"What was it that piqued your interest in MSL, and are there any...

"What was it that piqued your interest in MSL, and are there any obvious red flags I'm missing?"

You've pretty much summed it up: it has good financial pedigree.

For me the appeal when I acquired it was that it was a mere sub-$30m EV company at the time, that was generating $25m in Revenue ($17m of it of a recurring nature) and had reached EBITDA breakeven.

And the current CEO - who I heard present on 4 or 5 occasions and he made perfect sense in those presentations- had started to deliver on what he had foreshadowed in the weeks after his appointment.

I figured that not too much needed to go right for that $30m figure to become $50m,or $60m. (As it happens,the business has become a near-$90m company (although its issued share count has increased by 10.6% due to a capital raising (6.6%), scrip being applied yo acquire SwifptPos (3.0%) and the conversion of performance rights (1.0%)) [*]

Of course, since then a number of things have changed: they have become even bigger in POS through what looked like two astute acquisitions.


The most pressing red flags are very much near-term in nature, namely in the form of hospitality and sporting events in the UK being shut down again, which is where MSL's nascent business is.

In terms of longer term risks, the thing that exercises my mind most is the way they execute on any foray they make into the US market;it is obviously big, but also uber-competitive. If they approach accessing the US market prudently they will go on to become a multi-hundred million dollar business; it they get the get the US strategy wrong, they'll torch whatever capital they invest there (and probably even more).

Hopefully and presumably, they can leverage of the new Taubman relationship to avoid standing on any landmines in the US.


[*] Whenever one consider's MSL's valuation, one needs to account for the $4.5m convertible notes that have been issued to Taubman Capital (which convert into 21.7m shares at Taubman's election at some point between now and September 2024). That contingent equity means that, at the current share price, the market cap of the company is really $5m higher (equivalent to 6% higher) than it will be reported by information service providers. Probably not too meaningful in the context of the ultimate valuation potential of the company, but worthy of remembering, even if only for tactical purposes given that once Taubman elect to convert, that chink of equity will be looking for a buyer.

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