Investing in FTSE AIM Companies is taking a big gamble because of its light-touched regulations; therefore investors can quickly lose all their money.
So, what better way to pick a business with enough red flags to teach the amateur investors some viable investment lessons!
It is one of those companies that get retail investors excited because of the ingredients it puts into the cooking pot which has gotten you hungry about making money.
Let’s begin.



Crucial facts and evidence that are easily overlooked by the retail investor



1. Growing turnover with increasing losses


Are you mesmerised by its rapid turnover growth? If the answer is yes, then you need to understand business.
Do you think selling something that costs you £4 for £2 will make you money?
If the answer is no, you are taking a step in the right direction.
And, in Earthport’s case, it did sell its services less than its costs.

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Source: Earthport annual reports. (Graph created by the writer)

In the last eight years, Earthport has made a cumulative loss of £60.8m. More critically, the company incurred net cash losses of £45.5m in the same period.

So, how did Earthport carried on as a firm?


2. Investors point to Earthport healthy cash balance

Last year annual reported showed Earthport has cash of £31.7m in the bank, but where did they obtain such funds?

From you, the investors and financial institutions that manage other people’s money.

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Source: Earthport annual reports. (Graph created by the writer)

According to the chart, Earthport has raised a total of £79m from investors since 2007 and the way they did are through equity/share issues.

Fact: Earthport releases 24 RNSs relating to the issue of equity since the beginning of 2014.

How did Earthport get investors to put up the cash?

The answer leads to evidence number three

3. Contract wins and acquisitions

This section is relevant, and it’s long, so bear with me.

Starting with Earthport contract wins, you will see this impressive list below:

Company

Deal Details

19/03/14

Kyodai Remittance

A 3-year contract with a Japanese remittance…

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