Member Info for m007j

Could this be a takeover play? Surely the active fund management sector is ripe for consolidation.

Feels like countingcards has lost his away somewhat after that preposterous suggestion. Just like the company I am afraid.

Countingcards

If the company is trying to flush out small investors by making misleading statements about their progress in China and the US then that is market manipulation by the company and its directors and that is illegal. I think it very unlikely the company would do such a thing. I think it is more likely that they are actually struggling to get traction in these markets and therefore need to raise more money to cover their fixed costs.

If you read the RNS statement carefully you will see that Aviva did not participate in the last fund raising. Aviva have had a stake in the company for over 2 years. The statement said they had increased their stake from 8.2pct to 8.5pct. The investor who participated in the fund raising was one player who took a slug of 29.7m shares. We do not know who that investor is as yet. It has not been disclosed. But it should. I bought it is PepsiCo or Coca-Cola or a PE firm like KKR because if it was I reckon the company would have widely broadcast it. It is likely to be some penny share punter like that bloke Myles McNulty.

Countingcards you are one of the few shareholders who is happy about the way things are going at East Imperial. It is good to be an optimist although sometimes costly.

Slip slidin' away

Slip slidin' away

You know the nearer you're to administration

The more you're slip slidin' away

Slip slidin' away

Slip slidin' away

You know the nearer you're to administration

The more you're slip slidin' away

From today's RNS regarding the Capital Reorganisation: "As the Company is not permitted by law to issue shares at an issue price which is below their nominal value, the Company's ability to raise funds from investors is limited due to the proximity of the mid-market price of the shares to their nominal value. Whilst the Board's objective is to achieve the highest possible issue price for the Company when issuing shares, it is cognisant that, given current market conditions, the Company may be unable to issue shares at a sufficient discount to their market price in order to attract further equity investment into the business".

Suggests the company expects the next fundraising in April will have to be done at below 1p.

When you have a gross margin of 30% and fixed costs of £2m per annum you do not need a finance director to tell you at what level of sales and average price per unit you become cash flow positive. Surely that is GCSE business studies stuff?

Cash flow positive (promised to be in Q2 2024) has been delayed indefinitely. From las week's RNS: "Establishing the US base and distributors has taken longer than expected, and with sales in China also growing slower than expected, the Company's cash flow break-even point is now expected to occur later than anticipated. Therefore, the Company requires additional working capital to finance operations during 2024".

Also, expect another fund raising in April. From last week's RNS: "The net proceeds of the Placing will provide the Company with a cash runway until April 2024".

Bottom line - East Imperial remains heavily loss making and that is not going to change any time soon as Burt fails to increase sales of his product. Let me remind you of the revenues the company has generated since listing:

FY 2021 Revenues: £2.8m

FY 2022 Revenues: £3.2m

H1 2023 Revenues: £1.2m (meaning FY 2023 revenues are unlikely to exceed £3m)

That is pretty poor. I see 3 possible scenarios going forward. (1) Burt pushes on with his strategy until investors get fed up of funding him to generate losses and the company goes into administration (most likely scenario); (2) Burt is removed and someone who knows what they are doing takes over with a new strategy (unlikely to happen while Burt is the biggest shareholder); (3) someone buys the company (this is most likely to happen after it has gone into administration).

Countingcards seems to be a bit confused.....

What do you mean by "I see the £325k as a seperate placing requirement and not connected to the previous raise". This is just fuzzy logic. Burt had to raise £325k at a massively dilutive price of 1.1p because otherwise he would have run out of money and the company would have gone bust. He now has money to last until April 2024. At which point he will have to raise more money otherwise the company will go bust. There is nothing separate about it. The company currently has a cash burn rate of over £2m per annum.

Just a reminder how much Burt the CEO has raised from investors since the company came to the stock market in 2021:

£3m placing of shares in July 2021

£3.4m placing of shares in Jan 2022

£2.2m convertible loan in July 2023

£0.3m placing of shares in Jan 2024

Total: £8.9m

This is for a company that has been going for over a decade and which in 2022 had revenues of just £3.2m. Revenues for the full year 2023 are unlikely to beat the 2022 number given then stood at just £1.2m for the first half. Since listing in 2021, East Imperial has raised more money from investors than it has generated in revenue. And we can expect another fund raising in April.

All very disappointing!

I do not understand why the company has not issued a statement saying the placing has completed and named the new investor. It would be very easy to do.

To be honest I am starting to view Tony Burt the CEO as a bit of smoke and mirrors merchant. The company stopped producing last year because of a lack of capital. Shareholders were told long after the event. He then does a fund raising last summer with cash which is supposed to last until this summer. Then he runs out of cash and announces a fund raising for 300k last week which will keep the company going until April this year at which point he will have to raise new money.

In November in the Directors Talk interview he said the company would be profitable by June this year. Last week's statement said this has been postponed. Until when? Not clear.

In January this year he put out an trading statement. But only reported on trading in New Zealand? What about trading in China, Singapore, Macau and the US? No comment on trading in these major markets. I guess because there is not much positive to report.

I do not thing Aviva is the investor who subscribed to last week's placing. They already had 26.1m shares according to this statement from back in 2022:

https://www.lse.co.uk/rns/EISB/placing-and-year-end-update-7h72l2menjyyagl.html

If they had subscribed to last week's placing (29.5m new shares) their total holding would be 55.6m shares or 15% of the company.

There should be a TR1 before the end of the week if the placing has been done.

"It is currently anticipated that Admission will become effective and that dealings in the Placing Shares will commence at 8.00 a.m. on or around 29 January 2024".

Has this occurred? Has the placing been completed?

Next week the investor who subscribed to the equity issue will have to be disclosed. Because they have bought 29.5m shares and following the new share issue there will be 367.7m shares in issue and 29.5m as a proportion of 367.7m is 8pct making them the second biggest shareholder in the company after the CEO Tony Burt who will have 17pct.

That charge over his shares means Tony Burt the CEO is all in on this. He either makes this company work in the next 6-12 months or he loses pretty much everything. Keep in mind he has invested a decade of this life to building up East Imperial. Today we have an new investor - either an individual or an institution - who has bought an 8pct stake in the company and clearly believes Burt can make it work.

The Company has the distribution channels and infrastructure in place in Asia and the US (the largest markets in the world). Sales have taken longer than expected to secure. It now has the cash to make those sales happen. And today we have a new investor who clearly believes the company can make those sales happen.

It will be interesting to see who has bought this 8pct stake in the company. The new shares were placed with one investor according to the statement. The idea that this investor will take a big stake and then go about selling it into the market in drips and drabs is stupid. Whoever bought this stake is a long term investor and believes in the potential of the company.