- New company Direction
- Financing concerns over blown
- George Sharp dilution watchdog involved
- Real Estate application to fill void.
Nexus Energy Services, Inc. (IBGR), who will be will applying to FINRA for changing its name to Applicate, Inc. and also requesting a new symbol and CUSIP number in the process, announced news today that defines a new company direction that it will acquire a real estate application and the stock price got a violent smackdown on the open following an unusually strong move higher yesterday. On InvestorsHub the stock made the top 10 for the past 2 days. The focus of the negativity is the perceived dilution of an “equity funding agreement” expected to be announced within the next couple of week to finance the development. The kneejerk reaction could be from a number of things like the unexplained move up yesterday or the alleged manipulation called out by CEO Ron Minsky. The sad truth of the downward spike is from Investor’s ability to do simple math and we hope to rectify the situation.
Monkey Club Studios
The link between Money Club Studios and Nexus Energy Services is through the CFO Angelo Rodriguez. He appears to be part of the Monkey Club Studios team and IBGR. Investor’s fears of dilution may be overdone. Unless Angelo is a coder there are only 4 members of this team according the website. The press release indicates that it would need about 6 months to complete the app before it provides “significant revenues.” This means the burn rate for the project would be in a worst case 4 developers for 6 months. These developers are also getting 9,800 of Preferred “D” stock on completion. That is a key point. Unless they complete the app there really isn’t any dilution until that point. Clearly having an insider involved with Monkey Club the company knows what they are buying and there shouldn’t be any surprises.
Size of Potential Dilution
Using data from Indeed Jobs as a guide app developers command about $70K – 100K annually working for big firms. Assuming each works for 6 months and get paid $50K would mean a financing of $200K to finish the app. The market cap of IBGR yesterday was $4.3 million shares according to OTC markets however they have not adjusted for the 150 mil shares that were returned to the treasury. Only 140 million shares are issued and outstanding which would put the market cap at $2.1 million. A $200K financing represents approximately 10% dilution. At times this is the difference between the bid and ask. In retrospect the concerns of dilution are way overblown.
Corporate Advisor George Sharp
At the beginning of the year IBGR appointed George Sharp as an advisor to the company. George stands against deceptive and manipulative practices and believes management needs to be accountable to its shareholders. In essence he is a watchdog for the investors and their interests. The last thing on this mind is putting his name on a company that does a toxic convertible debt instrument. Here is what he said “It is impressive that he immediately agreed to my conditions, which are geared towards the benefit of the shareholders, including a bar on toxic debt financing and refusal to participate in stock promotion. Having reviewed the company’s business plan, I look forward to working closely with Ron and his development team to bringing the company’s new project to fruition.”
New Real Estate Application
The new app is called “Address” but the functionality of it is still a mystery to investors. Details have not been release but the company did say that it will “contain functionality that other real estate applications like Zillow™ do not offer and yet have been recognized as very desirable to the realtor community.” There seems to be a void in what Zillow does. Millennials are the new buyers and there has to be a better way for realtors to add value to the equation because now everything is online. The Address app may focus on one of these service voids.
Here are some real estate trends
Virtual Reality: People don’t want to wait for an appointment to see a place. They want to do something efficiently and virtual reality tours offered online can create a better experience. This speeds up the buying process and saves the grueling drive from house to house.
Listing Homes: Realtors need to find listings and have to use targeted ads to find people ready to move or looking for a new place. Finding a better way to do this might be another great tool to bridge homeowners with realtors.
Home Makeovers: When a realtor shows a house to a buyer in all likelihood it won’t be perfect. If a realtor had the tools to show what things could look like if they renovated and how much it would cost this could be a huge new selling tool. These tools exist and all you have to do is go onto HGTV as designers show prospective buyers the true potential of the home.
Investment Summary
This is a very volatile stock and it seems clear that there are some groups that are not concerned by the threat of legal action. What is clear is that the company has made great strides to clean up the books and take a pledge against toxic financing and dilution that would hurt the shareholders. Investors should be pleased that the company has a firm direction and they are trying to fill a void left by Zillow. Whatever financing they do complete in the next couple of weeks it should be minimal if George is continuing to advise them. If this application can generate revenue within the next 6 months and it gains traction in the real estate market this stock is woefully underpriced at the current levels and long-term investors might want to consider accumulation.
Disclaimer/Disclosure: PSInvestor has NOT been compensated for the above mentioned article from the company nor a third party. PSInvestor does have a LONG position in the company and reserve the right to sell, hold or add more shares of the company at any time. For our full disclaimer, please read here.