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First of all
The promissory note isn't revenue, it's a capital infusion to support operations and not overly the burden the company given the low market cap. Seems smart and shareholder friendly to me.
With respect to player counts, where are you getting your data? It contradicts the September update press release. Perhaps you think the CEO is lying or misrepresenting the data. Do you have proof of that?
"With the month of September now complete, and despite the start of a new school year, we are happy to report our Minecraft division revenue was up over 30% from the previous month. This was primarily due to the overwhelming success of the Skyblock Seasons and Olimpo releases. Additionally, our concurrent players increased significantly. We expect to see these numbers continue to climb as our servers penetrate the European and Latin Minecraft markets."
Moreover, if you look at the last quarterly report, the company did generate modest revenue and is up significantly year-to-date. Given the paltry market cap of less than $700k, the risk reward is highly skewed in favor of longs.
Companies in the private markets with significant liabilities, no prospect for revenue in the near term and addressing less compelling market opportunities oftentimes trade for market capitalizations well north of $10mm (in some cases, much higher). Being bearish on a company at this valuation with a sponsor that wants to increase shareholder value seems like a very bad bet to me.
Let's see what they have to say about Daytona and the agreement with Koralis. More to come on those fronts.
Very attractive financing
Albeit a small loan, but it's non-dilutive even if the maturity date is missed. ViaOne is obviously intent on increasing shareholder value.
In the land of OTC, you rarely see such favorable financing.
So why is it taking so long
To complete a 10-K for a company with no assets and presumably, no liabilities? According to you, no need to provide disclosures pertaining to the contemplated transaction, so that would seemingly be the only hold up to getting this done. What questions could the auditors possibly have?
It's a bizarre set of circumstances.
The audit of what, the target?
That's really not the issue when it comes to a deal. It's the financing and structure. Did he update you on those, more relevant topics?
Complain to Mark
He'll tell you they are working on completing the more significant updates.
They don't understand what it takes
To run a business. The hire is well-qualified with public company experience, which is big. It should mean that filings get done in a more timely fashion. It also helps comfort potential lenders that someone is minding the shop from an accounting and finance perspective.
They're trying to get the financing done
That's the most important thing at this point. Those deals sometimes take time. They may also require the symbol and name changes to be approved to complete the contracts. I'm just guessing on the latter, and hope I'm wrong, but I believe that may be the case.
Sent Mark an email requesting PR update
I got a rather terse response. Perhaps my frustration was too evident, but they really need to do better in terms of educating investors.
Perhaps you or someone else on this Board will get a more lengthy and thoughtful response.
Still holding and hoping...
Catalyst driven stock now
Market movements won't affect this stock much if at all. It's all about financing and Anshu's ability to deliver on the backlog. He's been talking about financing deals for over a year and a half...time to step up.
Did Mark respond to you?
Will we see an update PR with some substance soon? Company needs to build interest in the stock. There was a lot to digest in the 10-K, but it needs highlighting and explanation.
Expect an update in the next few days
Contacted IR and they told me to expect an update in a few days. Should have more to discuss regarding Daytona and the financial impact on the company.
Massive share issuance is obvious
The central questions, assuming he can get a definitive agreement (which, by the way, he still hasn't filed), are the following:
- What's the valuation that the market places on the target?
- What % of the company is left for existing ASKH holders?
- How is this financed? What mix of debt/equity?
At this point, the base case scenario is that he gets a 100% equity deal done. Then you have to answer questions 1 and 2. If he raises some debt (I don't see how, but it is possible), then more equity for ASKH holders.
Probably no filings for a deal, perhaps for the shell
Richards most likely will get current at some point, but I imagine he's not going to be able to finance this deal. The target most certainly will want some cash and he needs to raise some sort of convertible debt (probably toxic) to get a deal done. The backdrop is particularly poor as China is rolling over and junk spreads are widening across the globe.
I am curious why he just doesn't get the shell current. That is the puzzling part.
Agreed
Not sure what they are thinking, but perhaps they want to get listed on CSE before issuing more PRs. Very few institutions can buy OTC stocks, but many more, particularly cannabis-related ETFs and funds, can buy on the CSE.
There's also the issue of hiring a permanent CEO. Having a low stock price is advantageous in that regard as options will get struck at lower price levels.
This one has been puzzling...I'm disappointed in their IR effort, but it's silly cheap here, so I'm prepared to hold for a while to get the reward.
