This is one of TSIG's competitors..
<<The following risk factors and other information included in this Annual
Report should be carefully considered. The risks and uncertainties described
below are not the only ones we face. Additional risks and uncertainties not
presently known to us or that we currently deem immaterial also may impair our
business operations. If any of the following risks actually occur, our business,
financial condition and operating results could be materially adverselyaffected.
7<PAGE> 8
We have an accumulated deficit and anticipate further losses. We have
incurred significant losses since we began doing business. As of December 31,
1998, we had an accumulated deficit of $162.1 million. To succeed we must invest
heavily in marketing and promotion and in developing our product, technology and
operating infrastructure. In addition, the expenses associated with our recent
acquisitions and interest expense related to the February 1999 issuance of our
4 3/4% Convertible Subordinated Notes due 2009 (the "Convertible Notes") and the
May 1998 issuance of our 10% Senior Discount Notes due 2008 (the "Senior
Discount Notes") will adversely affect our operating results. Our aggressive
pricing programs have resulted in relatively low product gross margins, so we
need to generate and sustain substantially higher revenues in order to become
profitable. Although our revenues have grown, we cannot sustain our current rate
of growth. Our percentage growth rate will decrease in the future. For these
reasons we believe that we will continue to incur substantial operating losses
for the foreseeable future, and these losses may be significantly higher than
our current losses.
Unpredictability of future revenues; potential fluctuations in quarterly
operating results; seasonality. Due to our limited operating history and the
unpredictability of our industry, we cannot accurately forecast our revenues. We
base our current and future expense levels on our investment plans and estimates
of future revenues. Our expenses are to a large extent fixed. We may not be able
to adjust our spending quickly if our revenues fall short of our expectations.
Further, we may make pricing, purchasing, service, marketing, acquisition or
financing decisions that could adversely affect our business results.
We may not succeed in addressing these risks. In addition, the businesses
we acquired in 1998 are incurring operating losses.
We rely on a small number of suppliers. We purchase a majority of our
products from three major vendors, Ingram, B&T and Valley Media. In late 1998,
Barnes & Noble, one of our largest competitors, announced an agreement to
purchase Ingram. Ingram is our single largest supplier and supplied
approximately 40% of our inventory purchases in 1998 and approximately 60% of
our inventory purchases in 1997. Although we increased our direct purchasing
from manufacturers during 1998, we continue to purchase a majority of our
products from these three suppliers. We do not have long-term contracts or
arrangements with most of our vendors to guarantee the availability of
merchandise, particular payment terms or the extension of credit limits. Our
current vendors may stop selling merchandise to us on acceptable terms. We may
not be able to acquire merchandise from other suppliers in a timely and
efficient manner and on acceptable terms.
We may not be able to meet our debt service obligations. If our cash flow
is inadequate to meet our obligations, we may face substantial liquidity
problems. If we are unable to generate sufficient cash flow or obtain funds for
required payments, or if we fail to comply with other covenants in our
indebtedness, we will be in default. This would permit our creditors to
accelerate the maturity of our indebtedness. >>
That is what is called "involuntary bankruptcy"
I cut and pasted to keep it as short as possible..sorry for the length.
freak!! |
