Hipcricket Inc.(fka HIPPQ)

[Amigo Mike]

The PR yesterday shows HIPP hitting the mark for a projection for the first time in quite a while. Would have been better to exceed the mark ...... but at least delivering on what was projected is a start towards repairing their reputation.

FastPay was new information. Another reason for a lack of buying has been the spectre of dilution hanging over the stock and the potential default on the Silicon Valley Bank LOC. HIPP previously disclosed they were in default with a small period available to recify several weeks ago. But there was no follow up from HIPP on the resolution. With yesterday's PR .... seems to indicate paying off the SVB LOC (for which the bank would not lend the full amount available) and replacing the LOC with FastPay.

Here is a link to info on how FastPay works.
http://pando.com/2013/02/20/fastpay-raises-another-10m-crosses-100m-in-digital-receivable-lending/

Of interest is the client quote offered to indicate that FastPay financing typically is straight interest rate .... without "equity kickers". So basically it would appear HIPP refinanced the SVB LOC and replaced it with a larger facility (although terms not disclosed) and potentially without added dilution. I suspect HIPP's blue chip list of clients would lend to the creditworhtiness of the receiveables and reduce the time for HIPP to get that money for a fee. So HIPP's interest expense will rise .... offset by cash in hand much quicker for use in more revenue generating activity. If they do it correctly, building those revenues quickly would then allow them to better manage how much goes through FastPay and how much they simply accept terms themselves leading eventually to CF+ and less need for receivables financing.

Need to see the details ..... I assume an 8K would be filed on the payoff of SVB and terms for FastPay .... but thus far .... I think a needed move to get things moving.

HIPP technically still has not "changed" mgmt. They've cut CEO and CFO but they are still getting paid ..... and no culture change IMO thus far .... so sale still at top of my list until there is some tangible evidence of change ..... plus current mgmt needs to come out and tell investors what the plan is ..... albeit they did toss in a few items in the PR. Also would love an update on CG strategic alternatives.

1X revenues in this space is well below where companies are being sold for in the space. Up to 10X revenues is the norm, but this company has saddled itself with much baggage. So we shall see.

Amigo Mike