By Tom Winnifrith, The Sheriff of AIM | Wednesday 11 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.
I have written a letter to Nomad SP Angel, broker Beaufort Securities and the oxymorons at AIM Regulation re shamed MySquar (MYSQ). Has it committed a massive breach of AIM Rules or Securities fraud or both and will anyone do anything about it. The letter follows:
Re: MySquar PLC - Securities Fraud on 31 July or AIM Rule 11 breaches since or both?
To: SP Angel, Beaufort Securities
cc AIM Regulation
Your client MySquar has either committed wholesale Securities Fraud on 31 July or driven a coach and horses through the AIM Rule Book since. Which is it? I write to suggest that you force it to repay the £1.2 million raised at 3.75p on that dayif it is the former and then to resign your positions at once, if it is the former or the latter, as this company is not fit to be on AIM.
Perhaps you do not consider that MySquar has done anything wrong?. Let us be clear how and why it has sinned.
On 6th June and 4th July this year it provided guidance to the market on daily revenues. In each case it was able to supply information that was just a few days old. It was therefore either making up those numbers or it has accurate management systems which allow it to track daily sales in a very accurate manner.
On 6th June we learned that sales had averaged $5,500 per day in May so making $170,250 sales in May. Furthermore the trend was increasing having been just $5,000 at the start of the month but was $7,000 a day by early June.
On 4th July we learned that by end June daily revenues were $8,500 a day which was "operating breakeven." Wee do not know whether that included PLC and finance costs but the clear implication was that the run rate was now $244,500 and rising.
On 31 July £1.2 million was raised at 3.75p and that guidance was reaffirmed.
Today we are told that sales in the months July, August and September averaged just $135,000. Given that the company has such accurate financial reporting systems in place the question must be asked when did it know. At best the sales continued at the end June rate all the way through July but then utterly collapsed in which case MySquar has clearly breached AIM Rule 11 on the timely disclosure of financial information.
Arguably had the upward trend in sales reported on for May and June n ot continued into July ahead of the placing that should have been reported on. Even a flatlining of sales from late June would have been contrary to what most investors were expecting given the May June trends and confident statements made by MySquar.
But I struggle to accept that revenues held at $8,500 per day in July otherwise your client would have stressed that in the statement today. If they were anything less than the company was not operating at breakeven ( however you define it) and to place without disclosing that is fraud.
So which is it? A clear breach of AIM Rules or fraud or both? Your position is untenable if your firm has a shred of integrity and I invite you to act accordingly. I cc in the poltroons at AIM Regulation to help you focus your mind on this matter.
I remain, as ever,
Your obedient servant
The Sheriff of AIM
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