Is Muscle Pharm at a desperate juncture? Well, getting a 20% loan when interest rate is low, low, low, low (I have stop because it can't get any lower) should be a clue. Is a down-and-out meth addict visiting a loan shark desperate?
I see three possible scenarios IF the loan proceeds:
1. They use the money to window dress the company in order to sell it. Good for longs.
2. Mr. Frost somehow gains controlling interest, at which point our shares will be massively diluted but it'll still favorable to longs because Mr. Frost's team will know what to do with the company. It'll be a case of, "I'd rather have 1% of a billion than 100% of a million." We'll get a smaller piece of a much larger pie.
3. Worst case scenario. The 3 Amigos, being spendthrifts, blow the pawnshop lawn and issue more shares on the open market to pay it off. If I remember correctly the authorized shares are up to 100 million. If this ever happens, I'd classify MP as a sophisticated scam. I'm praying it doesn't unfold in this manner.
I believe the problems are fundamental (structural, rotten within).
--the 3 Amigos are enamored with being surrounded by star athletes at whatever the cost. There needs to be a balance. They don't seem to have a solid business background.
--appointing a lawyer, Mr. Bluher, as the COO to solve supply chain issues wasn't a good idea. Lawyers tend to delay and obfuscate things. Great companies are not founded or run by lawyers. Nothing personal to Mr. Bluher.
--management appears to carry an adversarial attitude with its shareholders (us vs. them) when we're on the same team. They need to communicate and be forthcoming. What factors are preventing the company from being profitable? Keep the shareholders updated, good, bad or ugly. We need to know. Are they hiding something?
--executive compensation contingent on revenue growth is one main reason we're seeing explosive sales growth at the risk of the company going bankrupt.
--the CEO seeing the trees for the forest. If I recall correctly, his salary is $400,000 a year. In order to make $8 million, he'd have to work 20 years at that salary. Or he can ease off on the ego and let seasoned business managers turn the company profitable. At which point, he'd be worth $10 million from his MP shares.
I can take this MP train wreck in good humor because I've already mentally written off the investment.
GLTA
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