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Mirada – shares soar on contract win, but what about that financing needed?

By Steve Moore | Friday 6 October 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.

Shares in Mirada (MIRA) are currently soaring from just above 1p on the back of a “New Contract Win” announcement. Hang on though, isn’t there currently financing needs by this company?

The company “is delighted to announce a new contract win for its Iris multiscreen solution. The five year contract is with Digital TV Cable Edmund S.R.L., a Bolivian pay TV operator and broadband services provider”.

This is described as a “significant contract”, though no financial detail is provided. It is added that “this contract will be based on Mirada's new Software as a Service model, which is structured so that the company will receive long-term recurring revenue streams”.

However, that structure also means lower upfront payments – troublesome here as recently announced results for the company’s year ended 31st March 2017 showed, even after a net more than £2 million working capital inflow, a further more than £0.7 million increase in net debt and it was updated in August that “net debt at 31 July 2017 was £5.91m, with available facilities of £1.21m (mostly comprised by invoice discounting facilities) and cash in hand was £0.46m” and that the board had seen it necessary to seek further financing facilities.

It updated last week that “discussions regarding additional financing facilities are advanced and further announcements in this regard will be made in due course”, but even with these I consider the sustainability of this business is still to be demonstrated and the stock currently remains on the bargepole list.

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