By Nigel Somerville, the Deputy Sheriff of AIM | Tuesday 13 December 2016
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
It seems the pantomime season has started early: AIM-listed lifestyler Milestone Group (MSG) has announced that it has raised a keep-the-lights-on placing at just 0.3p, and that of the original October placing which was announced to have brought in £1.385 million, only £60,000 has made it to the coffers. If Nomad Cairn Financial thought that its (currently suspended) client CloudTag (CTAG) was just a rogue case, Milestone begins to make it look more like carelessness.
We have already seen (HERE) that Milestone has form in announcing fundraisings before they have actually raised the funds. With the placing announced 20 October the funds have, bar 4.3%, not arrived at all. One can only hope that this morning’s fundraising RNS has been released AFTER the cash has been banked by the company.
Having originally announced a placing in October at 1.5p to raise £1.385 million, we now learn that in the wake of ‘fessing up that £1.25 million never arrived (a week after admission to trading) and the repayment of the balance of £135,000 to the other placees, only £60,000 of that has finally been subscribed – but on new terms: they’ve ponied up but also got a boatload of confetti issue to them at par (0.1p) to bring the aggregate price to them down to this morning’s placing price of 0.3p.
Given what has happened, one rather doubts they’ll be keen to hang on. Meanwhile, subscribers for the other £75,000 which did arrive for the ill-fated non-placing have walked away, and the company says it is to pursue the missing £1.25 million which never turned up at all. Thus, out of £1.385 million apparently raised, £1.325 million remains outstanding. Good luck with bringing any of that in.
This means that out of the currently issued equity (including this morning’s confetti-fest) of 1.08 billion shares, 88 million shares are unpaid – about 8%.
With all that, it is little surprise to see the shares off by another 38% this morning, trading on a spread of 0.3p – 0.35p. That, as against the 1.325p close the day before the ill-fated October placing was announced.
So how does this all leave the company? Its interims to 31 March saw net current assets of MINUS more than two million quid, having racked up losses of £0.74 million on revenues of just £50,000. The net loss before working capital movements worked out at about £112,000 a month, so we might consider that something of the order of a further £1 million has walked out of the door since then.
On the plus side, this morning’s announcement means that the company has brought in (before expenses) something of the order of £2.46 million since the interim period end.
But that suggests that the company remains under water at the net current assets level (excluding the outstanding October Placing money, which is uncertain at best) to the tune of half a million or thereabouts.
And with the full year having ended on 30 Sept the clock is now ticking on the reporting timetable – audited numbers need to be out by 31 Mar next year. By my maths the company could well have sent another £400,000 or so off to the great central bank in the sky by then, meaning that the company has a gaping black hole of around £1 million just to keep the lights on.
But to get a going concern sign-off it will need enough cash banked to cover 12 months from audit sign-off. Another £1.3 million, anyone?
Thus it seems that the splurge of golden tickets is set to continue. The company’s broker, Hybridian, has its work cut out to raise the cash – how big will the discount be next time, and how low might the share price have sunk to by the time it reports its numbers for the year to September 2016?
Needless to say, with all the scandal of the last few months this is a complete and utter bargepole stock, but with more placings clearly on the way it is a slam-dunk sell.
Still, all is not lost for the company: if Hybridian can’t raise the bunce then Nomad Cairn could always ride to the rescue with an introduction to its good friends at L1. We’ve seen what a fine thing that relationship has been for CloudTag.
With the pantomime season clearly well underway at Milestone, it seems that the entertainment is only just beginning.
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