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What Does LCLP's LOI Mean If/When Completed

About a week ago I came across a company that was mentioned by a member in a chat group that I'm in, Life Clips, Inc. (LCLP). Now it should be noted that there looks to be some promotion on it but from what I've seen so far, the typical "selling" hasn't really been seen the same as many other promotions of this magnitude.  Nevertheless, I began looking into things myself and it looks like if LCLP can deliver on its latest binding Letter of Intent with Batteryfly Energy to basically buy out the company for $6 million in a cash and stock transaction. 

The transaction has been heavily speculated on as far as what it brings to LCLP as this would be a possible revenue producing venture that would bring a much sought after product called Mobeego.  This product acts as an "energy shot for your phone" and simply put, when you're out of juice, the company purports that you can get an immediate charge to your mobile device or action camera.  Assuming that these devices plug into traditional Android and Apple branded devices, there could be a huge opportunity to get this little battery to go mainstream.  The company has already said that the Mobeego device is in other countries and this arrangement between Life Clips and Batteryfly would bring it to the US.  

Now, just like many many stocks trading with small market caps and under $1, these are highly speculative in my opinion and sould be treated as such.  I don't think we see "the next big earnings" release from the company just yet but if this transaction closes, I could see this product at a corner store or in an airport pretty quickly.  I for one am always searching for power on the go and unfortunately I don't think it's fashionable to be dragging along a USB cord & wall adapter in my slacks when I'm heading downtown for a meeting.

So what can we look for as far as potential here?:

1. If LCLP closes on the Batteryfly transaction, it would give them access to the Mobeego product and bring some serious competition to the rechargeable battery space.  Simply put, if I can buy this along with my can of Red Bull...I'm good for the day and I'm sure I'm not alone in that thought process.

2. I never thought about it but the space for portable battery packs is actually a big thing. The overall ’Portable Battery Pack Market‘ is expected to reach up to $10.94 billion by 2020, at an estimated CAGR of 17.53% through the end of this decade. The rechargeable battery case company, Mophie was just reported to have been bought out for $100M by Zagg, Inc. (NASDAQ:ZAGG). If LCLP can prove a more effective product that's also less costly (some Mophie devices score big bucks to buy), this could present an acquisition play down the line.

3. LCLP is more than just "a battery company" from what I've found.  The company also has a competitive action camera device called The LifeClips SOLO 4k.  There hasn't been a whole lot of guidance from the company on this yet but it's listed on the site and a pretty interesting product that looks like it streams video as opposed to something like a GoPro (GPRO), which just records.

4. Additional IP acquisition.  This was highlighted in the company's shareholder update on Monday (5/9). "We plan to seek out additional acquisitions as well as innovate products and grow organically. Mr. Singer (LCLP's Senior Vice President of Sales) and Myself as well as the rest of our team are fully dedicated to making (LCLP) a huge success."

5. The market seems to be waking up quite a bit.  Call it a result of this promotion or call it new attention from the series of news this month, but LCLP has seen an increase in both price and volume since last week (starting May 2nd).  Overall it looks like the price has moved up as much as 91% from those $0.23 lows on the 2nd.  Keep in mind that the company has just started making announcements so, I hate to say it this way, but this could be just the beginning for something.  I'm most interested in seeing if and when this acquisition closes, what the company will have in place as far as distribution channels and pre-launch retail outlets.

Potential Risks

As with all stocks, there is inherent risk but with a company like LCLP, it is incredibly speculative if not for anything other than the fact that LCLP hasn't reported any significant financial milestones and reported a net loss of nearly $5million in its last quarterly report.  For anyone who knows penny stocks, this is typical of an emerging growth company and with the potential that a completed Mobeego transaction brings to the table, these figures could be very different by the end of 2016.

Outside of this, the overall market volatility could pose an issue. These stocks can see very volatile swings in either direction.  When you think about the "blue chips" of the world, a big move is something like 20-30% over a few months.  LCLP has managed to trump that in a single week.  Granted this is a young company but when identifying risks, market risk is something that comes into play even moreso at prices under $1.

And probably the largest elephant in the room for risk here would be that there is an active promotion on this.  Now in my experience, promotions aren't necessarily a bad thing because companies need some kind of investor interaction to build awareness around a new company.  This is especially true based on where LCLP is at right now.  Sometimes however, these promotions can see heavy periods of dilution that could trap investors.  Right now it doesn't seem to be showing that so this could be a very big plus because a "non toxic promotion" could actually become an asset to the stock overall

Speculative Watch On LCLP

There's a lot going on here and it's all just happened within the last few weeks. LCLP is on the verge of possibly closing this Batteryfly transaction by the end of the quarter, according to the company, and they've also got other products in the pipeline that could add to the sales strategy.  Should they be able to close, the Mobeego product could be a game changer for the mobile battery pack industry.  You don't see anything like these at your local corner store or at any airports but this could quickly change and LCLP could present that opportunity.  This will be something that I will personally be watching on speculation of a closed acquisition.