Equity markets are open
Bond market is closed. I would suspect that FINRA might be closed and won't finalize name and symbol changes today.
Good Gaming role
Seems to me that ViaOne signed the deal with Koralis and then subcontracted with Good Gaming to provide back end services. Nothing wrong with that and it shows that ViaOne wants to seriously develop Good Gaming using its experience as a broader services company.
The fact that Good Gaming wasn't promoted or displayed during the event isn't relevant IMO. When the business takes off, GMER will benefit.
At this point, the market cap is about $600k, so what's the downside? ViaOne is providing debt capital to fund the operation and its interests are obviously aligned with other stockholders given its sizable equity position (I believe they own over 8mm shares, correct if wrong).
Hopefully we'll get more updates about what events like Daytona actually mean from a revenue and audience growth perspective. That said, the valuation is cheap and skewed significantly to the upside in my view.
Trade credit is one option, but many others
Whether it's the best option depends on the terms. I actually think a working capital revolver is a better alternative, particularly given the still low-level of global interest rates (particularly in Europe, nothwithstanding the recent spike in the 10 yr UST). For example, he could obtain a credit facility backed by A/R and Inventory (I've worked on a number of these over my career) at Libor + 300-400bps. He could then hedge the interest rate risk with a fixed for floating swap and lock in a favorable rate. I can understand how all of this would have been difficult with Nestbuilder, but that constraint is obviously gone.
Anshu used the word "syndicate" when describing a capital raising option. That term is typically used in the bank loan area where banks form a syndicate to share the risk of the underlying loan. We'll see if I'm right on that. As I've said in the past, a $20mm revolver could probably be turned over 6x in a year assuming 60 days receivable. Even assuming his DSOs are 90 days (well above current levels), he'd still, in theory, be able to generate $80mm in revenue. Once he starts generating cash, the banks could expand the facility and the company would be off to the races.
As for the growth rates, I wouldn't get too hung up on them on a historical basis. This isn't a software company with essentially zero marginal cost and no inventory requirements. It depends on capital, but it should ultimately be a good credit given it's in the food business operating in relatively high per capita GDP geographies.
Keep this in mind
“We have the funding right now through our trade financing to achieve annual revenue of close to $20M if everything falls into place, but clearly that is just a small measure of what we can do with more capital to deploy. While our newest contract has flexible financing and can expand to meet our customer’s needs, our legacy contracts are performing at a maintenance level pending different forms of additional financing. So, our focus is on strategies that will unlock these sources of revenue as quickly as possible.”
There should be no obstacles now. Time for Anshu to step up.
The update has to be about financing
It's obvious that anything else gets sold off quickly. The market needs to have confidence that a large portion of the backlog can be realized in FY 19.
The stock is dirt cheap now, but it needs a specific catalyst. Updates on shipments will be nice, but that's a small part of the overall picture.
I think they want to do a big corporate update
I'm sure discussion of shipments will be part of that, but it certainly seems (based on Mark's commentary) that they want to get the financing lined up before another update. More importantly, I want to see revised guidance. They've said $20mm in FY 19 revenue is achievable based on current financing, but there's still a ton of backlog to work through.
They also have acquisitions to potentially discuss, so the next update should be quite meaningful. Hopefully sooner rather than later as I've been quite patient on this one through a lot of turmoil.
Next filing is a 10-K
Which isn't due for 90 days after the quarter ends. They are usually late, as we all know, so the official filing probably will come after an extension. That said, now that Nestbuilder is no longer consolidated, that might expedite the process.
More importantly, we need an update on financing and revised FY 19 guidance. They can certainly provide that in the next few weeks. That's the catalyst that I'm looking for.
No, that contract was postponed
Didn't have sufficient financing and he needed to focus on the UAE beef deal. Again, if he starts generating some cash flow and gets a working capital revolver (or similar financing), these types of deals can start happening again. Positive operating income is very close as evidenced by the near break even levels in Q3 (excluding the financing charges).
He signed that thinking financing would come through sooner, but the Monaker group litigation, in conjunction with overall corporate structure, made it close to impossible (according to him at least).
Comprehensive financing package
Will cure the balance sheet relatively quickly. The debt level is trivial in relation to the revenue potential.
