I am somewhat concerned with how they anticipate paying for these additional servers. If they are wanting to expand to 500 over the next year, that is going to require an additional $1,000,000 (assuming the $250k of financing a couple months ago was for the first 100 server purchase).
As of right now, they have zero cash and whatever bitcoins they've mined in the last couple weeks. As per their last quarterly statement, they also have a large amount of short term debt (roughly $650,000 as of the last 10Q).
A lot of that debt (roughly 193k as of March) is convertible into stock at 70% of the 10 day average prior to the due date. Meaning that if MELY can't produce the actual cash, then we're going to get a lot of dilution. I am assuming this is what has been going on here the last couple months and why the stock hasn't taken off. Almost every bit of financing that MELY has done in the past has the convertible options, and until now there has been no actual income to pay these back with.
Of that $193k, $102,680 was due prior to July 1st, meaning that with no cash then likely almost all of that was converted into stock. Hence the dramatic increase in A/S that came about in March (2.5 billion additional).
The good news is that this is now in the past. There is only one more $16k note due in August, and then there is nothing until January. The bad news is that there is a good chance that this is being diluted quite heavily right now. Hopefully by the time January comes around they will be able to just pay the notes back. The additional 400 servers they are hoping to set up in the next year will obviously have to be financed, but once they have an income coming in, then hopefully they won't have to use common stock options.
At least, this is my understanding looking through their financials. Please let me know if I'm misreading any of this.
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