make or break time coming up..., page-7

I thought the convertible notes were due to have been either converted or repaid in June, but so far no sign of either, so perhaps they have been extended. They borrowed a further $1.5m from somewhere last quarter, as well as issuing shares to raise another $1m this quarter.

The biggest issue is that, so far, the majority of the cash has probably come from MIS schemes and not from pearl sales - I think there is one more year of MIS sales to go and then there will be a few more months beyond that of cash inflow as installments are received. Now they are reaching a point where they have to start paying back the MIS scheme investors the return on the pearling ops at each harvest. As I read it, APB will get to keep about 40% of the revenue from each harvest and the rest goes back to MIS holders.

Need to do some calcs, but think they will struggle to cover costs with that if SSP prices don't improve significantly.

They say that "underlying operations" will be cashflow positive from next calendar year harvest, which gives the impression they are about to turn the corner - but not clear to me that they are including MIS cashflows in that. Also, probably next calendar harvest not until Sep 2011 anyway, with sales probably Dec 2011 - Mar 2012.

How many years can they go on diluting and borrowing while they build up to having their own farms?