It sounded like a big deal. Have the Messi brand to sell clothes. However, neither with a world champion Lionel Messi, nor with his signing for Inter Miami, has the company MGO Global been able to make its exclusive contract profitable. Losses have skyrocketed. The company closed 2023 with red numbers of $7.1 million and doubts about the viability of its business. The company has made a clean break: it has sold the contract with Messi for two million dollars and will focus on selling flagpoles.
MGO's prospects did not seem very good even at the time of its listing, when with Messi's name as a lure it reached a crazy valuation. The price of the listing a year ago was $5 per share, with which MGO Global It was now valued at around $58 million despite doubts about its viability. The value of the shares of the two main shareholders, Maximiliano Ojeda (executive president) and Virginia Hilfiger, (design director and little sister of Tommy Hilfiger) became around 20 million, multiplying the value of their investment by more than 10 .
When trading began on January 13, 2023, the shares soared and reached a maximum of $16.61, which implied an increase of 232% over the placement price and an average return of 4,645% over the price. to which the original shareholders invested. However, the price deflated as quickly as it inflated and the shares closed at $4.65. After a year, the shares had lost 86% of their value and as of this Monday they are trading at $0.41, 92% below the placement price.
The company has closed an economically ruinous 2023, with a turnover of $5.4 million and losses of $7.4 million, which more than double the red numbers of the previous year. In the business segment called Messi Store, sales were 1.7 million dollars, and losses were 1.9 million dollars.
The contract with the firm that manages the Argentine star's businesses, Leo Messi Management (LMM), to sell Messi brand clothing had a duration of three years and the Argentine star was guaranteed a minimum income of four million euros. , in addition to a royalty of 12% of sales. When the contract has less than a year left to run, MGO Global has preferred to sell it.
On March 21, the company reached an agreement with Centric Brands by which it transferred all its rights and obligations under the license agreement for an amount of two million dollars. Centric, in addition, assumed the minimum fee of 1.5 million euros that remained pending to be paid to LMM until the end of the year, as communicated by MGO Global to the United States Securities and Exchange Commission (the SEC, for its acronym in Spanish). English).
That sale can save the company from a worse situation. In its audit report, the accounting firm Assurance Dimensions indicates: “The company [MGO Global] has suffered recurring losses during the year ended December 31, 2023. The company had a net loss of $7,370,465 and net cash used in operating activities of $6,978,788. These factors raise substantial doubts about the company's ability to continue as a going concern.”
The company itself recognizes its critical situation. MGO Global evaluates strategies to obtain additional financing necessary for its future operations, including capital increases, the issuance or restructuring of debt or other operations. “Any additional equity financing we obtain may dilute the ownership of our current shareholders. The economic dilution for our shareholders will be significant,” he warns, warning that it is also possible that he will not be able to obtain additional financing. “As such, these factors, among others, raise substantial doubts about the Company's ability to continue as a going concern for a period of 12 months from the date of issuance of these financial statements,” he says.
MGO Global bought a company that sells flagpoles. With it, its turnover has increased, but profitability is resisting. The company already has a stock market value of only $6 million and was warned of its possible exclusion from Nasdaq.
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