Paychest Inc (PYCT)

[mortalmyth]

Rumor of Paychest buyout by one of the big three? Absolutely comical!

Seriously, what is there for anyone to buy?

In essence, the way I read the company description, reports and their PRs, Paychest is a sort of a middleman. They communicate and coordinate, but have little in the way of any real tangible assets of value.

The company has:

* NO real estate or property (uses CEO condo as company office, and supposedly Xinpro has a production plant).

* NO product production equipment/machine assets (as supposedly Xinpro owns these).

* NO PYCT products or inventory identified anywhere.

* NO intellectual property (e.g., no PYCT patents, and abandoned the Mibella Trademark efforts on 9/6/12).

* Lapsed rights to produce and market Flushaway (required to pay for a Tech, License Agreement, but evidently let it expire in July and it wasn't reported as renewed in the 3Q2012 report).

* NO cash indicated in financials (only an encumbered $200K cash advance available for potential use at a cost).

* Goodwill (but, that is worth nothing to other companies).

* The Electronic Payment System. Per page 6 of the 2011 Annual Report, "The Company's first product in 2006 was an electronic payments system." Also, referenced was "The Company made modest sales through use of its payments system. Sales of this product and associated services were discontinued." As the system and services were discontinued, and because Paychest has no assigned value identified in its financials, I wouldn't expect to see any appreciable value considered in a buyout transaction from one of the big three.

* Shareholders - the value of this solely would be in the eyes of the beholder. As such, put whatever value you want.


Based on the above, I wouldn't realistically expect anyone to make an offer for Paychest. I do, however, instead expect Paychest to do something in the way of a significant share restructuring, such as a R/S, due to the excessively bloated outstanding share count of almost 28 billion. I realize the company has stated they aren't for implementing a R/S unless it's for moving to a higher stock exchange, buy the realities are that having such a bloated share structure is very detrimental and places hardships on obtaining any future additional funding.

Sorry to say, but this kind of rumor reeks of desperation. Anyway, I guess we'll all have to wait and see what if anything transpires.