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Technology Stocks : TouchStone S/W (TSSW) -- Ignore unavailable to you. Want to Upgrade?

To: robbie_nw who wrote (3209)	3/26/2000 12:54:00 PM
From: David Alan Cook	Read Replies (1) \| Respond to of 3627

ahhto2, It is not calculated into the model at the same ratio that cash is calculated in the model. See page 4 of the report. Razo used the value of the software business not the value of cash received from the sale of the software business. He valued the B2B at $5 and the software Business at $2 to arrive at his target of $7. If you use the same value that he used for CASH that will be used for investment in B2B Companies ( Ie the 3.1 Million) and add the 9 million for the sale of eSupport with PTEK Investment of 2.5 M, you will have 12.1 Million in cash. Now calculate the NAV of just the B2B business and do not include any valuation for the software business and you will be able to see the difference. I will post my numbers shortly using: 1)No NAV Premium, 2)No NAV Premium but receiving the same rate of return for reinvesting the NAV one time at the same rate of return the company has received on its first two investments 3)The NAV at the Low End Of the Ratio Used (3 times) from The Razo Report 4)The NAV at the High End of the Ratio Used (8 times) from the Razo Report 5)The NAV Used in the Razo Report ( 5 Times ) Adjusted for the increase in cash to be received from the sale of eSupport.com DC

To: robbie_nw who wrote (3209)	3/26/2000 1:12:00 PM
From: David Alan Cook	Read Replies (1) \| Respond to of 3627

ahhto2, You are not including any investment at a favorable cost basis of the cash received from either the sale of esupport.com or the 3.1 Million the company has in cash when you calculated your NAV. If you assume that TSSW has not invested its current cash $3.1 million and will not invest its current cash in B2B at favorable cost basis and if you assume that TSSW will not invest the 9 Million that it receives from the sale of eSupport.com in similar deals with favorable cost basis, then I can see how you came up with your NAV calculation. I disagree with these assumptions: " TouchStone anticipates that the $6.5 million in proceeds from the proposed sale of eSupport.com plus an investment from Phoenix Technologies of an additional $2.5 million, will provide additional capital to strengthen its new business incubator strategy as the company establishes favorable equity investments in early and mid-stage technology companies. " ( Source Company Press Release) I disagree with your assumption that the company has not invested in other IPO positions and will not use the funds from the sale of eSupport to invest in other preIPO positions at favorable prices. " Through strategic investments, TouchStone has been building a diverse network of Internet-based companies placing it squarely in the center of the new Internet economy. We are continually looking for opportunities that allow us to capitalize on the many opportunities this extraordinary new medium presents. This transaction will allow TouchStone to focus on what has now become its core business," said Pierre Narath, chairman and CEO of TouchStone Software. " ( Prior Press Release - Sounds like the company has made other investments with its current cash ) Further, the company remarked that the majority of their positions will be coming public this year. " Its initial investments, which it made late last year, require a shorter time to maturity than many venture-type investments because they were made with later-stage companies that have sound and mature business strategies that were transitioning into an Internet focus rather than true start ups. Therefore, TouchStone may realize short-term liquidity from initial public offerings and achieve value appreciation and return on investment. " ( Prior Press Release - Sounds like the company has other investments that will be coming public in the coming year ) Give the company a call. Ask if they have only invested in the current 3 companies - EBLD - PRTS and SupplyAccess.com. Then ask them when they will be announcing their other positions. I encourage other shareholders to do the same. DC