Well, it's official. AMC has voted on what is going to happen with the Ape units. AMC is saving the Ape units according to shareholders that is apparently Uh Adam Aaron and shareholders have voted in unison to allow and authorize the Ape units to essentially merge with the AMC units. Basically, what this does Uh is it allows AMC to issue more shares.

That was always the issue with AMC They had a lot of debt and their goal was to be able to minimize the debt. Well, usually the way you minimize debt is you raise Equity But AMC was restricted by shareholders. they weren't allowed to raise any more Equity They weren't allowed to issue any more shares basically. So instead they came up with this stock split idea and made these Ape shares which supposedly had equal value as the AMC shares.

And then they made these AP E shares basically diluted the crap out of the AMC ones. That's why the AMC shares plummeted and then the Ape shares plummeted even more because there is no guarantee those would ever convert to AMC shares. Which is basically exactly what I said many months ago when I warned against holding the Ape share units because I warned they would go under a dollar I sold mine at eight dollars. Sure enough, Ape ended up going under a dollar.

It's sitting somewhere just over a dollar now. But anyway, shareholders have officially voted. They've officially decided to allow the Ape shares to merge with the AMC shares. And as you would expect, that is compressing the valuation of actually both of them.

That's because really, the leftover shares at AMC will all now be worth less. AMC shares were down 15 percent just yesterday on this down to 4.64 Ape shares you would have thought would go up because of the Arbitrage but they actually went down. They're down 5.2 percent at a buck 64. And the reason for that is likely because there's still a lawsuit this has to get through.

Adam Aaron tweeted yesterday. saving AMC is my professional Mission And remember I own millions of AMC shares and Ape units too I'm very much want for AMC to succeed I'm absolutely passionately convinced that what you approved today is in the best interest of AMC and shareholders, right? Because remember, the goal of AMC is to get rid of their debt That America goes on to say. So what happens now, we cannot Implement what you approved today. Until the litigation in Delaware courts is resolved, the next court hearing on the matter is set for April 27th we will hear.

We will update stockholders when we have additional information. Unfortunately, a court hearing means next to nothing. Usually legal matters can take years to resolve and you could potentially be Diamond handing Ape and AMC for years waiting for that legal uh claim to actually resolve itself before these two share years end up actually merging together. In the meantime, AMC continues to burn a lot of cash.

I'm personally a big fan of actually looking at the fundamentals and knowing what is inside of the reports of the companies that you invest in. And it's not that spectacular unfortunately. So the first thing I want to do is go over to the AMC cash flow statement because AMC and their earnings call regularly brags about how much cash they have available. In fact, let me show you that first.

So the AMC there it is. Let's see here and this is the AMC earnings call here. They brag about how they're reducing their debt on lease obligations, which is nice. We want to see them reduce debt.

That's fantastic. They talk about how they're potentially doing better than their competition, how they've announced their new uh AMC popcorn with a Walmart partnership. It's perfectly. popcorn is apparently what it's called.

They're talking about how box office is opening up. They talk about how they ended the year with over 840 million dollars of cash quote or undrawn revolving credit line. Now that's actually really important because if you say you have 840 mil of cash, it's very different from saying you have 840 million in cash and a credit line because that basically means like, hey, maybe we have a hundred mil of cash and we're able to draw on debt and have more debt. But the whole point of AMC is to try to get out of debt, not draw on more debt, right? So anyway, the first thing I like to do is I like to look at the cash flow statement for the company.

As of the end of last year, the company burned 840 million dollars in the year in free cash flow. That's that's uh, 70 million dollars a month in free cash flow being burned. That's created by 628 million dollars in operating losses, plus about 202 million in capital expenditures. When we actually look at the assets, the good news is they do have 631 million in cash, so it's really 631 million in cash, and the other about 200 on that undrawn credit line.

They do have some receivables here as well, but just looking from a cash point of view, they've got about enough cash to lose as much money this year as they did last year. But if they get to that point, they would be bankrupt because then they'd be upside down. So in other words, they need to do everything that they can to raise money. Now that's why they created the Ape units.

Unfortunately, of the AP units that they were able to I hate to say this quote, unquote dump on normies, they only dump them at a share price of about 2.25 cents. Which is unfortunate because had they dumped when Kevin dumped, they would have been able to dump for about eight bucks and they would have realized somewhere around three and a half times as much money. But anyway, uh, they didn't do that. They waited like a month before they dumped.

We knew this was going to happen. Uh, I mean this was so obvious, but whatever. So uh. now.

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Use that! St Patty's Day link down below. What is good news is their operating costs. Their operating Leverage is positive. so if you're looking for some kind of good news, they increase their operating cost by 28 while they increase revenues by 54.

That's fantastic. But do remember that even though at the end of 2022, we were knocking on the door of 2.2 actually just over 2.2 billion dollars in admissions, that still is only 54 of where they sat in 2018. now their food and beverage revenue is sitting at 78.6 percent of 2018 level, which is good. It's a sign that people are you know, still buying a lot more junk at AMC with a high profit junk.

