An independent public accounting firm has said that it has ‘substantial doubt’ over the ability of media company Multimedia Platforms (MMP) to continue as a going concern.
MMP describes itself as ‘the only publicly-traded LGBT media company.’
The Fort Lauderdale business made news last year when it bought, in quick succession, Funmaps (now rebranded as WiRLD City Guide), New York’s Next magazine and the Los Angeles-based Frontiers. It already owned Guy magazine.
The investor warning over its finances is contained within MMP’s own end-of-year 10-K form – part of the annual paperwork that all publicly-traded companies must file in the US.
When it bought Next magazine last year, CEO Bobby Blair indicated that the company was engaged in a committed expansion program, and was aiming to take on a dominant stake in the US’s LGBTI media.
In February of this year MMP launched WiRLD.com, a LGBTI news and entertainment website, and in April it relaunched its FrontiersMedia website.
MMP went public in January 2015 (OTCQB: MMPW). However, since that time, its share price has slumped from a 52-week high of $2.50 to $0.02.
In its end-of-year report, filed 30 March, independent auditor Baum & Company, PA, issued the following assessment: ‘The Company has suffered recurring losses from operations and has a significant amount of accumulated deficit that raise substantial doubt about its ability to continue as a going concern.’
The report says that MMP’s revenue for 2015 was $1.8million, compared to $642,173 in 2014. The increase came largely from its acquisition of the Funmaps, Next and Frontiers brands – all of which boosted income.
However, after deductions, its gross profit was $794,404, and its outstanding indebtedness, as of 31 December 2015, was $3,650,834.
The report states, ‘Management has developed a plan to continue operations. This plan includes continued control of expenses and obtaining equity or debt financing.’
Part of this has included the loss of staff.
In March this year, MMP laid off Frontier’s long-running, veteran News Editor, Karen Ocamb, with Blair indicating that it was because he wanted to give younger people opportunities within the company.
He told PressPassQ, ‘Unfortunately, Karen fell where we realized we were moving toward a digital and Millennial audience, and we wanted to give the generation of Millennials a real shot at creating our content.’ The comment was criticized by some for demonstrating an ageist attitude towards MMP’s workforce.
Blair also said that MMP had ‘found $1.1 million of efficiencies’ across its brands, primarily through reducing its number of ‘print staff’.
Speaking to Gay Star Business, one investment manager said that he was unsure why MMP, which has 44 employees, had even decided to publicly trade.
John Roberts is the founder and Portfolio Manager of the Workplace Equality Index. Launched by Denver Investments, the index invests in companies with LGBT-friendly policies. It includes such companies as Kroger, Twitter and Apple.
He pointed out that compared with MMP’s $1.8million revenue, ‘The average revenue of the companies in the Workplace Equality Index is about $32billion a year – even the small cap companies we deal with, their average revenue is about $6billion.
‘MMP is not even small cap. It’s not even a microcap stock, and with companies like this, one questions why they would go public, besides the publicity.’
Commenting on the fall in share price, Roberts pointed out that the markets were particularly tough and unforgiving for microcap companies at the moment, with investors preferring to opt for safety.
‘Larger companies that are big and liquid and easily trade-able have seen much greater investor interest than illiquid mini-micro-cap stocks.’
So could MMP go the same way as PlanetOut Inc?
The latter was the only other LGBT media company to undergo a public listing. It launched in 1995 and went public in 2004. However, it soon reported large losses. It merged with Here Networks and Regent Entertainment in 2009 and effectively ceased operations.
Multimedia Platforms have not responded to our requests for comment.