Special report - OptiBiotix

Good evening all. It's a brief but important update re: OptiBiotix.

I have written about this company before and in July I said this:-

http://michae1mouse.blogspot.co.uk/2017/07/shares-to-avoid-at-all-costs.html

Before we get to OptiBiotix, it's worth having a look at the share prices of CPT, BST and NIPT since I wrote the article. Not a pretty sight is it?

As for R4e, did it breach it's banking covenants again? No it didn't I hear you all cry. Oh yes it did I'm afraid, although you may have missed it. The company issued the RNS at 6pm on 18th of this month. That's right 18:00. Anyway here it is just in case you missed it:-

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/R4E/13401457.html

"the Directors of the Company understand that PNC remains fully supportive of r4e."

Perhaps they should know for sure?

Anyway, let's move on to OptiBiotix. In July I said this:-

"So are things on the up for OptiBiotix? Well given that the interim period ended in May and they've since had an AGM then surely investors have been given a guide to revenues, cash on the balance sheet, cash outflow, future projections etc.

No they haven't. Why might that be do you think? I'll leave it to your imagination.

Did anyone shout pathetic revenues and cash-call AHOY captain? I couldn't possibly comment."

Well I was certainly correct about the pathetic revenues at the half year. In fact worse than even I imagined. Total revenues amounted to £72,000. No, it's not a joke. It's less than they reported last year and significantly less than the previous 6 months , and neither of these were anything to shout about. Think about that. £72,000 revenues (not profits) and a market cap. touching £57m.

OptiBiotix's full year is the end of November. We're going to see a significant jump in revenues then? Nope, don't think so. What about 2018 then? I wouldn't bet your house on it. In fact I wouldn't bet anything to be honest. Have a listen to this guy and see how careful he is when talking about revenues. In fact I burst out laughing at one point near the end of the interview. See what you think:-

http://www.proactiveinvestors.co.uk/companies/stocktube/8299/optibiotix-health-focused-on-marketing-and-ramping-up-revenues-8299.html

Anyway, on to the main business. I was wrong about the cash call then? Nope. In my opinion it's coming.

Look at the latest set of interims. They are burning through cash at a rate of around £1m every six months. At end of November they will be down to their last million or less. In other words, six months left before they run out of cash. I presume they aren't going to let that happen. They won't be cash generative for some years yet (if at all of course). That means a cash call is relatively imminent.

They've already ramped up the spin, and it can't be to long before the begging bowl is out.

What price will the placing be? Difficult to say, but I'd guess a pretty hefty discount given the current market cap. relative to revenues (let's not even mention profits or FCF that would just be silly).

Anyway, good luck but I'm not a fan of these companies as you've probably gathered, although I should say that this blog is my own thoughts and opinions and I'm always prepared to stick my hand up if I get it wrong.