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Microcap & Penny Stocks : TSIG.com TIGI (formerly TSIG)
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To: Zeev Hed who wrote (31973)6/30/1999 2:05:00 PM
From: Suzanne Newsome  Read Replies (2) of 44908
 
Zeev, when you say that TSIG must finance inventory, I assume that you know that TSIG does not maintain any inventory of CD's. CD fulfillment is handled by Valley Media. There is a possibility in the future when volume warrants, that fulfillment of the Top 100 may be handled by TSIG.

Perhaps you meant that TSIG must finance inventory of Music Cards. I struggle to understand how this could possibly be a factor bringing on the downfall of the company. The actual cards themselves cost pennies to produce. Obviously, there are other costs associated with providing customers with Music Cards and CD's. Much of this cost has already been incurred. The mailing of the packets has already been done. The Music Card web site is up. The phone system is operational. There will be increased marginal costs associated with the rise in sales. But these costs will be incurred on a gradual basis and are small percentage-wise compared to potential revenue. The card is a very high-margined item.

The burn rate is currently estimated at $400,000 per month. There are past obligations that must be paid. It is a known fact that TSIG must have additional funding to survive until November. The period from September (when fund-raising will start) and November (when significant revenues would be expected) can be referred to as a period in which TSIG must "finance accounts receivable." All of this has been calculated and taken into consideration. If outside funding does not come in time, TSIG is quite possibly going down the tubes.

Zeev, when you say "most businesses," are you including Internet businesses? Do you agree that the economics of an Internet business are significantly different from those of a brick-and-mortar business? Once again, I'll ask the question: If we assume a 30% cost of sales, and the kids sell $50 million of cards (implying a cost of $15 million) or the kids sell $300 million of cards (implying a cost of $90 million), where does the extra $75 million of costs come from?

Regards, Suzanne
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