place to make the transition to the next phase as a totally different company from which we have come from or this is just a cash box for funding the AGMPL Services agreement? Given the high fixed costs, when does management expect this company to be cash neutral?
I'm holding on the faint potential within this innovative industry (unless I can find a better alternative), but leaning towards sell if the people that have been there since Australian Gold Investments do not move on. This is now beyond start up. Otherwise management put together detailed financial forecasts and head to a small cap broker/analyst and sell the potential if there is substance behind this business and we can look forward to a buy recommendation if the estimates are realistic and the assumptions stack up!
