I guess the concern could be the continued improvement in cashflow has been outlined in previous reports, the below from 2011 where a projection was made when banking covenants were breached. Might be a wait and see if the directors can follow through on their forecasts before jumping in?
"- Management has prepared a cash flow forecast for the 15 months ending September 2012 which assumes an improvement in sales, profitability and cash flows, which indicates a strong cash position"
From the 2011 report:
"The Group incurred a trading loss of $342,723 and incurred negative cash flows from operations of $836,683 for the year ended 30 June 2011. Accumulated losses were $12,985,197 as at that date. Additionally the Group has breached its bank covenants in relation to its long term loan facility (refer to Note 11 – Interest Bearing Liabilities). Whilst these factors cast doubt regarding the ability of the Group to continue as a going concern the directors identify the following mitigating factors:
- Management has prepared a cash flow forecast for the 15 months ending September 2012 which assumes an improvement in sales, profitability and cash flows, which indicates a strong cash position - Actual sales for the 2 months ended 31 August 2011 significantly exceeded budgeted amounts - The Group’s bankers have renewed the loan facility for a 12 month period with the next review due 31 December 2012 - As disclosed in Note 12 – ‘Subsequent Events’ the Company raised additional capital of net $678,570 post 30 June 2011 (14 July 2011) from the exercise of 38,083,074 options at 2 cents per share offset by settlement of a shareholder loan, principal and interest, of $83,091."
MLA Price at posting:
14.0¢ Sentiment: None Disclosure: Held
