GamesAnother small, concern is Heri's lack of understanding of market forces. TD et. all could be financiers that know capital will be required and that Henri has no stock market promotion budget. Anyone who REALLY understands the market and follows closely knows that all these big "successes" on the TSX and CSE on heavy uptrends with volume were not because they were found on a newswire or an IR guy called someone. They spent MONEY. LOTS OF MONEY. BLOC and HIVE spent 5 million dollars plus on promotion. Glance spent 5 million. They all raised 10's of millions at a huge huge premium. Insert "X" into this...any big win in the market and dig deeper. You will find they have a huge budget for stock promotion. Why is that? So they could pump and dump? No, not always. It was to protect the shareholders and backers. It was to issue shares at a much higher price to not make shareholders (and insiders) suffer great dilution. Have the stocks fallen back to earth hard and are they deemed "pump and dumps"? If insiders aren't selling I wouldn't call them pump an dumps. They are marketing campaigns to increase exposure and gather 1000's of new shareholders and spread the float around and increase shareholder value. When they crash down (not all do) ... the company has 5-50 million in CASH to execute on the rollout plan. Dilution was minimal. So how is this bad for the company as whole for shareholders?
Basic math- Let's say Fando spends 750k of their 2 million left in the bank on promoting the story. They set up Uk, German and American newsletters, roadshows etc. The stock finds legs and runs to .50.
What happens?
1. Every warrant gets exercised. This puts roughly 4 million in the bank.
2. Likely a higher placement in the ,25-.50 range ...also makes any telcos/potential partners see strength and not a weak 9 cent stock.
3. The exposure may attract telcos etc or any X factor investor/partner who reads/hears about the company via viral communications from the programs
What happens if they spend all the money on the product to be "responsible" and not deemed "pumpy"?
Unless Henri finds a telco partner who will pay UP at a premium...or somehow there is a huge viral movement into the app and user numbers rise with a 1-1.5 million marketing budget spent on the APP launch (which is a very very small budget)....we can expect the following:
1. A 5 cent PP for 30-50 million more shares with a full warrant (diluting shareholders to death). getting only 2.5 million in the bank...still very small
2. No warrants exercised above...so a massive overhang
So best case is telco partner and viral app. As I said..maybe this is happening behind the scenes. Henri is smart. As I did say though, he has a serious blind spot with the market. He doesn't want to appear "pumpy" and feels money is best spent on the product. While this is wonderful and a breath of fresh air for the CSE...it's only great if there was already 10-20 million in the bank. There's not though.
So why would TD and all the finance guys walk this down? They are betting against Henri having a telco partner and the app launching and being a huge success on a very modest budget. They know he will need more money. They also know he has no market sense and won't spend the money to promote the stock because he doesn't feel it's important. So they probably feel very comfortable walking it down knowing the day is coming where funds will be needed. Since as far as they can see there are no partners/huge announcements and no promotion...they know he will have to come to them and take whatever they offer him.
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Also, with 5-10 million in the bank this could easily see a 100-500 million market cap inside 2-3 years regardless of dilution. The question is "what price is the next big dilution at"?. TD and finance guys think it's at .05 is my gut feeling. To my eyes, it appears they may be right. Regardless, once there is enough money in the bank via telco partnership or a PP...this will prove to be a big winner. It just may/could have been a bigger win for shareholders if there was some emphasis put on the market side to not allow the finance guys to dictate terms.
This is a theory. This is not a fact. I'm just thinking out loud and trying to sort it out like everyone else.
I'm long and strong and a Belieber!