SPYR is a classic pump and dump scheme.
After trying to pump up the stock in the summer by releasing false statements that it would spin-off the money losing restaurant division to bury the short sellers, it now tries to hype up the fact that the company has bought SPYR Apps LLC for 8 million shares and that it has received a license to incorporate Star Trek into Pocket Starships.
1. So the company has purchased SPYR Apps LLC for 8 million shares (basically a consideration of $2 million depending on the stock price), while investors continue to value the business at almost $60 million. Even though, revenues post acquisitions are still close to non-existent and the company still operates at a $10 million annual burn rate.
2. As a way to alleviate short term liquidity issues, the company has entered into a revolving credit loan agreement of $500.000 with Berkshire Capital Management, a company associated with notorious shareholder Fiore. The company won't generate enough free cash flow to repay the loan. So unless Fiore extends the loan again, he is entitled to SPYR Apps LLC as loan collateral (the game, pretty much the only asset on which the company is based, even though it has no economic value).
3. Based on the existing burn rate, the company will have to find capital this quarter to keep the lights on. If the company burns through another $10 million coming year, it would have to issue 33 million shares at the current price, bringing the total market value $71 million at an unchanged share price. The market value continues to balloon due to endless dilution, while the intrinsic business value continues to shrink.
4. The company keeps touting the success of Pocket Starships, despite refusing to give any concrete factual details on number of downloads, active daily users or revenue per user. It keeps referring to the growth of end markets that have nothing to do with the success of the game. You can have a growing end market and have no paying users for Pocket Starships. Based on downloads (found on sites such as Annie apps), Pocket starships has had no growth in active users despite new iterations of the game and millions in operating losses. Even with the new inclusion of Star Trek in the game, there is no evidence that the game gets any traction, let alone that is generates any meaningful revenue.
I am not interested in bashing other users. If you disagree with me, come with facts, or plausible arguments why I am wrong with my thesis. It is no shame if you got duped by managements endless false statements and news releases, but move on to many better companies that are listed. No need to win money back the way you have lost it.
Full disclosure: I am short. And no, there is nothing nefarious about being short a pump-and-dump scheme. If anything, it prevents prices from rising even further, before the eventual fall.
The stock may move up and down but there is endgame is $0. Game Over.
