SOME PRIVATE PLACEMENT DISCUSSION, PRIOR TO ANNOUNCEMENT
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TokyoMex Nov 12 1997 Reply #257
TPRO is looking to do a 1 million (one million) share private
placement at the street price (not discounted or any crooked deal) plus
comm. The deal is to be brokered by Hanofen and will go to several
institutions in blocks. This will give total shares outstanding
including the outstanding warrants at 24 million shares.
According to CFO they need money like mad! as I suspected .The deal is
kosher and above board. Its something I can live with.
Jack Zahran Nov 12 1997 Reply #5855
They must have some really positive news and contracts to convince a
couple of institutions to jump in. I believe they currently only have
5% institution in now, this is an additional 5% to be owned by
institutions. How would you feel if an institution was willing to
risk $6 Million dollars on you? Doesn't this tell you that some really
smart people have done their DD and are buying into the TPRO story.
Would an institution pay $6 Million + dollars only to have to sell it
at a loss. They definetly will not be able to unload their investment
without sinking the price. This is very positive news as they must
have concrete reasons to buy TPRO near it's 6 month top.
TokyoMex Nov 12 1997 Reply #5856
First of all this is not a discounted placement but at street and
whoever buys has to buy within 5 day window at the current market price plus commission. For 1 mil extra shares company gets 6 3/8 to whatever the price may be on that day and the money is used for ramp up !
Its not for expanding ceos office or buying a new car.
As for getting a loan the co did everything in its power to reduce
the debt. This cash infusion will be healthy for us in long run than
carrying the debt service. I am not worried about 1 million more at this juncture.
Ron Harvey Nov 12 1997 Reply #5858
<Would an institution pay $6 Million + dollars only to have to sell it at a loss.>
Happens all the time, which is why, over the years, well under half of all mutual equity funds fail to beat the S&P 500.
A possible buy of Topro would likely reflect an effort at small-cap diversification with TPRO joining a basket of other minor leaguers with the hope that one of them becomes the next Mike Piazza. Of course, being chosen for the basket is more encouraging than being rejected but, without knowing the money manager's track record, optimism about the possible purchase should probably be tempered.
Karl Drobnic Nov 12 1997 Reply #5861
Spending money is what I expect TPRO to do at this juncture.
Other companies have until 1/1/00 to get their acts together.
TPRO has to hit 1998 running on overtime with tanks topped to the
brim. The last thing we want is for Jenkins to settle for a 2-yr
contract with some biggie just because TPRO doesn't have the cash to win the whole prize. TPRO has to have its white knights charging out of the stables 1/1/98, or companies start finding other solutions. TPRO can have it all if it can service the business. Not being able to service the business will breed competition, even if it is half-baked quack competition. I want TPRO to spend the lights out in 1997. Get the cash. Spend the cash. Anything less is to blow the opportunity.
Zebra 365 Nov 12 1997 Reply #5863
Take the fact that wonderware has 20,000 clients and TPRO has 4,000.
Let's say that 75% need no Y2K work at all (ridiculous, but stay with
me) that leaves 6,000 clients. And TPRO has maybe 300 engineers. That is
20 projects per engineer that should be completed in the next 13 months,
(to give 1999 for testing the fixes). Even if the plants would do it all
with their own employees using PlantY2KOne, this is a Stygian task.
They will still need support for the software coming from humans.
(Actually this is where I see the TPRO employees working, not all at
plant sites, but at PC's helping customers' employees with the software.)
TPRO is not going to do anywhere near the whole job needed. And who else
is out there to do it?
But if the TPRO folks and the CD are as good as they seem to be, they are going to do a huge chunk of the plant remediation work and I think that will take much more cash to hire and train people than they have in the bank currently. Just saying I would be surprised if that is not addressed Friday. I only hope for many peoples sake, they can ramp up fast enough.
Knowing what I know about the Company's finances, if they were not talking about raising cash now, I would wonder if they really had anything to sell. I think the stock will take a small hit in price though from an announced dilution, regardless of the magnitude. It doesn't bother me, I'm in this for the duration.
TokyoMex Nov 13 1997 Reply #5866
Here is my thinking. When and if this goes through we are talking 24
mill shares complete.
This includes all current + s3 + 650,000 warrants + 1 mil new shares.
This is it !
The formula if looking at 500 mill (end 99 ?) rev with nett of 10%
$50,000,000 /24,000,000 = eps of $2.08 x pe of 20 = 40 per/share
If rev was 300,000,000 (end of 98 ?)= eps of 1.25 x pe of 20 = $25 p/s
If rev was 200,000,000 (end of 98 ?)= eps of .83 x pe of 20 = $16.7
If rev was 100,000,000 (end of 98 ?)= eps of .625 x pe of 20 = $8.3
Now if I was to use nett profit of 15% it would be 65, 37, 20,& 12.5 p/s
On top of that if I used y2k index avg pe of 50 we all retire.