Possibly because you know a lot of people are very sympathetic to AMC I'm as well when I go to an AMC theater I Actually purposely buy the stuff I ordinarily wouldn't buy I Purposely buy the sodas that ordinarily you would sneak in. now you buy it there as sort of Charity because it's the money losing business. Kind of like the Cheesecake Factory I go to The Cheesecake Factory and I'm like I feel like I'm eating at a charity because they lose money. Which is kind of sad because the stuff there is really expensive.

Anyway, the company's burning nearly a million dollars a day in interest expense. Uh, that is because the year-ended interest expense was about 336 million dollars. and obviously there's 365 days in a year. So obviously the company is spending money like crazy.

I have absolutely no idea how they actually expect to go profitable I don't I don't see that path to profitability. Even with these numbers up, they had an operating loss of 522 million dollars that for a net loss of nearly a billion dollars on on a gap basis. If we go all the way back to the 2018 report. Uh, maybe maybe there's a little bit of Hope because they actually had operating income of 265 million dollars in 2018.

Uh, unfortunately. Then when you actually a factor in operating uh, or should I say corporate borrowing some interest expense, you get to net earnings of only 110 million dollars. Uh, the year before that, they had a loss of nearly 500 million dollars and they've kind of always been bouncing around an income of around 100 million dollars. But right now they're losing about a billion dollars.

so they've got a long way to go. Free cash flow. Pretty dang. Negative They really really need to figure out how to get out of debt.

But honestly, even if they had zero debt, they'd still be pretty largely upside down. So I guess the bottom line is if I were an AMC shareholder which I'm not I I you know I A couple years ago I bought some AMC shares and I promised I'd hold them for a year I held them for 16 months and then I sold part of the community that was. that was the goal and that's exactly what I did. But uh, now now what you really have is some resentment and frustration actually coming up in the AMC Community There's pretty much not a single tweet from from the CEO that doesn't get a bunch of replies from people basically upset uh, people saying they've lost 90 of their money that they've invested into.

uh AMC that they should have never invested in AMC that they wish they dumped their Apes stocks like me Kevin said many months ago At the same time as you have the CEO promising he stopped selling stock. He only made that promise after he dumped 42 million dollars of AMC stock on quote. unquote the normies. At the same time, he tries to justify his dumping and the dilution of AMC stock by blaming the hedge funds AMC CEO has now reached out about failed to Deliverance oh my.

God 36 billion dollars worth of failed orders. There must be naked shorting going on. He says basically what he's trying to do is he's trying to jerk off the retail investors who still believe in this moas coming and he's trying to justify that. He really is the ape out there trying to save retail.

But the reality is this is a failing business model. and while it's possible, it seems extremely unlikely that the stock is going going anywhere in the near term, specifically because of the overhang of the lawsuit. But even when their lawsuit completes, the company didn't raise a lot of money. All they managed to do was massively dilute AMC shareholders.

So the biggest concern for me is a law. If if you were a longer term shareholder would be the actual fundamentals and the fundamentals are not getting that much better. The annuals for 2022 were not that great. And yes, there is hope because hey, maybe the box office is going to look a lot better this year.

That is true. Box office does look like a lot better. Uh, that is that is your hopium right now I Mean, take a look at this right here if you want hopium right here. They do talk about the problem of generating audiences and and being quite different after the pandemic.

However, they do hope that with maybe 30 or more movies coming that'll gross over 100 million dollars in 2023. Maybe they could do very well. But remember what you have is you have people in this sort of space demanding a whole lot more wages these days. Uh, you know.

Walmart McDonald's everyone raising prices and sort of this retail and Hospitality space In terms of wages, right? It's not indicative of wage price spiral. It's indicative of sort of a lagging of wages that should have gone up a while ago. But anyway, AMC is probably going to face those sort of wage increases as well. You're facing recessionary environment at the same time as you basically have less than a year of cash left.

Not super excited about the future prospects, but hey, you know what? The CEO seems to be pretty excited. This is coming at the same time as insiders sold 76 million dollars worth of shares in the last 12 months while at the same time out of the one side of their mouth saying we are with you on the other side of their mouth saying we sold 76 million dollars of shares See, that's not good. Unfortunately, that's bad and it sucks. and we obviously know what selling pressure does to a stock from insiders.

When all you have to do is look at what happened with Elon Musk Elon Musk Sold 24 billion dollars worth of tassel shares last year created the perfect down Channel which just increased the shorting because it was the easiest stock ever to short retail only net. Bought 15 billion dollars of Tesla shares last year. So basically retail normies got dumped on including me. I got screwed by that too.

So unfortunately, uh for AMC the fundamentals for AMC are substantially different from those for a company like Tesla, so at least one of those two has hope.