Xponential Inc (fka XPOI)

[mrpanick]

Liquidity should be over 5 mil immediately after the Cherokee transaction including the increased credit line, cash and some of the CPFH proceeds. More on that below.

Pawnmart's web site was updated to switch from a Christmas theme to a winter theme. Still no updates to the Xponential web site to add the new financials that were sent to shareholders and other proxy materials as promised in the shareholder letter.

Cummer picks up 250k free shares and gets options on more at $1 for the Cherokee acquisition loan deal. It would be nice if the company would update their web site so perhaps the public (who can't be bothered to find the link to the financials I posted) might get a chance to look at some of the positive things happening at PawnMart which are motivating the CEO to get his hands on more shares.

I've been looking at the Cherokee acquisition and XPOI's liquidity. One could question whether XPOI really needed a 15%loan (with free stock thrown in) from Cummer in order to make the acquisition. As noted in the shareholder letter, the credit line was increased to 10 mil in conjunction with this acquisition and they owed about 5.9 mil on the credit line just prior to making the acquisition as per the June 2011 financials.

I think management deserves the benefit of the doubt on the Cummer loan. The letter suggests it was reviewed by the Board, accountants and legal counsel for fairness. The loan plus the increased credit line leaves XPOI with lots of flexibility to ramp up high margin pawn loans. Borrowing at 15% is bad - unless you're using it to finance pawn loans where you are effectively making 50% - 100% interest.

Since the Cummer loan covered the acquisition the 4.1 mil availability on the credit line plus about 500k cash would give them close to 5.5 mil liquidity following the Cherokee transaction and the CPFH transactions (700k cash plus loan payments) which are not reflected in the June 2011 financials.

XPOI has gone from a company with severe restraints on working capital to a company with close to 5.5 mil (minus any increase in pawn loans). Hopefully we'll see that Pawn Mart put some of this added liquidity to good use during the Christmas season and into 2012. Pawnmart has more scale and more working capital. The economy is improving. Now we just need to see some profits to get the stock moving!