Another weak result out... only $2.3m of cash receipts- they had...

Another weak result out... only $2.3m of cash receipts- they had $3.8m of receivables on the books at start of quarter. Taking a while to collect (perhaps because MIS applications are paid in installments over 10 months).

At half year, they justified the going concern basis on the rights issue, sale of inventory from Feb and more MIS sales through until June.

The rights issue cash has effectively all gone to pay down bank debt. It appears unlikely they have sold much of the inventory - and even so, will not be enough to fund more than another quarter. Also, given there are no "current" biological assets, it would appear that most of the proceeds of this years harvest are due to MIS participants? MIS sales cannot have amounted to much either based on cash receipts -though if my reading of the scheme is correct, there is probably the same financial return for investing in January as in June, so most participants might leave money on deposit until then.

So only $428k of cash left. Also $4.5m of debt - though about $2m of that is convertible notes and the remainder is, I think, finance leases. The convertible notes all come up for conversion in June, and indications are that they won't be too dilutive as $1.5m worth convert at 45cps and the remainder at 18cps - though I can't find any precise documentation or indication as to whether the conversion price has been affected by rights issue dilution. On current understanding, there will only be 6.1m shares issued against the notes.

However, that aside, the situation looks a little on the precarious side based on current expenses - they urgently need to sell pearls. With the first of the MIS schemes (2007) due a return from June, APB will only be due about 40% of the sale proceeds from pearls, with the rest going back to MIS participants.

On the positive side, they are out of the banks clutches and the real losers may turn out to be the convertible note holders and the MIS participants. If the MIS crew come out with a marginal or negative return and no new takers can be found, the owners of APB end up owning the farm and future harvests - just need to generate enough funds from the end-of-project MIS takings to keep operations going (still a tough call until prices improve).

Will watch with interest.