(Pinksheets:DMGS) CEO interview with Leo Greenfield of DMGS
EDS: Leo, can you please introduce yourself to investors and provide us with a brief history of Distribution Management Services?
LG: I graduated from the University of Miami law school in 1948, when Florida was completely underdeveloped. After the war, the Miami area began to thrive as a substantial national vacation resort. Following my service in the Air Force as a fighter pilot, I and another lawyer became affiliated in the law firm of Street and Greenfield.
To stimulate the law practice we entered the 2nd mortgage business. At that time the FHA was assisting people with low cost housing and builders began developing small subdivisions, where families bought houses for as little as $9-11K with 30 yr. mortgages and a $500 down payment. In the course of our 2nd mortgage business we acquired and financed over 500 homes. Now through the years we have continued this business.
In 1996, I and my partner acquired a tract of land near what is now downtown Miami, which became a recycling center. That was the start of DMGS. We had organized DMGS in 1995, and after receiving our license from the Dept. of Environmental Regulation we began to thrive as a recycling center. We enlarged the center, and through a 504 filing, became an authorized public corporation. Our IPO generated $400K and I then invested $600K of my own money or through mortgage financing and had a thriving company from 1998 onwards, generating $150-$200K per month of gross revenue. During this time, the property market throughout all of Florida increased substantially,
The operations were limited by the small size of the recycling center due to the zoning regulation that restricted us to 32,000 sq. ft. In April 2003, DMGS sold the recycling center for $1.5M and began to look for other opportunities in the real estate market. In Dec. 2004 we entered into a transaction acquiring a 50% interest in 266 vacant lots in Poinciana, Florida, which is within the growth area of Orlando. This acquisition required financing of $4.7M, which we obtained through mortgage financing.
EDS: Can you tell us about the property market that DMGS is currently in? Is it growing and well situated for property development?
LG: Orlando is currently designated as the hottest real estate market in the US. Medium priced homes in S. Florida are now selling for $300-450K. The result of this is that recent retirees have been priced out of that market and now looking at C. Florida where medium priced homes are selling around $150K. What this means to investors is that DMGS' properties are now located in the "sweet spot" of the Florida real estate market at the moment. What is amazing is that these trends are even now continuing to improve since most retirees want to come to Florida. By 2030 we will have surpassed New York as the 3rd most populated state.
EDS: One of the benefits to investors in DMGS is the fact that you already have an agreement in place with a homebuilder to sell quite a large percentage of your inventory of building lots in 2006, can you update us on that?
LG: During 2006, our scheduled closing of the sale of 178 lots, which is now in progress, will result in gross revenue of over $6.5M and leaving shareholders approximately 60 lots which are increasing on a monthly basis. We are now in the process of closing the sale of 50 of those 178 lots, which will yield approx. $1.785M.
Thereafter, on a quarterly basis, including this first quarter, we expect to close approximately 30 lots generating gross revenue of approx $1M and a profit of $450K.
EDS: Can you explain how shareholders will benefit in the future, from the current sales already committed to this homebuilder?
LG: Since the homebuilder will be installing sewer and water facilities, it will increase the value of the unsold 60 lots by approx. $20K per lot.
EDS: Do you expect most or all of the 266 lots to be sold by the end of this year?
LG: No, since we anticipate substantial appreciation of the remaining lots after 178 lots have been sold to the homebuilder once they have been fully developed with houses. Lots in the area are now selling for $55-70K per lot which would result in substantial addition to profit to DMGS. The future financial investments available to the company will dictate a decision on the timing of the sale those remaining lots.
EDS: Looking out beyond 2006, once the revenue is realized from the sale of these land assets, what do you intend to do with all the cash generated?
LG: The company will continue to seek valid real estate investments towards enhancing the future of the company, such as shopping centers, office buildings or other income producing investments. Upon closing of the first 50 lots, substantial cash will be generated, and we are currently examining several opportunities in developing areas of Florida.
EDS: DMGS is currently quoted on the pinksheets, but you are in the process of bringing your filings up to date, can you outline your the time frame for the completion of that task and what impact it will have on your future listing?
LG: By June 30th all past filings, including the May 31, 2006 Annual Report will have been filed, which under present circumstances, should indicate cash available or the completion of the acquisition of investments currently under consideration. At that time, we will then continue to seek to be re-listed on the OTCBB, with the long term goal to be listed on the Nasdaq Small Cap.
EDS: Can you give investors an update on the recycling center litigation?
LG: In connection with the litigation on the recycling center we are seeking a recovery of the center or payment of the remaining $450K of the purchase price which remains due for the past two years. We hope that our optimism will be supported by the actions of the court. We expect this litigation to be resolved by the end of this year.
EDS: Leo, you have been in the real estate business for quite a long time, based on your extensive knowledge of the Florida market, do you feel that the shares of DMGS currently offer value to shareholders?
LG: The continuing growth of Florida causes us to be extremely optimistic about the future growth of DMGS. We believe that this growth will be ultimately reflected in the price of our stock, which management and shareholders look forward to.
2004 © Eric, David & Sons, Inc. All Rights Reserved. |
