To: Jazzbo who wrote (26588 ) 4/23/1999 10:49:00 PM From: Suzanne Newsome Read Replies (8) | Respond to of 44908
Tim, my charm is a poorly understood phenomenon! During our phone conversation, Paul Henry referred to TSIG as a "development stage company." I believe that phrase helps explain a little of the angst we are suffering through at the present time. Implied in "development stage" is a situation in which seemingly endless resources are poured into an enterprise with little visible results. The development stage of a company can be a demoralizing time. I know one company that has been in this stage for 10 years. People in the know would probably agree with me that TSIG is within 4-6 months of the end of its development stage. Mr. Henry said TSIG was looking for "institutional semi-permanent financing." The company wants to find an institution who will say "How much money do you need to reach positive cash flow?" Suppose that amount is $5 million. TSIG would make a deal with that company to borrow $5 million "at a rate that was not too dilutive to stockholders." Mr. Henry believes that such reasonable rate financing would provide a boost to the stock price. The institutional financing they have found so far has been too expensive—"they want total control of the company." Mr. Henry brought up the subject of the floorless debentures. He said people were upset that the debentures were floorless, "but there is a tendency for the stock to be driven to that floor." On the other hand, what no one discusses is that there is no ceiling. He says most convertible debentures have a ceiling. He pointed out that if we can get some good developments, and the lenders convert their debentures at $2.00, the floorless debentures will be declared the most brilliant financing anyone has ever seen. According to Mr. Henry, TSIG is in an odd position. There is a possibility (and he emphasized "possibility") that the company will do $100 million in revenue in 1999. Most of it will be the 3rd and 4th quarters so we don't see much evidence of it now. On the other hand, it's also a possibility that TSIG will go out of business. That is why the stock price is where it is. So today we can buy shares for $.36-.37 in a company that "may" do $100 million in revenues this year. Mr. Henry talked about TSIG's "coming out" party in May. Yes, the company is gay! Actually, a party will be held at the Silicon Valley office in May to announce the repositioning of the company as a e-commerce company emphasizing Internet solutions for business. Golin/Harris will use their contacts to get the relevant audience to the party. Mr. Henry said people complain about Rob Gordon's arrangements regarding financing he has provided the company. Gordon has put 80% of his net worth in a risky venture—he would much rather it be someone else's money! Undoubtedly, Gordon has stepped forward with cash when there was no other source of money. I believe the longs on this thread are truly frustrated with me and others who have raised questions about shares and dilution. The longs who have visited St. Pete, who have been to the mountain top, who have been converted, they have no questions, no reservations about the company, its prospects, or its management. They know that the stock price is a critical issue when it comes to the company obtaining that "bridge financing," that capital that will keep the company going until positive cash flow is achieved. By bringing up negatives, the stock price is driven down, and financing is purchased at a price of even greater dilution. While it has never been my intention to drive the stock price down, there has been from the beginning a certain lack of openness, an obtuseness, and sometimes doublespeak from the company. Has this been double dealing on the part on management in order to line their own pockets at the expense of the stockholders? Or has this been management desperately scrambling to keep the company above water. Your call. The thread has been in an orgy of negativity. Maybe there's a better way. Next post. Regards, Suzanne