Abundant Produce (ASX ABT) released its half-year results recently and they were awful. Even the auditor mentioned there was a question mark over whether the company could continue.
The Punter was attracted to the company by its original intent to produce seeds for vegetables that would thrive in harsher conditions, without expensive high-tech support.
A spin-off from research at the University of Sydney and the University of NSW, it soon expanded into producing cosmetics, aimed mainly at the Chinese market.
The seeds, particularly cucumbers, are sold in NSW, South Australia and the UK, and are being trialled in other Australian states, Europe, North America the Middle East.
The price of the shares doubled to almost a dollar in the first four months after it came to the stock market in April 2016. Since then they have been bumping downhill.
The cosmetics business has failed to take off. Sales fell from $130,580 in the second half of 2017 to only $15,882 in the six months to last December.
Seed sales have been growing, but are still tiny - up from $30,706 to $53,431.
The cost of running the business was about $1.6m in the latest six months, up from$1.3m in the corresponding period.
The accounts have been prepared based on the directors' belief that ABT can carry on, but the auditors did note "a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern".
With a deep sigh, the Punter has decided to cut his losses and sell.
On a happier note, news from the Select Harvest (SHV) meeting recently was much better. Operating cash flow has continued to increase and debt has been further reduced. Perhaps he should not have sold them in December.
- The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.
