What is Ultimax Digital?
Ultimax Digital, Inc. (NFTX), based in New York, NY, was founded to create payment technologies for video games and has since pivoted to focus on NFT production and a marketplace.
Management is headed by the President and CEO Jesse Sutton, who has been with the company since 2021 and previously served as CEO of Majesco Entertainment and President of Global Bit.
The company’s main offerings include:
As of June 30, 2022, Ultimax has recorded a fair market value investment of $2.6 million in equity and debt as of June 30, 2022 from investors such as Aurora 1 Equity Trust, Gideon 718 Equity Trust, Robin Equities Irrevocable Trust and Level Up Revocable Trust.
According to a 2022 market research report by SkyQuest Technology, the global NFT market was estimated at $15.7 billion in 2021 and is expected to reach $122 billion by 2028.
This represents a projected CAGR of 34.1% from 2022 to 2028.
The main drivers of this expected growth are growing demand for digital artworks, both visual and audio, growing awareness of technology among a wider group of consumers, and easier access to information. and purchasing abilities.
However, market growth has been particularly volatile, with strong growth in the summer of 2021 followed by a sharp decline in interest in the summer of 2022.
Major competitors or other industry participants include:
Ultimax Digital IPO Date and Details
Ultimax’s IPO, or IPO, date has yet to be announced by the company.
(Disclaimer: Compared to stocks with more history, IPOs generally have less information for investors to review and analyze. For this reason, investors should exercise caution when considering investing. in an IPO or immediately after the IPO.Remember that many IPOs are heavily marketed, past company performance is not a guarantee of future results and potential risks may be under -estimated.)
Ultimax intends to raise $11.25 million in gross proceeds from an IPO of its common stock, offering 2.5 million shares at a proposed midpoint price of $4.50 per share.
No existing shareholders have expressed interest in purchasing shares at the IPO price.
Assuming a successful IPO, the company’s enterprise value at the time of the IPO would be approximately $76.8 million, excluding the effects of underwriter over-allotment options.
The float-to-shares-outstanding ratio (excluding subscriber over-allotments) will be approximately 13.5%. A figure below 10% is generally considered a “low float” security that may be subject to significant price volatility.
Management says it will use the net proceeds from the IPO as follows:
We currently intend to use the net proceeds we receive from this offering for general corporate purposes, including growth capital, working capital, operating expenses, hiring, acquisitions potential losses, redemption of convertible notes that are not converted into common shares by holders, and capital expenditures.
(Source – SEC)
The presentation by management of the company’s roadshow is not available.
Regarding ongoing legal proceedings, management said the company is “not a party to any ongoing legal proceedings, and our property is not subject to any ongoing legal proceedings.”
The sole listed bookrunner of the IPO is WestPark Capital.
How to Invest in Company Stock: 7 Steps
Investors can buy shares in the same way they can buy shares of other publicly traded companies, or as part of the pre-IPO allocation.
Note: This report is not a recommendation to buy stocks or any other security. For investors who wish to pursue a potential investment after the IPO is complete, the following steps for buying stocks will be helpful.
Step 1: Understand the company’s financial history
Although there isn’t much public financial information available about the company, investors can view the company’s financial history on their SEC Form S-1 or F-1 (Source).
Step 2: Assess the company’s financial reports
The main financial statements available for publicly traded companies include the income statement, balance sheet, and cash flow statement. These financial statements can help investors learn about a company’s cash capitalization structure, cash flow trends, and financial condition.
Here is my summary of the company’s recent financial results:
The company’s financial statements show no revenue in recent years and significant operating expenses.
Free cash flow for the six months ended June 30, 2022 was negative ($861,643).
The company currently plans to pay no dividends on its share capital and intends to reinvest all future earnings in the growth and operational needs of the business.
Step 3: Assess the potential of the business against your investment horizon
When investors are evaluating potential stocks to buy, it is important to consider their time horizon and risk tolerance before buying stocks. For example, a swing trader may be interested in near-term growth potential, while a long-term investor may prioritize strong financial stocks over short-term price movements.
Step 4: Select a brokerage
Investors who do not yet have a trading account will start by selecting a brokerage firm. Common account types used to trade stocks include a standard brokerage account or a retirement account like an IRA.
Investors who prefer fee-based advice can open a trading account with a full-service broker or independent investment adviser, and those who want to manage their portfolio at a lower cost can choose a discount brokerage firm.
Step 5: Choose an investment size and strategy
Investors who have decided to buy shares in the company should consider how many shares to buy and what investment strategy to adopt for their new position. The investment strategy will guide investors’ holding period and exit strategy.
Many investors choose to buy and hold stocks for long periods of time. Examples of basic investment strategies include swing trading, short-term trading, or investing over a long-term holding period.
For investors wishing to obtain an allocation of shares prior to the IPO at the IPO price, they would “indicate their interest” to their broker prior to the IPO. Indication of interest does not guarantee that the investor will receive a pre-IPO share award.
Step 6: Choose an order type
Investors have many choices for placing stock orders, including market orders, limit orders, and stop orders.
Market Order: This is the most common type of order placed by retail traders. A market order executes a trade immediately at the best available trade price.
Limit Order: When an investor places a buy limit order, they specify a maximum price to pay for the shares.
Stop order: A buy-stop order is an order to buy at a specified price, called the stop price, which will be higher than the current market price. In the case of a buy-stop, the stop price will be lower than the current market price.
Step 7: Submit the transaction
Once investors fund their account with cash, they can decide on an investment size and order type and then submit the trade to place an order. If the transaction is a market order, it will be executed immediately at the best available market price.
However, if investors submit a limit order or stop-loss order, the investor may have to wait for the stock to reach its target price or stop-loss price for the trade to be completed.
NFTX is seeking investment in the US public capital market to fund its proposed growth plans and possibly to repay convertible promissory notes.
The market opportunity for providing various NFT-related services is significant and expected to grow significantly in the future as consumers seek out various types of digital assets and objects secured by blockchain technologies.
WestPark Capital is the lead underwriter and IPOs conducted by the company over the past 12 months have generated a negative average return (49.0%) since their IPO. This is an underperformance for all major underwriters over the period.
The main risk to the company’s outlook is its lack of revenue history and strong competition from major market players who have already gained significant market share in network-effect industries.
As for the valuation, management is asking investors to pay an enterprise value of around $77 million for a company with no revenue history.
Thus, the IPO of NFTX is highly speculative as the management did not generate any revenue.
Although the IPO may attract day traders looking for volatility, I’m waiting.