TSQD update...
There were two news releases, one local (MN) and one national. These releases contain valuable information that pieced together, paint a VERY exciting portrait. Here are the highlights.
1) The latest private placement is the LAST before the IPO. As it stands, TSQD now owns 23% of DR. There will be no further dilution due to PPs. The last worry we will have is whether TSQD shares are entered into the IPO. That would not be terrible, because it would mean TSQD will have alot of cash per share.
2) "Several major" investment houses are interested in offering the IPO. If Ronning has the same definition of "major" that I do, we may see a Goldman-Sachs or somebody similar make the offering.
3) DR revenue is just under one million a month! Last year, it was 2 million for the whole year. 700 transactions a month. That's $1,428 dollars per transaction. That is not retail, my friends, that has got to BUSINESS TO BUSINESS tansactions. That is a huge market.
4) Bandwidth is increasing. DR is installing DS3 lines, the equivalent of 45 T1 lines. You can really make the information flow with that setup!
5) Digit River is already the largest online distributer of somftware. Think about it. Amazon.com has ridiculous valuations based on being the largest online book distributor. People will buy alot more software than books on line, especially businesses.
6) DR sales is growing 20-40% per month. If that keeps up, lets say at a rate of 30% per month, that would mean 8 million in sales a month by December. We could have sales of 25-30 million for the whole year.
7) DR is moving its HQ to a different (but nearby) city. However, TSQD and DR will continue to have a "symbiotic" relationship. Ronning will devote alot of time to DR. My interpretaiton is that TSQD will share in the revenue streams of DR. With a kick from increasing Mac sales, TSQD's core operations oculd increase along with increases in DR revenue. The bottom line is looking good.
DOWNSIDE POSSIBILITIES
1) Ronning will devote more time to DR and allow TSQD to "run itself" per the news release. this oculd be bad if Ronning allows TSQD to run without hi,m. Is he showing confidence in TSQD turnaround, or is he showing indifference to TSQD future? Not sure, but we need to keep an eye on TSQD core business.
2) TSQD shares are put into IPO pot. This would lessen the valuation potential for TSQD. If TSQD holds on to its shares, TSQD share price owuld go up the further DR shares price goes up. If TSQD shares sold into IPO, then we would have is non-recurring cash benefit. This is not terrible news, but it is far from the best possible scenario. The market typically discounts cash rich companies deeply if those companies have no visible growth plans. We can still be hopeful that TSQD will share DR revenue streams.
Stay tuned, stay long...
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