Q: What are your thoughts on American Aires? I have held a small position for a couple years. The stock has had little to no momentum up until the past month upon which it has taken off in both price and trading volume with really no news released that I'm able to find.
5i Research Answer:
You certainly have the 'take off' part right. WIFI is up 734% this year and up 192% in 52 weeks. It has raised some money ($2.5M) and announced a couple of partnerships, but we see no real significant news. It has not reported the 4Q yet. In the 3Q, it had only $2M in sales, and lost $0.25M. It had only $1M in assets. At $125M market cap, it certainly seems 'frothy' to us. 'Radiation blocking' seems to have caught investors' attention. Insiders own about 15% and have been net buyers in the past six months. There are some red flags other than valuation. There was a debt-for-shares conversion last year. The company is going to need a lot more capital. There was a reverse share split (1 for 10) last year. We would be cautious.