Please review my numbers and kindly comment.
RDavidson Nov 13 1997 Reply #5870
I find myself going back on a previous belief on further dilution for the following. TPRO's cash flow model will not be static. Short run, the better their business prospects, the worse their short term cash flow is, assuming further investment for new hires, CD updates, hardware for ongoing contracts, etc. All require cash, hopefully, big cash. Contracts are probably also subject to being restructured to encompass more work and revenue.
You know better than most what loan negotiations regarding debt financing entail. Your cash flow model better be good, because your repayment schedule will flow from that. As difficult as debt financing is, restructuring is twice as hard. I think at the
present time, no spreadsheet is good enough to allow TPRO to "kiss the paper on".
There's almost nothing worse than overhanging debt when your capital needs are increasing rather than easing. A limited equity offering to a holder who hopefully will not induce further volitility into the issue is probably the best in a list of none too desireable possibilities. The dilution factor has to be weighed against the stream of income the cash enables. Based on management's pragmatism in past decisions, (they're unbelievably conservative for small cap), I'll support this decision.
Stuart Schreiber Nov 13 1997 Reply #5880
I view the alliances as pieces of the puzzle being put into place while also validating the TPRO solution. Sure, we'd all like contracts with dollar signs, but it's highly unlikely that dollar signs can be attached to anything just yet. Also, there's NDA and publicity issues. At this stage of development, one million shares, or about a 4% dilution is a small price to pay for the added liquidity. Has the story here really changed? To me, it has. A couple of months ago we had questions about the product, specifically the CD. Now, we have clear evidence it's a valuable tool. I'm never reluctant to second guess management, but in this case, I think they're right on track.
TokyoMe Nov 13 1997 Reply #5885
Jan asked about restriction; only restriction is the time frame to register with scc, once registered there is none. But what does it matter.
They are not buying TPRO at a discount. They have to pay street price just like any one else. There also is no discount to warants. Remember folks we are in this thing at 6 bucks ! Please look ahead to 98 and 99 !
Zebra 365 Nov 13 1997 Reply #5900 of 6177
The 4% dilution is a downer, but right now that means the average price of your $6 shares should take a 1/4 point hit. TPRO down 5/16 today, OK, .......ouch, now get on with the show.
lbs Nov 16 1997 Reply #6113
John, I am surprised that you think the PP is such a big deal. 1 million shares is a rather small percent of the float when you compare it to the other offerings done by Y2K companies like IMRS. While I wish they did not have to do the private placement, it is clear that TPRO needs money. This of course assumes that they are going to do a PP. There was no mention of it on the CC. I have enough faith in management to believe that they will do what is best for the company. While management should care about what shareholders think, I think it would be bad business for them to base their decisions on opinions expressed on SI. While I am addicted to SI, it is not the criteria for how I would want companies to make their decisions.
Clayleas Nov 20 1997 Reply #6341
A/R are in the latest 10QSB, available on Edgar. They are $6.5MM. A/R financing, or factoring, is EXTREMELY expensive and would be a last resort type of solution in my book.
TokyoMex Nov 20 1997 Reply #6355
My understanding is PP at street level and buyers save commission.
No discount or deals. Hanifen gets commish from TPRO.
It doesnt come out of our pockets nor will it drive down the price necessarily.
Tim J. Flick Nov 20 1997 Reply #6356
TM... I hope your info is right. It will be the first PP that I have seen done at Street level. A typical discount is 10 to 15% off of market price.
rogermci Nov 20 1997 Reply #6357
Tim...I've seen PPs come both ways. If demand was strong and the placement was easily done, it could come at street level. In any event, the effect should be the same as a secondary done with a high level of interest--the price should rise after the deal is announced.
thump9 Nov 21 1997 Reply #6363
I would have to agree with you Tim. I have negotiated some block trades before and, without exception, they are done at a price below market. And, as volume is the bread and butter of the market maker, the price being held in a certain range to facilitate such a transaction is perfectly normal.
David Sheridan Friday, Nov 21 1997 Reply #6370
MMs want our stock, and are waging a war of attrition to get it cheap.
PP stands for private placement. Shares will be bought directly from company, so the MMs won't make any spread money on it. They know stock will soon be taking off, and want to accumulate shares in advance, IMO.
