Traders have been loading the boat with starter positions in the newest moble app focused penny stocks, LifeApps Digital Media Inc. (LFAP ) after a 15:1 split. We profiled LFAP stock in early September anticipating something would take off with this Company and had some optimistic views of the attractiveness it presented. Now that its live and we’ve had a chance to dig deeper, we’re curious as to how profitable 40% of the revenues of a new Soccer specific tutorial app can actually be.
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LFAP Stock Chart
Market Cap: 29.60M
Close: 0.28, down -0.03 (-9.68%)
Volume: 497,270
Dollar Volume: $138,798
High: 0.32
Low: 0.265
Trades: 58
Average Trade Size: 8,573
Authorized: 300,000,000
Issued and Outstanding: 105,700,000
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The issued and outstanding, according to our calculations, is 14.3 million less than what most sites are showing since after 90 million post split shares were exchanged for 100% of the LifeApps shares in the merger, the 8-K reports on page 6 that 75.70 million shares were outstanding, including the PPO units: 5.7 million shares at $0.20 per share with warrants exercisable at $1.00 (page 5 of the 8-K).
The S-1 registrants of the original shares (30 million after the 15-for-1 stock split) are banking hard on this deal. As per the bottom of page F-12 of the S-1 filed (see here), from March 14, 2011 through April 21, 2011, the Company sold 2,000,000 shares of its common stock at $0.02 per share to 33 individuals for a total of $40,000. After the split, the cost basis is $0.00133.
The 75.70 million shares held by the insiders, Robert Gayman, Arnold Tinter and Howard Fuller, are locked up for a minimum of 12 months. However, as stated in the lockup agreement, if the Company engages in an underwritten public offering of its equity or convertible securities prior to the end of the Restricted Period, the managing underwriter may waive the balance of the Restricted Period (see here). Translation: Bring on the convertible note paybales.
The App itself was a deal signed May 17, 2012 with Rachel Buehler for a Soccer specific tutorial app said to feature written content, photos and video covering the basics of Soccer:
- Description of the field
- Description of the basic gear required
- Cleats
- The Kit
- Ball
- Basic Soccer Skills
- Basic Soccer Drills
The deal called for LifeApps® to issue quarterly compensation checks to Ms. Buehler. based on the following calculations:
• Current market agreements attribute 30% of the sale price of mobile apps to the app store operators;
• LifeApps® proposes splitting the remaining 70% of app sales with Ms. Buehler at a rate of 40% for LifeApps® and 30% for Ms. Buehler
• The breakdown of the sale shares is: 30% App Store / 40% LifeApps® / 30% Ms. Buehler
If the App deal was just to get their foot in the door so they could get their multi-sport and fitness offerings, including their latest digital magazine app, YouWorkout, for subscribers to benefit from the expertise of top-tier sports physicians, performance fitness trainers and professional athletes, we are basically looking at another Pazoo (PZOO).
About LFAP Stock
LifeApps Digital Media Inc., through our wholly owned subsidiary LifeApps, Inc., is a digital publisher, delivering a cross-platform suite of products and services that are focused on enthusiast health, fitness and sports topics. Tha Company has a multimarket strategy that incorporates web, mobile, social media and internet TV to engage consumers in multiple areas of interest including medical, yoga, golf, tennis, running, soccer, cycling, and other health, fitness and sports topics.
Bottom Line: LFAP isn’t the penny stock we thought it would be. Keep LFAP on the list of penny stocks to watch and swing it since it looks likely to follow the path of PZOO with the same hype build up provided via Trilogy Capital Partners IR.
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