Record of a PM dialogue with a "nice" basher today
To: ztect (who wrote...)
From: xxxx Friday, Apr 9 1999 12:55PM ET
OK...I'll grant your wish. Tell me a little about TSIG. I actually am a little interested as I mentioned in my post.
xxx
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To: xxxx (who wrote...)
From: ztect Friday, Apr 9 1999 12:57PM ET
Here is my disclaimer....
Review the dd page and then if you have questions feel free to ask me them.
Disclaimer: IMO TSIG has been successfully restructuring itself with an unique marketing strategy and integrated e-commerce business model with some very qualified new management. This restructuring is yet to be reflected in the company's filings. The company is fully reporting. These are my conclusions and mine alone. I encourage each and everyone to come to their own conclusions. I suggest those interested in understanding TSIG start their research via this link below to a website of compiled "due diligence". Do your own research before taking any position in any company to fully understand the risks associated with your investment decisions. This page includes several field reports on the company.
geocities.com
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To: ztect (who wrote...)
From: xxxx Friday, Apr 9 1999 1:28PM ET
Thanks. Interesting new business model but they appear to be in deep financial doodoo....Are they going to be able to survive to implement the model?
xxx
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To: xxxx (who wrote...)
From: ztect Friday, Apr 9 1999 1:48PM ET
IMO yes.....
There balance sheet sucks.
And yes they will be able to survive.
Why?
1). Significant reduction of past debt. 34% last year more in the fourth quarter.
2). Getting rid of revenue draining division.
3). Agreements in place currently are or will very shortly generate revenue. I'm most familiar with the Babe Ruth League deal. Please review the site thebabecard.com . My understanding is that this site will soon be replaced with a new one on or before 4/15/99.
The site explains the card concept as it relates to the Babe Ruth League and has incentives in place to get kids to sell cards. The card entitles people to get CD's at discounted costs. (I proposed another agreement to a "friend". If you're interested in it, I'll share parts of it with you. I turned the agreement over to the company to pursue so I don't know if anything has come out of it).
4). They haven't burned cash quickly enough to need any more of a PP placed. They only took a small portion of this PP (1.5 out of 10mil). "Chat" seems to suggest that the portion took will be bought out. A more strapped company IMO would have needed to take a larger portion of the PP.
5). Would be very difficult to attract employees to an office from secure positions if the financial situation was as precarious and as dire as the last 10-k suggests. Look at the resumes of the recent hires especially that of John Hwang. (Most of these resumes are contained in the news releases). Also note how many new hires have been announced. Since when does a dying company expand with an whole new talented management team?
Hope this helps.
Sincerely,
ztect
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To: ztect (who wrote...)
From: xxxx Friday, Apr 9 1999 2:30PM ET
ztect,
Thanks again. I agree with your points. When do you expect information to come out that will clarify their "new" model and financial condition. I.e. with all the good new, why hasn't this stock already taken off? What's holding it down?
xxx
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To: xxxx (who wrote...)
From: ztect Friday, Apr 9 1999 3:10PM ET
XXX...
Their have been many theories as to why the price has risen:
Theory 1). Many believe that the portion of the PP taken has been shorted against because of the terms of PP were ugly except for some contingencies (like a liquidated damages clause) that the shorters didn't perceive. the reason to short being that shares convert on a discount to price.Now there is some questions outstanding to language in the PP regarding registration of shares to be converted (when) and whether or not the converts are floorless. People reading the same portions of the 10-k seem to have come to different conclusions. You almost need to be in contract law to understand the EXACT language ie. what "is" is. Within the past two days a participant on the thread who I've spoken to on the phone on many occasions (and trust) has visited with the CEo and the company. Prior to his going, a list of questions was compiled with specific questions regarding the PP and the need for any additional PP money. This participant "Marty" should have answers to his questions at the beginning of next week.
Theory 2). Recently posed is that the company since being cash poor had paid outside sources with shares. These are now being liquidated for the financial needs of those consultants. One of these consultants was the old IR firm that TSIG dumped immediately upon hearing that this IR firm had problems with the SEC for non disclosure of financial compensation from promoted companies. This IR company may have immediate needs for legal fees and consequently may be selling off their position.
Theory 3). Company has done a poor job promoting itself and exactly defining what the company is. Consequently many in the investment community have mistakenly believed that the company is strictly an e-commerce company. Or, in other words, people don't know what the company is about. This has occurred in part because the company has been expanding its vision. many e-commerce sites have "popped" in price despite being non-reporting because they were the "flavor of the month" . Examples are MLRE and recently many Chinese Internet companies all of which are non-reporting, but people buy because of some association that may or may not be a reality.
In reality, I think portions of all three theories are partially correct. Since when has judging an Internet company by profitability
been such a criteria. Increasing revenues seem to be the measuring stick and not earnings.
Anyway, my understanding is that by 4/15/99 on the updated Babe Ruth League site, standings for League player's card sales in the "Field of Dreams" competition will be posted. This understanding, if I'm not mistaken comes from a person in the league who participates on this thread: Sam Lbi nj. The posting of sales will be interesting because the number of cards being sold for the top sellers will be easy to tabulate. (Hopefully they'll also have total card sales). Sam's kid has already sold over 100. Multiply $5 per card (profit per card for tSIG) times say 10 cards (avg kid sells) times say only 1/9th of the kids participating in the League or 100,000 kids. you're already at 5 mill profit. This doesn't account for CD sales at $1 profit margin per CD generated by the card sales.
So anyway as you can see the number of cards sold as of 4/15/99 ill be an interesting barometer of this portion of the business.
The next 10-q for this quarter may not reflect this ramp up. But the 2nd Q 10-q should include results from this agreement and those from the Signature Group Deal...which other on the thread understand better than I do. The Signature Group deal is "reported " as a 30 mil dollar deal.
Hope this helps.
Sincerely,
ztect
btw- If you don't mind, I;d like to pose your questions and my answers to them on the thread. I will delete your name. Please PM me back if that is okay.
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To: ztect (who wrote...)
From: xxxx Friday, Apr 9 1999 3:22PM ET
Thanks once again for taking the time to respond to my questions. And, no I don't mind if you post the questions and yes, it will be a good idea to delete my name. Otherwise it will be taken the wrong way.
One other question. Have you personally ordered any products from them? If so, what was your experience?
xxx
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To: xxxx (who wrote...)
From: ztect Friday, Apr 9 1999 3:31PM ET
yes I purchased cards and CD's on both the old site and on the new site.
All were significantly less than I could buy them elsewhere with the "card".
I just ordered off of the new site. These CD's haven't yet arrived.
I personally haven't had any problems, though I've mentioned some short comings about the current site on the thread recently.
Note: CD's are just the first of a long list of products to be offered. From my understanding The product division ultimately is going to sell books, travel packages, dvds under an array of different "cards". Many of these different cards have their domain names already registered. Many of these cards will be co-branded with companies, non-profits, and charities.
Again, I hope this helps.
Sincerely,
ztect
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