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Proxama – dire results, though emphasises “exciting transition” as needs to get away a confetti issuance extraordinaire

By Steve Moore | Saturday 1 July 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.

Proxama (PROX) “is pleased to announce its Full Year Results for the year ended 31 December 2016” and “pleased to announce the successful completion of an upsized bookbuild for the placing”. Shareholders probably aren’t so pleased – the shares having responded approaching 70% lower, to 0.04p…

The results show, on reduced revenue of £1.8 million, even after £2.1 million of new equity and a £1.1 million working capital inflow, still a £1.5 million increase in net debt to £3.2 million, with net tangible liabilities £2.8 million higher to £4.3 million. Not to worry though as;

“The board is pleased to announce an exciting transition of the main focus for the company; from a mobile proximity marketing business to a mobile location data and intelligence business… With the demand for accurate and verified location data and intelligence, we are well positioned to take advantage of this trend, not only accessing a growing marketing spend but many other sectors.”

Haha - continued significant losses and dire balance sheet, so it’s “exciting transition” time hey? And it’s not well positioned” currently since “the company has been informed by Barclays that should the company fail to raise the minimum amount of £3.1 million and were alternative financing methods not forthcoming, then Barclays may seek to proceed with an accelerated sale process. In this situation, there is no certainty that any value will confer to the shareholders”.

The “pleased to announce” upsized placing bookbuild is for a gross £1.5 million at 0.03p per share. Wait, you what? The shares previously closed at 0.145p! – and this all following a recent ramptastic announcement. For the remainder, the company is relying on an “open offer to raise up to approximately £4.1 million, on the basis of 17 open offer shares for every 3 existing ordinary shares held”.

The results announcement also sees CEO John Kennedy state;
“We want to take this opportunity to recognise the support our shareholders have given us to date, and acknowledge that providing this support has come at a cost. I want to reassure investors that we firmly believe that by supporting us in this proposed placing and open offer that you will be sharing in a significant new growth direction for the business.”

Er, based on the track record here, I wouldn’t be betting on that – and this latest proposed confetti issuance extraordinaire certainly does see support having come at a cost John. Bargepole ahoy!

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