In addition to the Sept. 20 EliteXC “Showdown” event, ProElite has canceled Cage Rage’s “Contenders 11” event in the UK which was scheduled to take place later today. According to the report from Five Oz., Cage Rage now has just three full-time employees. All signs point to the ProElite’s financial troubles as the reason for the canceled events.
The company’s most recent SEC filing tells the story.
The Company is actively negotiating to consummate a financing of approximately $3.5 million in secured debt (with a funded amount of $3.0 million after an original issue discount of $0.5 million) and believes a successful closing is reasonably likely, but there is no assurance that it will be successful in doing so at all or on a timely basis. Any such failure to obtain financing in the immediate future would also have a material adverse effect on the Company’s liquidity and capital resources and ability to continue as a going concern.
Even if the Company successfully closes on such financing, it expects to report in its Quarterly Report on Form 10-Q that its capital resources are sufficient only until the end of the year, and only if the Company makes significant reductions in operations and expenditures. The Company is also actively seeking additional financing beyond the $3.0 million to enable the Company to execute its operating plans without significant reductions in operations, but there is no assurance as to whether any such financing will be available on reasonable terms or at all.
In short, ProElite is canceling unnecessary events so they can put their money into the event that gives them the best chance for success—the third CBS event.
Here’s where it gets a little strange. Despite all this, ProElite’s stock actually jumped 220% yesterday from $2.50/share to $8.00/share. I’m not a stock expert by any means, but I’m pretty sure that’s not normal when a company’s outlook worsens. Something is obviously going on that we don’t know about.
[UPDATE 8/16/08 2:39PM ET] – Robert Joyner over at MMAPayout.com believes the stock price jump was due to a “minuscule sale” of ProElite’s stock.
Just as an aside, many folks on the various MMA blogs are mentioning the sudden increase in the ProElite stock and trying to read the tea leaves as to what it could mean. The answer is: not much. The ProElite stock is very much a low trade stock, sometimes going days and weeks without a trade. The sudden jump in price was based on a minuscule sale of stock, around 5,300 shares. It wouldn’t even be fair to call this a drop in the bucket when compared to the 55 million shares of outstanding stock in ProElite. More than likely the reason the price was that high was because of a locked in option to sell the stock at that price on that date.