ShareProphets

The one stop source for breaking news, expert analysis, and podcasts on fast-moving AIM and LSE listed shares


Join ShareProphets at less than 2p per article

> Hot share tips

> All the big AIM fraud exposés

> 300 articles and podcasts a month

> Original investigations by our experienced team

> No ads, no click-bait, no auto-play videos

Find out more

Milestone Group – Time for an update about its proposed deal with Black Cactus and its financial position

By Tom Winnifrith | Wednesday 7 February 2018


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.


On 6 December 2017, Milestone (MSG) announced that it entered into a software license agreement with Envoy Group Corp (soon to be renamed Black Cactus Global, Inc). Yes that is the company run by serial teller of untruths Lyin' Larry Cummins.

The RNS stated:

“In consideration for the Licence Agreement in respect of licenced products, Milestone has agreed to pay Black Cactus Global a royalty of 10% of the first £500,000 of gross revenues and 5% on any gross revenues in excess of this amount. In addition, Milestone has agreed to issue Black Cactus Global 744,131,477 shares which equates to 29.5% of its enlarged share capital ("Share Consideration"). The Share Consideration is subject to shareholder approval.”

Two months later and not even a Circular providing further information and soliciting shareholder approval has been forthcoming. Is that because Milestone has got cold feet over its proposed new shareholder following revelations on this website about Black Cactus and about Lyin' Larry or is it because the deal is being restructured or even abandoned by Black Cactus?

Milestone should really provide an update on the status of the deal and articulate what its intentions are if the deal isn’t going to proceed and also the status of its remaining operations it has left post the scrapping of most of the initiatives started under the Deborah White regime and what if any revenue or cash they generate.

Milestone should also update shareholders on its cash position and net assets. After settling the outstanding placement debtor of £1.25 million recorded in the last interim accounts for a mere £125,000 there is a big hole in the company’s balance sheet.

My estimate is that starting with net liabilities at last interim accounts of £125,000 and then deducting £1,125,000 being the shortfall in placing debtor and even being generous and assuming new management have reduced the administrative cost burn from over £1.1 million (in comparative six months) to £750,000 in last 10 months, the net liabilities before new monies would be approaching £2 million. True subsequent equity, warrant issues and loans have raised cash of £1.788 million but that appears to suggest that Milestone is now running on fumes and is reliant upon Dr Ramesh Para not calling in his £1.1 million loan. Perhaps they might take comfort from the fact that Dr Ramesh Para has just been appointed to the Board of Black Cactus.

However, even assuming the Black Cactus deal does proceed, Milestone cannot expect any immediate financial support from Black Cactus because as the latest filing with the SEC for the quarter ended 31 October 2017 filed on 20 December 2017 reveals Black Cactus is itself teetering in the brink of being financially insolvent:

“2. GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has had no revenue or operations, and only incurred losses since inception. As at October 31, 2017, the Company has a working capital deficiency of $717,202 and an accumulated deficit of $3,364,538. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. In view of these matters, the Company’s ability to continue as a going concern is dependent upon the Company’s ability to raise sufficient financing to acquire or develop a profitable business.

The Company intends to finance its future development activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including related party advances and term notes until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.”

Given the recent crash in the price of Crypto currencies and drop in share price of Black Cactus perhaps shareholders would be better off to simply sell their Milestone shares whilst they can as the current market valuation for what is essentially a cash shell at £4.7 million is a massive over valuation. Milestone really should update the saps who own this stock about both its own looming insolvency and also its relationship with Lyin' Larry.


Filed under:


Never miss a story.




This area of the ShareProphets.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ShareProphets.com. ShareProphets.com does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ShareProphets.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ShareProphets.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.


More on MSG


Comments

Comments are turned off for this article.




Site by Everywhen