A 5-year $400m deal with a government agency is generally a company maker, especially for a company with a $5 million market cap. So if the Mission Ready Services (MRS.V) news that went out Wednesday is to be taken at face value, today’s 209% (at the time of writing) stock price increase might be just the beginning.
MRS touts itself as a company that saves the lives of military and law enforcement personnel by providing them with the “best possible protective equipment.” They go on to say, “Mission Ready’s management team offers over 100 years of combined industry experience and is composed of industry experts in developing products, contracting, and selling to the federal government, first responders and tactical markets through open market procurements, teaming arrangements, and a variety of federal contract tools.”
Considering this is a Vancouver-based public company on the Venture Exchange, you’d usually read those words as an empty brag, but the news that dropped today was SUBSTANTIAL.
Mission Ready Services Inc.announces that it has signed a 5-year, multi-million dollar exclusive distribution agreement with a US-based contracting partner to manufacture and supply Flex9Armor and No-Contact Tactical Shield Covers – among other Protect The Force (“PTF”) products – for a large foreign military. The Agreement includes annual minimum purchase volumes – USD$50MM for 2017 through December 31, 2018 – which must be met in order for certain Distributor provisions to remain in effect, including regional exclusivity and an automatic renewal of the contract in 2022 for an additional 5-year term.
Should the deal play out as planned, it’ll bring a total of $400 million of buying to MRS, making their now tripled market cap of $15 million look like a steal. In fact, I jumped aboard myself and bought some.
But any time a Venture company jumps in such a fashion, it’s important to look for the looming dark horse of the apocalypse; what could go wrong here?
Well, the company will need bridge financing to deliver its good. That appears to be something they’ve taken care of, with MediaTech Capital Parners having signed on to provide exactly that. That said, we might see a large dilutive financing needed down the road.
Next, the company agreeing to buy the equipment, which is thus far unnamed, may not actually do so, and would suffer no penalty but the loss of exclusivity in the US market. We’ve seen this before – a huge deal is only as good as the guy you’re doing the huge deal with, and we don’t know who that is yet.
Last, paper. There’s a lot of MRS paper out there, with 83 million shares out currently, likely more needed soon, and a lot of cheap $0.05 paper currently being sold into this rise. Hey, no issue with folks taking their (big) profits, but with $0.15 warrants out there, and the stock at $0.17, there may still be some churn to work through.
All of that said: Don’t care. The company financials are decent, there’s new management at the helm who appear to be at least feeding the market the sort of news it needs, and with the political situation in the world today, with North Korea tossing nukes about and Donald Trump completely oblivious as to how to deal with aggression from rogue states (and even maybe in bed with one, whats up Vlad), investing in the military sector right now seems a smart move.
In related sector news, Patriot One Technologies (PAT.V) is also cranking upwards today, shooting up 10% on the announcement that its tech has been Industry Canada certified.
“Patriot One Technologies Inc. (TSX VENTURE: PAT) (OTCQB: PTOTF) (FRANKFURT: 0PL), is pleased to announce that its award-winning PATSCAN CMR™ (Cognitive Microwave Radar) concealed weapons detection system has received Industry Canada (IC) certification for commercial use in Canada. Initial deployments will be undertaken in collaboration with law enforcement and government agency personnel at several strategic locations.
This sector is on fire, and PAT has been one of its pioneers.
Patriot One is in the enviable position of having secured sales commitments for more units than it had planned for 2017. The Company is now finalizing sub-manufacturing agreements to increase its 2018 production capability in order to meet growing demand.
— Chris Parry
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