Unfortunately, Anshu resorted to unfavorable debt financing to get the operation up and running and hit maintenance levels on the big meat deal. Now that the excuses should be over, he needs to step up and deliver on the backlog and all of the growth opportunities that he's mentioned over the past several months.
Keep in mind, Anshu probably isn't drawing much of a salary, so his reward is in stock appreciation. His interests should be aligned.
Yes
mlubchenco@intivabiopharma.com
Not sure if they changed the email addresses after the corporate name change, but worth starting there. If not, I'm sure he'll see your message if you send it to the corporate IR address.
Really need to ramp up the IR effort
Mark is generally responsive, but they need to issue a PR highlighting the strategy and achievements from the 10-K. It appears that there were multiple patent filings, but I only say one PR back in the early Summer.
Compared to other CBD drug stocks this stock is grossly undervalued. Perhaps they are waiting for a PR blitz after getting listed on CSE, but I think they are missing out on a great opportunity to capitalize on sector momentum now.
The float is still super thin, so some positive buzz would do wonders to lift the stock.
If anyone has a good connection with Mark, please try to push him towards another corporate "summary" PR.
Valuation
Reading the note on investments, it looks like at the very least the limestone deposit could be substantially undervalued. I suggest this because the valuation was done three years ago.
The 10-k is a very interesting read
So much going on with this company, but it hasn't been communicated well at all. Turning into a holding company for a variety of CBD IP and drug (and drug delivery) development. I like the strategy of setting up separate subsidiaries to raise capital. Makes it easier to eventually sell to another pharma.
The IR effort has been extremely poor to this point. Perhaps a blitz is in the offing once they get listed on the CSE. I certainly hope so.
More patent applications
The company has been active on the patent front. Would be nice if they spent more time with investors educating them on the different facets of the business.
Perhaps they're waiting for the CSE approval to go on an investor relations blitz.
If there wasn't a more obvious sign of manipulation
10mm to buy at that price...fleece retail, take out stops, big holders accumulate.
Someone trying to accumulate cheaply
443k on the bid...trying to fleece retail.
If they do anything right in eSports
The stock is easily a 10 bagger..market cap is trivial in relation to the opportunity.
Love the share dynamics here too with the small float. It's getting locked up.
Well said
FWIW, I did go back and forth with IR. He was adamant that there are number of positive things in the works, but they are obviously taking longer than hoped. Patience is tough, but it should be rewarded.
One example doesn't constitute an infallible rule
What gives you confidence that the same could happen here? Are there FACTS that support that possibility?
I made money on this stock...but the technicals are awful and no one can assess the fundamentals since we don't know the structure of a deal. I can assure you that with a depressed currency (ASKH's stock price), the seller is going to want a higher portion of the company. So what's left for ASKH holders in a deal?
I can also be fairly certain that this business isn't going to be valued at more than 1-2x sales in the current environment. Are there comps that you can provide that suggest otherwise?
I made money on this stock, so I'm fine with those that want to hold for hope. But let's be clear that there is no real investment premise...just an empty shell in search of a deal.
Funny
I invest in real businesses that have backlog and substantial growth with consistent communication. You have neither in this one. Only hope.
Hope is a great investment strategy.
We do know one thing
The stock price has traded down to below the price pre announcement. Is that a good thing?
I can assure you, if the Chinese thought this deal was on, the price would be a lot higher. Insider trading enforcement is close to impossible in foreign jurisdictions.
You'd be surprised
IR is the primary conduit to the CEO. CEOs care a lot about their stock price for a lot of reasons. They will take notice.
It's obvious from the P&L that Anshu isn't getting rich off a salary...he needs the stock price to rise a lot to enrich himself. The multiple is so depressed right now that an increase in confidence could have significant impact on the multiple.
If there was an extension
Of the LOI exclusivity period, why didn't Richards disclose that at the very least?
Come on, you know the chances of this deal happening are beyond remote.
Totally disagree
Company hasn't spoken to the markets in a year. CEO confidence can be immeasurable in terms of its impact on the stock. Moreover, good responses to tough questions increases confidence and consequently, helps increase the stock's multiple.
Less than Zero?
I'd take my chances...company needs to do a call.
Here's a fact
Since deductive reasoning doesn't matter according to some on this board, which is laughable since markets are anticipatory. Richards hasn't even secured a definitive merger agreement. All he had was an LOI, which did give him exclusivity, but we all know (for a fact) that the LOI lapsed.
Does anyone know, for certain, that he got an extension?