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Boxhill Technologies: A profits warning and yet another odd-looking deal – no great surprise!

By Cynical Bear | Friday 10 February 2017

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.

The thing about dodgy companies is that eventually the chickens come home to roost and this morning’s RNS from Boxhill Technologies (BOX) is testament to that fact. Nevertheless, I almost admire the chutzpah of the guys as it’s not holding them back from issuing more confetti in unknown directions in a further attempt to squeeze a few quid out of the mug punter!

The bad news was kept to a minimum in the RNS and it simply opens with: Progress in the payments division has slowed during the second half of the year due to new regulations introduced by card scheme operators and acquiring banks.”

That is the issue with businesses that operate in the slightly grey / unregulated end of the gambling / adult payment services market; regulation can catch up with you. I wouldn’t be surprised if certain operators would prefer not to deal with Boxhill and/or Phil Jackson as well these days but I guess it’s easier to hide behind regulation.

Not to worry though, the RNS goes on to say that this slowdown has allowed the business to develop in so many other ways, blah, blah, blah.

The reality is that it is the payments side of the business that has generated the profits (although not much cash) for Boxhill in recent times with The Weather Lottery being break-even at best and the now vaunted Soccerdome JV nascent. Funnily enough, no news of the once heralded Casino Cash in today’s update.

It is worth noting that the payments business is not now struggling for want of trying.

Boxhill has made three different acquisitions in the payments space, albeit that one had to be jettisoned for a VAT liability issue, in the last few years, issuing over a billion shares while doing so, most of which I imagine ended up in the hands of connections of either Phil Jackson or the convicted fraudster, Mark Entwistle, although I doubt they stayed in those hands for very long as I imagine they’ve been flipped as quickly as humanly possible.

Unfortunately though, Boxhill now appears to be back at square one but there is no need to despair as a saviour is on the way….. yet another deal in the payments space.

The potential acquisition of the shell, Timegrand, was announced this morning for a mere further 500,000,000 shares. What’s half a billion shares between friends after all, only further dilution in excess of 20%!

There are very limited details of the deal at the moment although more will come once the agreement is signed. I will try and keep an open mind but it wouldn’t surprise me if various assets are sold in to Timegrand from the same old guys who will then have another chunk of equity to sell.

All very dispiriting and all very predictable, although the good news is that the downtrodden PI seems finally to be smelling a rat and the share price has plummeted this morning, down over 20% at 0.145p as I write. My advice remains to stay clear.

Two other quick points to make.

First, I note that KPMG has recently taken on the audit at Boxhill. No idea what it is thinking but good luck with that.

And finally, I would just like to thank M’Lord for making me smile with the last line in today’s RNS:

“Additionally we are continuing to look for a new CEO and will update as and when appropriate.”

Very funny, Lord Razzall, very funny!

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