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The MJP Dodo prepares to float

Stories in Australian and NZ newspapers over the weekend announced that Martin Aircraft are (finally) about to float their company on the stock exchanges of both countries.

I've said it before and I'll say it again... you'd have to be mad to invest a single red cent in this flight of fantasy.

In the lead-up to this IPO, the company is claiming to have 40 pre-orders, worth $6m in turnover. However, one doesn't have to look back very far through the company's wild and outlandish claims to realise that this could well be just a little more wishful thinking on their part.

None of the previous claims have actually eventuated and with a burn-rate in excess of $1.5m a year, the company has little to show for all the money that has been invested so far. Last year the loss was $1.76m for the year ended March 2013 and there's absolutely no sign that an IPO will reverse this.

Not only is the company woefully late on delivery but the specs of the latest proposed version (called a "quantum leap" over the original) are pretty dismal.

A 1,500m ceiling, sloth-like cruise speed of just 56kmh and maximum speed of 80kmh are not exactly in keeping with the original promise of a 2,400m ceiling and 100Kmh top speed. The newly downgraded specifications may be a "quantum leap" -- but perhaps not in the right direction.

I notice also that in order to achieve the claimed range, they've doubled the size of the fuel tank from 5 US gals to 45 litres.

As an investment, the MJP has to be worse than lotto.

The litany of press releases about deals, contracts and partnerships that have, for years, simply turned into vapour are a clear indication that this is a company that can't be trusted to deliver on its promises.

What's more, as I've stated in the past, an IPO is simply the mechanism of last resort often used by venture-capitalists who realise that they'll never get their money back by way of the actual product. Their solution is to simply hype up the product and the company before flicking it off (by way of a float) to unsuspecting and easily duped investors.

At least James Smalley, quoted in this NZH story is being honest (albeit understating the situation somewhat) when he states "Martin Aircraft was "right up there" on the investment risk scale".

Hell, if folk want to take a risk they can buy me a piece of land on which to test my SAA system and they'll be far more likely to receive a real return on that investment!

Sadly, many of those who might be sucked in by the hyperbole and "buzz" that has surrounded the MJP (thanks largely to a woefully incompetent media) will be unaware of the true risks and I doubt many of them will read this column. As a result, I'm sure that the IPO will attract more capital to sate the high annual burn rate -- but this will simply delay the inevitable.

I'm picking that, within two years of the IPO, MJP will either fold -- or be sold to some other company who'll pick its bones before tossing what's left onto the scrapheap.

Will the MJP ever be seen in the skies over our heads?

I think you already know the answer to that.

Sadly, those who invest their hard-earned money in the MJP will suffer massive losses and that will sour them to touching local hi-tech companies. How tragic this is. Whilst so many really good Kiwi hi-tech ideas fail for a lack of investment, the dodo that is the MJP will have succeeded in simply further lining the pockets of those who already have a lot of cash (the initial investors) whilst ruining the chances that other, far more promising companies, can attract the money they need to succeed and prosper.

I guess we'll forever be a country that relies on fields filled with cow poo in order to earn our crust.

Bookmark this column now and revisit it in a couple of years' time. See if I'm right.

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