Xponential Inc (fka XPOI)

[mrpanick]

715K looks like a very reasonable repayment deal for the 950K note given that the note was mandatorily convertible into shares of CPFH upon maturity in 2016 at 50 cents / share. CPFH is currently trading between 4 and 7 cents per share. I think that CPFH is undervalued given that they are profitable and have cash of more than twice the market cap. XPOI took a 200k haircut on the note, but avoided a much bigger haircut in 2016 if CPFH stock remains depressed. In terms of GAAP earnings the notes to the 2010 XPOI annualreport show that the 950k note was already written down substantially to account for the low price of CPFH.

Bottom line is 640k cash to invest in pawn mart and provide some financial breathing room. They could use the money to repay about 20% of the pref A stock on a pro-rated basis, but investing in Pawn Mart makes more sense to me. Obviously the added cash cushion and improving pawn mart profitability make a bankruptcy less likely. I wonder if the auditors will remove the "substantial doubt" opinion from the next 10k or leave it in until overdue Pref A redemption issue gets dealt with.