here we are on Monday morning - covering 30% of my position but clearly expecting this to break below $2 this week
there is no government contract - a local reseller sold a large amount of tube lamps for a low six digit dollar amount - that's all
RSOL guided Mercury revenues to be just $18-20 mln for 2013 in its Q3 earnings release - but the fact that Mercury took nine months to generate just half of that revenue und will need a stellar Q4 to meet the projection made by RSOL might #$%$ investors.
Given the size of the revenue decline in 2013 it becomes quite clear WHY the company had to be sold and why the price appeared that low.
The merger proxy perhaps brought the disappointing business performance of the Mercury acquisition to the mind of investors and caused Friday's selloff
1. RVLT didn't get a contract from the US Navy - the navy in fact bought some tube lamps from one of their local resellers
2. 17,000 2-and 4-foot tube lamps might amount to a $300.000 gross purchase value (if at all) with most of that money remaining with the reseller.
actually he was the CEO of red hot ISP biznessonline (Nasdaq: BIZZ) which had the same ultimately ill-fated "strategy" - acquiring weak businesses pretending to build a strong telco.
The company managed to go bust BEFORE even before the dotcom bubble bursted - since then the company was renamed several times until its remains were picked up by Birch Communications some years ago (which itself is a troubled undercapitalized telco).
after the failure he tried to run Broadmoor Capital Partners LLC a now equally defunct privat investment company through which he tried to unsecussfully ride the data protection hype some years ago.
and today he is trying to capitalize on the cloud buzzphrase by setting up another ill fated ponzi acquisition scheme which will be dead once it becomes clear that the numbers of the acquired businesses don't live up to initially communicated expectations.
I don't have any doubt that they will move on with their ponzi scheme as long as things don't go bust.
But it won't go on much longer as the fabricated hype will soon get the attention of professional shortsellers like Geo Investing or some smart Seekingalpha authors - there's been already one article out some days ago which put great pressure on this sham.
this is no software / cloud company. Actually this is not even a company rather than an aggregation of completely separate and mostly even unrelated businesses somewhere at the very bottom of the cable / telco space which all have been acquired by generously issuing shares to the owners of that little rat-shops. The acquired businesses aren't growing either.
This whole thing is a sham designed to fill the pockets of Intercloud's senior management and their buddies who own(ed) the acquired businesses. I would bet the house that this will trade below $1 just twelve months from now.
even an uneducated investor should easily figure out that the company is designed solely for one purpose - to attract money by using red hot buzz phrases while indiscriminately collecting unattractive and sometimes even unrelated businesses which have one thing in common: they got nothing to do with cloud computing companies using a software as a service subscription business model. Their businesses are all low margin contract work and reselling agreements. Uninspiring and as far from the cloud as Microsoft from being the dominant player in the smartphone space.
Yeah - they are pretty busy picking up tiny little rat-shops which most likely belong to former companions and old college buddies so everyone can make some money at the expense of bona FIDE shareholders. Clearly the company is something between sham and fraud trying to lure in new bagholders by using the most sexy buzz phrases for their business description. This has got nothing to do with software as a service subscriptions - it is just some rip off artists trying to create a hype without any substance behind it. Buyers beware.
So what are they trying to build ? Snapping up underperforming, non-growing little rat-shops using dubious financing methodes at the expense of shareholders doesn't look like a great deal rather than sham to me.
By the way: Did you find out about the "gross revenues" from the new IPC takeover press release ? They did not use that term last year. And this time they made no projection for next year either...
sure - issuing convertible debentures at a 40% discount to current share prices is indeed a great way to build investor confidence.
When looking at the valuation of the Mercury deal you perhaps should not hope for an acquisition. There are dozens oft poorly capitalized solar installers out there so clearly nobody would pay a premium for a tiny company like RSOL with a measly below 1% market share.
while I am sharing a negative view of the company your posting is of course utter nonsense.
the Mercury deal will go through in January as last week's vote just failed because of a formality - this is a done deal no matter what uneducated investors might think about the delay
cash burn isn't a problem as the company just took in another $20 mln just a few weeks ago - actually I wouldn't see cash as concern going forward at all anymore. And of course they would be able to access the capital markets again if needed although the conditions might become much worse.
so I don't see this going under anytime soon - if management will be able to leverage the new scale and reach they might grow their tiny market share going forward and become profitable on a quarterly basis.
That said all these things doesn't make the stock an attractive investment compared to fully integrated players like Sunpower.
what do you expect from a tiny underfinanced solar installation company ? Actually their US market share is BELOW 1% so clearly there's absolutely nothing to cheer about here.
Frankly I don't understand why investors are buying the shares at all - the company ist at the very end of the value chain without ANY margin leverage which has been pretty much evidenced in the company's most recent numbers.
actually their unique selling proposition is their stock exchange listing which made investors take notice once solar stocks became en vogue again earlier this year.
but you can't fool all investors all the time and the more investors got trapped in the stock the more they digested through the company's business and outlook and ultimately chose to permanently abandon their holdings.
would expect further pressure on the share price which might become even greater once it becomes clearer that the company will again underdeliver on its promises
last time the stock dropped considerably and even long standing pumpers like corstrat were in outrage
there's NO need for the company to prolonge the warrants which will become dilutive to shareholders once exercised
conditions as published in today's press release:
The Debentures bear interest at the rate of 12% per annum, and mature on June 13, 2015. At the Company's election, subject to certain conditions, principal and interest payments on the Debentures may be paid in shares of the Company's common stock. The Debentures also are convertible into shares of the Company's common stock at the election of the holders at a conversion price equal to the lesser of (i) $6.36, or (ii) 85% of the price per share of the common stock in the Company's first underwritten public offering of not less than $10 million, in each case subject to customary adjustments.
so the debenture holders are free to IMMEDIATELY exchange their debentures into common stock at a price of $6.36 diluting current shareholders by as much as 27% and bringing the number of diluted shares outstanding close to 9,000,000 for a current market cap of close to $100 mln
looking at the second condition it becomes clear that the company is already planning for the next dilutive equity offering which seemingly is aimed to get at least another $10 mln from the issuance of new shares - which would be double the size of the most recent offering just a few weeks ago.
So far I wasn't successful in locating that dubious IPC-NY company on the internet and given the strange cicrumstances of this "acquisition" I would encourage investors to take a very close look at the company before putting any money to work.
If this would be a Chinese corporation I would bet the house that this is a fraud using every nasty trick in the book.
nothing new here