David Sheridan Nov 21 1997 Reply #6373
I don't think a MM would be buying a PP, as they are unregistered shares and MMs want to be able to trade their stock. In cahoots with the buyer, maybe. This looks to me like normal downward manipulation when MMs are in an accumulation phase. Shake out weak hands before good news. They did it in the fives, they'll do it again after the next jump. We're not moving back, we're coiling up like a spring.
Wade Ramey Nov 21 1997 Reply #6385
I'm not into these discussions about MMs & PPs. I'd much rather talk about CCs and
DD. All this talk about the importance of closing above 6 3/8. Look: If the PP is done,
even at 6, with a million shares, then that's 6 million bucks minus a little; the warrants
will yield the co. much less than that. If TPRO gets the 6 million, then that'll be 7 million in the bank, and that's probably enough for the short to medium term. The timing of the warrants then becomes a much less important issue.
Jack Zahran Nov 21 1997 Reply #6401
If we set our eyes on the stars, the mountains will look small. There is little hype here, the TPRO story is true, the latest news, CC etc. confirms this. The "problem" is that we are ignoring the short term effects of 1. The PP, 2. The Warrants, 3. The cost of growth 4. Non-marginability.
1. The PP is over today (UPDATE: Anticipate week of 11/24)
2. The Warrants are not as important to the companies health as they were.
3. Revenues are growing by leaps and the next quarterly report will show at least $3 Million in just Y2K tool sales.
4. Will get NMS in mid-Dec.
biffpincus Nov 22 1997 Reply #6421
FROM SCOTT LIOLIOS: Pacific Consulting Group
It is no secret that the company has been working on a private placement. The private is being underwritten by Hanifen Imhoff. It is going to a handful of institutional investors.
However I can not confirm if it has been completed yet, but I did hear it was expected to be completed by today. I will tell you from experience that an offering usually take longer than expected. Therefore, I would expect it to be completed by Tue. Wed of next week.
I also believe the PPM is why the stock volume has slowed down. Once this has closed I believe the stock will continue with its normal trading.
Tim J. Flick Nov 22 1997 Reply #6439
H.I. is just the broker for this deal. The place to look close
is the institutions/people that buy the PP. All H.I. does is make the
contacts and bring in the investors. Also, H.I. is a Denver company
which explains why TPRO is useing them, they are local.
Scooter Nov 22 1997 Reply #6440
Biff--Hanifen Imhoff is a clearing firm that clears trades for brokerage firms who don't have the ability to clear themselves. Let's just say that some of the firms aren't exactly on the up and up, and have been involved in a lot of shady deals. Whether HI was involved or just cleared the trades, I don't know.
Zebra 365 Nov 22 1997 Reply #6450
UNITED STATES SECURITIES AND EXCHANGE COMMISSION FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1997
The number of shares outstanding of the issuer's $0.0001 par value
common stock on November 3, 1997 was 16,663,453.
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Since the private placement of the shares goes on the balance sheet as additional paid-in capital, we are adding shares with a book value of $6 to the current shares with a book value of about $1 per share this is an increase to the book value per share, or an actual small increase to shareholder equity.
TokyoMex Nov 23 1997 Reply #6453
To ad my 2 bits in an uncertain ground.
The book value is not share price first of all.
The PP will create the capital, but its not paid in capital since a dilution has taken place.
It will not add share holders value. We just got 6 mill in cash now and we have 1 million extra shares.
Correct me if I am wrong.
JDN Nov 23 1997 Reply #6461
Some of you are getting confused between "Shareholders Value" a term on the Balance Sheet and "Investors Value" the value to YOU. Shareholders value will go up 6 million (less expenses) on the Balance sheet. Since $6 per share is more than existing $1 share book value the PP is ANTIDILUTIVE from an accountants perspective. However,
since their are NOW 1mm more shares which must be divided into earnings the per share earnings will fall (I presume about 4%) from what they would have been-so from an Investors viewpoint it is dilutive. Good news is if there is a loss it also will fall per share, haha.
From: Wade Ramey Nov 24 1997 Reply #6476
At the Oct. conference call, the CFO said if you counted everything, there would be about 23,000,000 shares outstanding. That included some unexercised options that had been granted to management. Throw in the 1 million from the PP, and we're at 24 million shares. I agree: It would be nice to have all of these shares accounted for and
categorized on the research site (assuming it's not already there).
From: TokyoMex , Nov 24 1997 Reply #6487
The PP rumour was out on the street, when I heard about it.
In fact I learned it from the shorts, who EMed me and also on the AOL board.
In the beginnning I was very scared and had doubts etc so I called the co and spoke with CFO.
I said bluntly !
