Here’s a list of things you don’t want to read in a statement released by a company you’re invested in:
“…will require a significant amount of additional capital to upgrade […] platform which would make [us] more competitive. At this time such capital is not available.”
“Unless further financing is secured, no new [products] are planned at this time.”
“…continues to incur significant operational losses.”
“…bridge loans are due and payable on November 30, 2013 and carry an interest rate of 24% per annum.”
“…terms with prospective investors are still being negotiated and there can be no assurance for the […] financing to be completed at this time.”
“…looking to increase the size of the board…“
“..has suspended its previous engagement with [partner] due to the current political situation. The company is evaluating whether it should continue its Egypt operations.”
It goes on.
In this case, the company is Mint Technology (
V.MIT,
Stock Forum), and the statement can be seen, in all its knee trembling horror,
here.
Executives describe the company as “the world's first vertically integrated prepaid card and payroll services provider with its own ATM network, payment processing platform and proprietary branded card product delivered to workers in the United Arab Emirates and expanding to other parts of the Middle East.”
Okay, so on the upside, the Middle East is a big market. And the company does have an existing network and a decent sized user base. But then there’s this, part of their general disclosure statement:
“Since inception, the Company has not reached profitability. The Company relies heavily on high-cost, debt financing to fund its business plan. This has exposed the Company to unique financial risks associated with significantly higher than normal debt levels.”
Also, it “operates predominantly in the Middle East and North Africa .... It is accordingly exposed to significant political, legal and regulatory risks associated with operating in these emerging and volatile markets. The key management personnel and operations of the Company are based in countries which do not have strong and reliable judicial enforcement.”
The
Mint bullboard has been busy today, which will happen when a press release comes out announcing a trading halt, then another announcing the retirement of the Executive Chairman, then another announcing what appears to be the first creaks heard before a financial collapse, and then another announcing a resumption of trading.
Still, there’s drunken optimism out there: Bullboarder LeSaintRock posted, “lets be more optimistic, 20M financing deal and acquisition of Speed Remit? What all of you guys thinking?”, while others are throwing in hail mary buys of $0.005 in the hope that next week will bring news of a big investment and an instant Christmas bonus.
But for now, Mint is in freefall. The company lost 71.43% of its value through the day, with volume of 5,065,500 at the time of writing, dropping from $0.035 to $0.01, a 52-week low from the $0.14 being taken in October last year.
If it does find Series X financing, and that's a big if, then the stock price will jump significantly, and profits could be had on bottom out purchases now.
But if I was a betting man, I’d say the company will be forced into an asset fire sale before the fat lady starts to wail, and that would only see a jump in stock price for a moment if it can get back significantly more than the outstanding debt.
I’m going to need a few more gins and perhaps a keg of Stella to get me on the buy bus on that theory.
--The Drunken Optimist is a supremely untalented stock guru with no position in anything, at all, ever. He’s still convinced potash is a big buy and Enron is due for a comeback any time now, just as soon as economic pillaging becomes legalized and regulated. Take his opinion wit a grain of salt and a wedge of lime.
To see what he thinks of evil social gaming company Zynga, click here.