Borislav Tonev

Major League Football Inc (OTCMKTS:MLFB) Tackles Another 52-Week High

by Borislav Tonev September 28, 2015

Major League Football Inc (OTCMKTS:MLFB, MLFB message board)'s business plan revolves around the creation of what is known as a professional spring football league. A spring league, in case you're not familiar with the term, is a league that is supposed to keep fans entertained during the off-season. It's not a new concept. In fact, many businessmen and former players have tried to create similar football leagues over the years, but unfortunately, due to limited interest from the fans and the media, they have all failed.

Speaking of failures, MLFB as we know it today exists thanks to a certain acquisition completed in July 2014. Prior to it, the company was called Universal Capital Management Inc, it had a completely different business plan, and it wasn't particularly successful. Some shareholders weren't happy and they were particularly angry with Michael Queen – the former CEO who was later re-appointed as Executive Vice President.

This is in the past, however. As we mentioned already, MLFB now wants to create the first ever successful spring football league. But can they really do it?

Let's open the latest 10-Q and see what the financials looked like on July 31:

  • cash: $1,120
  • current assets: $76,949
  • current liabilities: $1,736,790
  • NO revenue
  • quarterly net loss: $635,725

MLFB's league is supposed to start in March 2016 which is less than six months away, and the figures above might suggest that the deadline is about to be missed.

Investors aren't bothered, though. In fact, after registering its latest red close on September 21, MLFB smashed its way through several 52-week highs and it ended up finishing last week's trading at $1.57 per share which is a massive 65% above the levels occupied just seven days prior to this.

Investors aren't bothered about the dismal-looking financial statement because they think that the financials aren't as dismal anymore. MLFB announced a few weeks ago that an entity called Clairemont Private Investment Group LLC has agreed to invest up to $15 million into the company. That sounds like good news. The cash is essential if MLFB is to carry out its business plan. Unfortunately, there's a hitch.

In exchange for the money, Clairemont will buy Preferred MLFB shares which will be convertible into common stock at a 25% discount to the value on the open market. We've seen worse discounts, but the threat of dilution is certainly present and it should be borne in mind by anyone who is willing to take the punt and invest in the company.

Another thing that you should probably do before you put your money on the line is take a closer look at the 10-Q. In there, you'll see that MLFB had some notes outstanding at the end of July which were convertible into stock at a fixed rate of $0.30 per share. You'll also see that on July 14, MLFB issued nearly 2 million shares as a conversion of debt at a price of just $0.16 (or about 10% of the current market value).

All in all, despite the recent cash injection and despite the approaching launch of MLFB's spring league, the company is not out of the woods. Make sure you tread carefully.

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