Metro One: seeking public funds for the mobile platform (OTCMKTS: WOWI)

A quick overview of Metro One telecommunications

Metro One Telecommunications (OTC:WOWI) has asked to raise $12.6 million in an offering of its common stock and warrants, according to an S-1 registration statement.

The company provides a mobile commerce platform for retailers.

Given the many uncertainties about the company’s trajectory and the dilution of the shares at the closing of the offer, I am awaiting the offer.

Introducing Metro One

Metro One, based in Sheridan, Wyoming, was founded to acquire and develop technologies that help retail organizations easily create a mobile-centric presence that better engages their customers and prospects.

The management is headed by chief executive Bianca Meger, who previously helped launch Motorola’s mobile distribution system in Angola and served as marketing director for various unnamed technology companies in Israel.

The company’s main offerings include:

• Mobile commerce trading platform

• Mobile commerce business system

• In-Store Engagement Suite

Metro One has recorded an investment at fair market value of $137.2 million as of September 30, 2021 from investors including GT Ventures and various individuals.

The company acquired the assets of Royal App in early 2021 and is looking to modify and improve the system as the basis for its offerings.

Metro One has begun generating revenue through an in-house sales and merchandising team and plans to further market its offerings through events, sponsorships, digital marketing, social media and traditional media channels.

Metro One Market

According to a 2022 market research report According to imarc, the global mobile commerce market was estimated at $834 billion in 2021 and is expected to reach $4.7 trillion by 2027.

This represents a projected CAGR of 33.4% from 2022 to 2027.

The main drivers of this expected growth are an increase in the preference for using mobile apps and software for a wide variety of business operations, including banking, in-app purchases, digital wallets and marketplaces. market.

In addition, the market is facilitated by the integration with the point of sale [POS] terminals that process transactions using near field communications [NFC] technologies.

Financial performance of Metro One Telecommunications

The company’s recent financial results can be summarized as follows:

• A small amount of main income

• Significant operating losses

• High cash used in operations

Below are the relevant financial results from the company’s registration statement:

(Source)

As of September 30, 2021, Metro One had $449,574 in cash and $666,617 in total liabilities.

Details of the Metro One telecommunications offer

Metro One intends to raise $12.6 million in gross proceeds from an offering of 80 million common shares and 20 million warrants at $0.12 per share.

Purchasers of shares will receive one warrant for every 4 shares purchased, and the exercise price of the warrants will be 125% of the offering price, or $0.15.

No existing shareholders have expressed interest in purchasing shares from the offer. Instead, the selling shareholders intend to sell large amounts of shares under the offer.

The company also records the shares sold via a PIPE 2021 (Private Investment in Public Equity), via the previous SAFE (Simple Agreement For Equity) and for the shares contributed to the acquisition of Royal App.

The stock currently trades on the OTC under the symbol “WOWI” and its closing price on June 14, 2022 was $0.10 per share.

Assuming a successful bid at $0.12 per share, the company’s enterprise value would be approximately $30.5 million, excluding the effects of underwriter over-allotment options.

The float-to-shares outstanding ratio (excluding subscriber over-allotments) will be approximately 23.7%. A figure below 10% is generally considered a “low float” security, which can be subject to significant price volatility.

Management indicates that it will use the net proceeds of the offering as follows:

We intend to use substantially all of the net proceeds from this offering to fund business activities, including the development and sale of our products, as well as for working capital and general corporate purposes. .

(Source)

Regarding ongoing legal proceedings, management did not provide information on the status of legal proceedings against the company, if any.

Comment on Metro One’s offer

WOWI seeks public market investments to fund its unspecified business growth plans.

The company’s finances produced a tiny amount of revenue, significant operating losses, and significant cash used in operations.

The company currently plans to pay no dividends on its shares and anticipates that it will retain future earnings, if any, for reinvestment in the business.

The market opportunity to provide mobile commerce software to enterprises is vast but highly fragmented.

The main risks to the company’s outlook are its tiny revenue track record and the seemingly unfinished nature of its mobile platform offering.

On valuation, management is asking public investors to pay an enterprise value of around $30 million, despite very low revenues, large operating losses and no clear differentiation.

There are plenty of major platforms to provide a mobile presence for businesses of any size, and the cost of acquiring customers is relatively high unless your process is fully automated, which the big platforms are.

Additionally, the selling shareholders will represent a very large increase in the shares’ free float, so it is difficult to determine what price the shares will trade at after the offering, due to such dilution.

Given so many uncertainties, I’m waiting for the offer.

Expected date of offer: to be announced.