Excluding the big ideas and related party transactions the...

Excluding the big ideas and related party transactions the current situation with AEB reminds me of an oil and gas explorer turned producer I invested in. It rightly had an ASX code of EGO and history showed that it’s downfall in part was due to big egos.

EGO promised a lot but struggled to deliver, they made mistakes which led to them introducing a cornerstone investor which took a 15% stake along with lending EGO money. Shareholders were expecting them to launch a takeover so stayed on board as they didn’t want to miss out or sell at a loss. I chose to take my losses and sold. The egotistical board made more and more mistakes which a couple of diehard board supporters explained away as unfortunate events that was not the fault of the board. More mistakes were made and the very second the board defaulted on their loan the cornerstone investor appointed administrators. In the end the cornerstone investor lost most of the value of their shares and in return for the loan got all of the assets of the company. Remaining shareholders got nothing.

I don’t see AEB coming out of suspension. To be solvent they would need $6m right now, but they would still be bleeding $3.5 every six months in return for zero income. So really they would need to raise upwards of $10m but even that much would not see them becoming anywhere near cash flow positive, and definitely nowhere near enough revenue to organically grow the company meaning that they would still need future raisings to remain solvent.

Given the funds they need to remain solvent plus the money to start any sort of meaningful production and money to remain solvent during the ramp up phase I would expect they would need well over $20m but given their massive overheads I cannot be sure that even that much would suffice to see them cashflow positive by the end of the initial ramp up phase.

Given their extended suspension it is clear they are struggling to raise the $5m they have indicated that they want to raise so I see no chance of them being able to raise $20m. Also remember that raising funds has expenses associated with it, so raising $5m does not mean AEB will wind up with $5m.