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Technology Stocks : SPNT (FILM) SHOPNET.COM -- Ignore unavailable to you. Want to Upgrade?

To: Ellen who wrote (4)	5/30/1999 10:56:00 AM
From: TOPFUEL	Respond to of 16

Thanks Ellen that was a great find I actually learned a few more things about SPNT I did not know previously . David

To: Ellen who wrote (4)	5/30/1999 11:05:00 AM
From: TOPFUEL	Read Replies (2) \| Respond to of 16

Heres some DD from a non SI member that emailed me : saw your posting on siliconinvestor (i am not a member and cannot post there). I have heard that the company has INDEED transformed itself into an internet company. The company has indicated that it will be increasing its ownership of PlayCo and that it is in serious discussions with offshore potential financial partners to provide significant capital to the continued buildout of SPNT's (and PlayCo's) web presence. The e-commerce potential on the toy side is incredible and the European investor market would appear to be hungry for investments of this type (keep in mind that the original capital behind this came from offshore). With only 5MM shares outstanding and a stockprice of $2/share, this company has a market equity capitalization of just over $10MM....Not only is this cheap, but this is insane!! Let me tell you why!...and I have slashed my assumptions to be conservative: a) Film business - Give them ZERO value for this, although there is likely some serious upside option value here. Keep in mind that this gives them ZERO value for www.videonostalgia.com and www.videosoncall.com. (This entity alone ould be worth $1/share) b) Breaking Waves - Give them ZERO value for this, although this is ridiculous given the steady-state business and new e-commerce sites that the company is building up. (This should be worth $1/share alone) c) PlayCo "Bricks and Mortar" Stores - This company presently operates 25 stores, going to 33 stores by the end of the year. With $32MM in sales as of 12/98, the company does over $1.28MM in sales per store. For 33 stores this means $42.4 in revenue run rate. Based on a 1.2x revenue multiple for "bricks and mortar" stores (i have lots of comparables if you want), this implies a market value of PlayCo "bricks and mortar" stores of $50.88 (1.2 x $42.4). Since SPNT owns 25% of this, the SPNT value is over $12.5MM. (This valuation alone supports a $2.50 share price for SPNT) d) PlayCo web presence - The value of the web sites created through PlayCo include www.toyswhypayreteil.com and www.playco.com. Further web sites are to be developed in the near future. the company has pointed out that the 4-7MM per annum in its stores will provide a solid startfor new web customers. Based on what I can piece together, the company did not enter this business unless it could have $20MM in sales within 2 years. Using a conservative 2x revenue multiple (comparable e-commerce companies trade anywhere from 5-200x revenues), I value this VERY CONSERVATIVELY at $40MM or $10MM for SPNT's 25% ownership (This is another $2/share value). e) The company last reported over $1MM cash on the balance sheet, or 20 cents per share. No matter how you look at it, the retail store business is worth $2/share minimum, the web presence through PlayCo is worth a minimum of $2/share, even if you give them NOTHING for their cash, their video sites, and their bathing suit business....notto mention the fact that they will be likely be taking ownership of much more of PlayCo in a private transaction.