Hi Frank,
Having spent the past few hours researching RDIM, I have to admit for a BB this looks pretty good. I wish I could put my hands on some financial records. <g>
Out of 50 million authorized common shares it appears that 14.5 million have been issued. The best I can tell, there are no preferred shares. Of the outstanding shares; 10 million are restricted, 2 million are treasury, leaving 2.5 million as the float. Do you by any chance know what the restrictions are on the restricted shares are or whether the 2 million treasury shares are already committed.
The $30 million revenue and $1 million earnings they keep talking about appears to be based solely on the acquisition of AHBC along with e-commerce enhancement of its revenue stream according to the press release of 12-5. It appears this acquisition for all practical purposes is a done deal. You will remember that Mr. Folger hinted that the $30 million could be as high as $100 million during the conference call. It would appear that they have not included other possible acquisitions in the $30 million figure.
With AHBC being primarily a distribution company with an experience distribution team with established contacts with over 1,500 manufacturers, it makes a lot of sense that it was the first acquisition.
We also know from the press releases that RDIM is in the process of concluding its acquisition of 2 multi-unit buying clubs. Obviously, the first of these is PCS which consists of 2 profitable discount consumer membership clubs. This acquisition is reportedly close to being finalized. It will bring revenues which exceed $4 million with profits of $480,000. If RDIM is as successful with PCS as they are projecting to be with AHBC, then this should add another $8 million to the revenue stream the first year along with $900,000 in additional earnings. On top of that AHBC will receive accounts receivables of about $3 million. I would guess that these accounts receivables represent credit transactions of its members which means with interest these receivables will produce a great deal more than $3 million in revenue to RDIM over time. AT 19% it would be $570,000 annually.
RDIM third potential acquisition appears to be PCN along with its 50,000 fee-paying members. On this one the crystal ball appears a little cloudier. One must ask themselves why would PCN enter into an agreement for AIME to launch an Internet shopping service for its members during early 1999 when PCN is about to become part of RDIM? I would suggest two possibilities. RDIM either would like to acquire AIME and have a separate Internet navigational site in the US or perhaps it only wants access to some of AIME's sites such as Amazon.com, CDnow.com, previewtravel.com, or eToy.com.
Next we learn that they have hired Fortune Marketing & Capital Consultants, Inc. to conduct a strategic marketing campaign designed to get its name out to over 2 million people a month. I would bet that by the time they roll out their demo web site in mid-January, that they will have their new name in place for Fortune to market as well as having finalized it agreement with the Singapore Internet navigational site.
I was surprised by the experience of the management team for a company this young. Either Mr. Folger has a great business plan or he is as "slick" as "Willie".
One of the things that I think has been under estimated on this thread is the Direct Access Purchase Card. I assume this will also serve as a type of credit card. If it does, then this will add significantly to the bottom line in the future. The reason every Sears' employee ask you each time you purchase something at Sears if they can put it on your Sears' Card is because Sears realize the Sears' Card along with 21+ percent interest is one of its best sources of profits. I noticed that one of the Special Advisors for RDIM use to hold a marketing management position with IDS/American Express. I doubt that was by accident.
I have notice that some think the membership fee of $299 to $499 might be too high. However, it is less than half what the current membership fee is for the 2.5 million current members of private membership buying clubs in the US. It seems that I read that their research found a average membership fee in excess of $1,000.
If RDIM wants to revolutionize this industry it has to build consumer trust. I believe that the opening of physical locations throughout the nation along with the issuing of its own credit card, especially if it provides special protection for things ordered over its site, could go a long way on building that trust.
I guess the bottom line is we will have to see if Mr. Folger can really produce what he says he can. It shouldn't take too long to find out. He has set out some mighty high goals and not much time to achieve them.
1. 100 physical locations within 3 years.
2. Revenues of $100 to $150 million within 2 years.
3. Membership of 250,000 by the end of 1999.
4. Membership to exceed 5 million within 3 years.
5. Demo site up by mid-January.
6. Fully operational site up by May/June.
7. Nasdaq listing in 1999.
8. $26 million earnings per $100 million revenues.
I do like their mission statement: "Positioned on the Leading Edge of the Next Generation."
I will be adding RDIM to my holdings as soon as I decide on an entry point.
BTW, could the "Eric Bottman" you mention in your post be "Eric Bauchman" the private investment banker and management consultant who provided the bridge loan for RDIM or are we talking about two different individuals?
Cisco |
