By Tom Winnifrith, The Sheriff of AIM | Thursday 12 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.
The first pressing issue with MySquar (MYSQ) is whether it has committed securities fraud or merely driven a coach and horses through AIM Rules or both. I hope that either SP Angel or Beaufort will force it to reveal July sales numbers to give us an answer. The next question is when does it run out of cash? Here is my best estimate.
At July 31 it had $700,000 in the bank. But net trade payables were $286,000 and that assumes full conversion of trade receivables and inventory into cash which I really doubt so on that basis lets put real net cash at c$300,000. It then raised £1.2 million gross so let's call that $1.4 million net so that equates to $1.7 million to play with.
In H1 sales were $341,000 and that delivered an operating cashburn of $1.4 million. Given that sales in the three months to end September were c$400,000 you can safely assume that, at least, $500,000 went to money heaven. So real net cash was at end September down to $1.2 million. There is no indication in yesterday's shocking statement that sales will pick up dramatically in the run up to Christmas so going into 2018 real net cash will then be down to $700,000.
At the current burn rate that would see the pot empty by mid May. Of course we do not know what the trend in sales is since MySquar refuses to disclose separate numbers for July, August and September. If, as I suspect, it is downwards then the cashburn will be even greater than anticipated by me and so tits up day could well be in April or even March 2018.
And after that last placing no broker in London will help MySquar - which claimed it would never need to fund-raise again - out of the hole with another bailout. So it really will be tits up time.
Of course if the Nomad SP Angel has an ounce of integrity it will quit within days as it too unearths the truth about July sales and that would be the end game for the morons who hold this stock. No other Nomad will touch MySquar with a bargepole.
Anyone still holding needs their head examining. Keep selling - target 0p.
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