For the Record8 Oct 2018 09:35
'They need to sort out their financing fast because it is plainly obvious from their accounts and trading statements that they are going to run out soon.'
I posted the above on the 21st. May. I considered the stock a complete barge pole, an utter POS!
Margins were clearly very thin and they were out of cash to progress sales. The founder then dropped them in it by dumping his stock on the market which halved the SP.
I have done a modest amount of DD, I've talked at length with the boss, specifically about how poor the margins were. This is what I learned,
By taking the sales internal they have improved the margins to 30%, this will take a while to roll out in the figures as the early contracts had pitiful margins circs 6%. The re-sellers will net them a minimum of 10% and will cost them nothing so straight to bottom line. Their retention rate is excellent, customer satisfaction is excellent. They raised £2million, MC of £2.5million. They expect this cash to see them through to cash positive. New customers were 300 in August and 320 in September .
Check out the presentation from the Turner Pope investor evening. The boss gets £60k per year which is peanuts. His family are heavily invested (as is he) at much higher levels. The directors put in about £50k in the placement via deferred wages given as stock.
We were repeatedly told that there are multiple large contracts being negotiated, the large £3.5million contract could well morph into something bigger and hitting the bottom line sooner. Expect good news flow over the next few months.
Having marked this a barge pole, I have bought in post placing, under the placing price. It is a 'bombed out' recovery play, high risk yet v well funded for the next 18 months. It has time to prove itself and I expect strong news flow . I've not put much in, just under 10k, but enough to keep me interested.
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