Why are we doing PP ?
and his answer was, "Joe we need to ramp up in hurry, the y2k is coming at us faster than we originally thought, in terms of cd production, manpower needs and allocations, and planning etc. We need the money for greater anticipated growth Joe"
<I believe we can correaleate this with CEOs remark that y2k revenue will be start showing up at 2nd qt, much earlier than anticipated.
That was good enogh for me Rob, I seemd to get more news and more rumours Rob, because I am a such a nousy person and I have a great networking Rob I like my money too much not to care, so more than others I meet poeple, I call them up and get an opinion etc. You can do it too. Ask Scott at IR , I used to call every sigle day 3 - 4 times, asking whats up, whats coming down, whats the story, whats the rumour etc ROFL drove him crazy.
From: Rob L. Nov 24 1997 Reply #6488
TM, Thanks for clarifying. Sounds like you had good information on the PP. In my experience, boards in which regulars refuse or are very reluctant to accept anything negative about the stock tend to only hurt themselves in the long-run. I think looking at the other side's (right or wrong) point of view is very healthy and will only help us to completely understand this company. Let's face it, this company has not made any money yet and its has new maangement, yet many people are expecting returns significantly higher than companies that make a ton of money and have seasoned management. To be talking anything over $10/share without any earnings is ludicrous and even $8 seems unrealistic in the short term as that would imply a nearly 30% gain from current levels. JMHO.
From: Raju Ramaswamy Nov 24 1997 Reply #6489
Rob, although you are correct in correlating earnings with stock price, it is NOT always true in tech companies. The street looks at the future potential and NOT even in last quarter. Q to Q, things change a lot and I know many cos who were leaders just few months back are routed because of better competition (take Rational for instance).
So 10+ by end of this year is justified when contract news starts rolling out and hopefully Street discovers our little gem. Mr. Jenkins won't be this exuberant in conf. call, if does not see awsome growth in Y2K business. My only wish is Mr. Jenkins should rope in more & better analysts for coverage. But this I believe will happen. The
instituions who had PP are apparently well known (by TM) and do you think their analyst staff will be sitting tight especially after TPRO makes it to NMS.? Strong buy ratings will follow & combined with January effect, this will rocket.
From: Skipard Nov 24 1997 Reply #6496
Sometimes when something seems so good, it isn't. When you do all of your DD, and can't see the flaws, you either are going to make a lot of money, or you are going to get blown out of the water.
As I have said before, this story is too good to be true, but is it really? Sometimes the obvious is not recognized until the stock has gotten away from you.
The point is very simply this. IF Y2K is a real problem, IF major companies are going to put up major dollars for this problem,IF TPRO has the goods, as I am convinced they do, then someday in the not too far distant future, Wall Street is going to wake up, and then we will be rewarded.
Everyone is concerned with more share via a private placement, but I am not. They need the money now, and I suggested a secondary offering, because it is my experience that having a prospectus, and a road show, giving many new investores a chance to hear the story is someitmes a company maker. Time is of the essence. This business is here today, and they have to be adequatley finaced to achieve all of the lofty goals we have set for them.
There are many more deals coming. We are in the beginning of the first quarter. As companies set their budgets, we are going to a raft of announcements on new business, and then we shall see what Wall Street is willing to do with this puppy.
The only time to get discouraged with your stock is when the story changes. If it changes and you have to rationalize, then you are invariably wrong, and should sell it, but when the story just gets better, and people do not care, then it means you will just
get paid later, but you will get paid. I know this board has very little patience despite all the chatter to the contrary, but IF we have a shot at 3-4-5x bagger, then what the hell.
There is one way we lose, and only one in my opinion. Y2K ain't for real, and it is no problem, other than that, we will get paid well for our bet.
TokyoMex on nov 25 1997
Does any one know Zweig or Sweig a mutual fund ?
I heard from Everen today that Zweig or Sweig mutual is one of the PP partners, I also understand they already own it.
I also heard that the PP was done at 10% discount, from 6 3/4 and that explains the drop to 6 1/4 other day.
Well I am glad that PP is over and TPRO went up in spite of the PP.
Steve Rubakh on nov 25 1997
Joe. Zweig does not have aggressive growth fund, but has two small cap funds.
Zweig Series Trust Appreciation Fund - Class C seeks long-term capital appreciation consistent with preservation of capital. The fund invests between 50% and 65% of assets in small-company stocks, defined as the 2,500 stocks positioned immediately after the 500 largest stocks traded on major domestic or foreign exchanges. It may invest up to 35% of assets in the 500 largest stocks. The fund may invest up to 15% of assets in foreign securities. |
