Monday, June 4, 2012

Mango Capital Sells (Basically) The Only Thing That Gave It Worth...

From here:

Mango Capital, Inc. (MCAP: Other Over the Counter) announced today that its subsidiary, MangoSoft Intellectual Property, Inc., has sold all of its patent rights.  The transaction resulted in estimated pre-tax proceeds, net of transaction-related expenses, of approximately $2.3 million.   Other than the net proceeds from this patent sale, Mango Capital, Inc. and its subsidiaries do not have material assets, and they currently do not conduct any substantive business operations.Source: PR Newswire (http://s.tt/1djdV)
Before the sale, the company had negative tangible book value. After the sale, even if the company doesn't pay taxes on the proceeds, the sale was for less than the goodwill on the company's books. At the end of September, 2011, the company had a negative tangible book value of $2.299 million... which, looking at the historical asset burn, is likely to be less at present (though, could be different, as I will talk of later). The real kicker here, is that a patent lawyer had been given stock in exchange for a capital injection, and that there was the potential for a patent infringement lawsuit.



Basically, this company is trading for nearly 3/4 of a million dollars and has no operations or, from what I can tell, no real assets, provided that they use cash to offset their liabilities. As such, a buyer of the stock is paying a ton of money for the shell corporation, which is generally is worth a lot less than present prices. The one redeeming factor is that the company does have a lot of NOLs- from the last 10K:

The Company has federal and state tax net operating loss carryforwards available for future periods of approximately $72,700,000. The federal tax net operating loss carryforwards began to expire 2010, and state tax net operating loss carryforwards began expiring in 2000. As a result of the changes in the ownership of the Company, there may be limitations on the amounts of net operating loss carryforwards that may be utilized in any one year. The Company also has research and development credits for federal tax purposes of approximately $518,000, which expire beginning in 2011.
With the company delisting, which seems necessary to reduce cash burn, there is no real way of knowing what is going on... however, with the press release saying that the company has no assets, the following seems confusing (from here).


On March 1, 2011, the Company announced in a press release (Mango Capital Launches Aspyre Settlement Funding) that the Company expanded its market focus into consumer financial service markets with a new subsidiary, Aspyre Settlement Funding, Inc. The re-branding as Aspyre provides a fresh approach to the structured settlement funding effort. Through the Aspyre brand, the Company also intends to develop products and services in consumer card and payments markets. Aspyre is a wholly-owned subsidiary of the Company.  A copy of the press release is attached hereto as Exhibit 99.03.  The information in this Form 8-K being furnished under this Item 7.01 and Exhibit 99.03 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of such Section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act or Exchange Act, except as shall be expressly set forth by specific reference in such filing.


While the company could have sold off Aspyre, which might have improved their balance sheet, I would think that they would have put out a press release as it seems that Aspyre is still in business for somebody...

In the meantime, I am sitting this one out due to lack of clarity and that there seem to be better NOL plays out there.

Disclosure/Disclaimer: I have no financial position in any regard to any of the entities mentioned. I reserve the right to change any of my positions at any time. This is not advice of any kind, is solely my own opinion, and is obviously for entertainment purposes. Always do a ton of your own research in regard to anything that I say, do, write, or so much as even think about.


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