MikeF13 Jan 2012 22:28
Glad to hear it! Spent Christmas abroad this year and had a great time, very nice for a change.
They have certainly released some very positive news lately, which has really rekindled my interest in the company, as a prospective long-term investment with the potential for some short-term profits if I can time my entry right.
Thanks for your detailed response, I knew I could raise my issues here without you getting the @rse! More than can be said for many BB's these days.
I perhaps misinterpreted the investment in AHG as being a way of sealing the deal for AHG to subscribe for shares in IHP, an investment I expected would be sold to a third party and proceeds would contribute to the DLM acquisition. I may be wrong, however:
cash position at 30/09 was £30,608, + £44,177 net raised in November, = £74,785.
"The proposed arrangements comprise an initial investment of up to £160,000 to secure a majority interest in the project during the two year development stage followed by Intellego's option to maintain this interest into the exploitation stage."
Do you know how this initial investment of up to £160,000 in DLM will be structured? Not saying it will be £160,000, at least in the short-term, but it does look as if holding onto the AHG shares could leave them very short of working capital, short of a significant upswing in cashflows.
Looking at AHG, it wouldn't be such a bad thing if they sold the AHG shares to a 3rd party soon after the deal was made, as IHP paid 0.415p per AHG share, and the shares are now sitting at 0.31p, worth just £68,211.
However, there is still the issue of up to 200 million shares to be issued in respect of the Pixel acquisition, the first tranche of which could be not long after the year ending in February.
Again it could be nothing, but as you say performance of Pixel has been strong, so there is certainly a chance that milestones have been met. The silver lining is that the deal involves shares in DLM being issued at 0.5p, not current market prices, otherwise the dilution could be much worse.
Hope it doesn't seem like I'm over-scrutinizing here, its just that I follow a number of micro-caps and I know that in the current market, any potential weakness or negatives are treated as certainties, guilty until proven innocent if you like, so I'm just trying to work out how much dilution is likely over the next year, and when sustainable profitability is likely to be reached.
You could be right, they could well be profitable for the full year. They say they are expecting a significant improvement in sales for the full year. Last years revenue was just over £2mil, and H1 this year was only £578,940, so even just to match last years revenue they will need a 200% improvement from H1 to H2.
If they do achieve this, and indeed more as they say, then who could say they won't be profitable for the full year. Proof will be in the pudding!
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