LIQUIDATORS’ FIRST REPORT
                          Section 255 of the Companies Act 1993


                                        ( in liquidation )

Espalier Agri-Systems Limited (in liquidation) was put into liquidation by
Order of the High Court at Christchurch on the 17th day of December
2001, Iain Andrew Nellies and Wayne John Deuchrass of Insolvency
Management Limited were appointed liquidators jointly and severally.


Date of Incorporation                            28 February 2000

Type of business                                 Manufacturer

Registered Office                                33 Murrays Road

Business Address                                 unknown

Directors                                        Gary Douglas MANN
                                                 Colin John ALLAN

Shareholders                                     Industrial Machinery Holdings Limited
                                                 Ron Birch & Associates Limited
                                                 Premium Posts NZ Limited (in liquidation )
                                                        32 shares (note this shareholder is not shown
                                                        on the Companies office records)

Espalier Agri-Systems Limited (in liquidation) was put into liquidation by Order
of the High Court at Christchurch on 17 December 2001 on the application of
NZ Rural Press Limited for unpaid services. The company operated as a
manufacturer and supplier of products for the vineyard and horticultural
sectors. The liquidators have received advice from the company's solicitors
that the company will be making an application to have the liquidation order

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terminated. The company has ceased to trade on the instructions of the
liquidators, while the company's bank account has been frozen and company
assets protected awaiting the termination order from the High Court.
The company records show that some directors have resigned in the weeks
leading up to the liquidation order being made as well as the company
shareholding being altered. Directors who have resigned in the past weeks
are as follows:

Simon Augustine LINDSAY
Peter Ross HILL

The company had issued 999,900 B class shares in the company in
September 2001 and then acquired them back on 10 December 2001. The
reason for the issue and re-acquisition has not been explained to the


A comprehensive list of assets has been provided by the directors as at 30
November 2001. Pending the outcome of the termination application the
assets have remained in the custody and safekeeping of the directors subject
to the liquidators' directions.


Secured Creditors

National Bank of New Zealand Limited

Preferential Creditors

Petitioning Creditors Costs as awarded by Court to NZ Rural Press Limited

Unsecured Creditors

26 known unsecured creditor

Hire Purchase Creditor

There are no known hire purchase creditors.


Any creditor who wishes to make a reservation of title claim against the
assets must inform the liquidators and provide relevant documentation prior to

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the 1 March 2002. This may include an initial credit application form and
relevant invoices to identify stock supplied by the creditor. The liquidators will
not be held to account to any creditor for the proceeds of sale after the assets
are sold.


The Balance Sheet of the company shows the book value of plant &
equipment which has been supplied to the liquidators as at 30 November
2001 to be $172000.00. Should the application to terminate the liquidation be
unsuccessful, the liquidators will proceed to obtain a registered valuation of all
plant and equipment to determine their value. The records of the company will
also require examination and investigations into the company’s affairs and the
directors' conduct will need to be completed. If the liquidation is not
terminated then it appears that there will be a dividend to the unsecured
creditors, however this is dependent upon the values received on the
realisation of the assets. It is recommended that all creditors promptly submit
a proof of debt to the liquidators.


Given the financial state of the company the liquidators relying upon section
245 of the Companies Act 1993 hereby dispense with the need to hold a
meeting of creditors.

In accordance with section 314 of the Companies Act 1993 a creditor or
shareholder may request the liquidators to call a meeting of creditors or
shareholders at any time in the course of the liquidation to vote on a proposal
that a Liquidation Committee be appointed to act with the liquidators. This
request must be in writing.

The liquidator may decline a request by a creditor or a shareholder to call a
meeting on the ground that:
(a)      the request is frivolous or vexatious; or
(b)      the request was not made in good faith; or
(c)      the costs of calling the meeting would be out of proportion to the value
         of the company’s assets.

The decision to decline a request may be reviewed by the Court on the
application of any creditor or shareholder.


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As earlier stated the liquidators have been advised that the company is
making an application to the High Court to have the liquidation order
terminated. If this order is not granted then the liquidation will proceed with
the sale of the company assets and investigation into the collapse
If you have any information that you think may assist the liquidators,
you are most welcome to contact us during normal business hours.
Failing any significant information becoming available, we expect to complete
the administration of this liquidation by 28 February 2002 assuming the
termination order is granted, if however this is not granted then the liquidation
will take some time to complete and at this time the liquidators are unsure
when the liquidation would be completed. We expect to report to you at that
time which will be the final communication to you on this company liquidation.

All enquires in the first instance to Wayne Deuchrass

Dated this 3rd day of January 2002

___________________________                      ________________________
Iain Andrew Nellies                              Wayne John Deuchrass
Joint Liquidator                                 Joint Liquidator

Liquidators address:
Level 7                                          Level 4
10 George St                                     728 Colombo Street
Box 1058                                         P O Box 13 401
Dunedin                                          Christchurch
phone: DDI 03 479 2639                           phone 03 377 3100
fax: 03 479 2478                                 fax 03 379 3636

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                       ESPALIER AGRI-SYSTEMS LIMITED

                                        ( IN LIQUIDATION )


 ASSETS                                                                       $

 Advances                                                                  68799.38
 Book Debts                                                                11127.02
 Directors Current Account                                                 14450.00
 Plant & Machinery (estimated subject to valuation)                       150000.00
 Total net assets                                                        $244376.40

 CREDITORS                                                                        $

 Secured Creditors                                                          5780.00
 Petitioning Creditors Costs                                                3582.80
 Unsecured Creditors                                                      723582.31

 Total amount owing to creditors                                         $732945.11

 Estimated deficit for creditors, subject to costs of liquidation        $488568.71

 SHAREHOLDERS                                                                     $

 Share Capital                                                                100.00

 Total estimated deficit subject to costs of Liquidation                 $488668.71

Disclaimer of Liability: The Statement of Financial Position has been
assessed as at the date of liquidation. The information has been sourced
from the company officers together with the books and records of the
company. As yet we have not fully investigated the validity or otherwise of the
information presented to the liquidators and therefore do not accept
responsibility for the accuracy of the information provided.

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