My analysis updated once again....Remember the good ol' days...
There is some modification to my first post
<<Greetings to the TSIG board. This is the first time that I have posted here even though I have been a lurker for about 3 months or so. First, I must state that I am long TSIG, and have accumulated a fairly significant position over the past few months. I have seen this board degenerate to a bunch of run-down overplayed arguments, so I felt it was worth my $60 bucks to invest in a SI membership and voice my own opinion on this company's past, present, future, strengths and weaknesses. While I profess that I am not the most knowledgeable about this COmpany as others, I have completed significant DD and I am very confident over my decision to ignore the short term trends (even though sometimes I get semi-ill over the stock price due to needless "panic" selling caused by the naysayers on this thread) and remain long while accumulating on this current pullback.
I think the foremost important thing is while you cannot forget the past and the problems associated with it, you invest in the future of a company. Wall Street PROJECTS revenues and a company's future success in calculating a fair stock price.
I acknowledge that the current 10-K is disturbing. The numbers are not impressive. The revenues are paltry. The "S-3" financing is troublesome. RG's potential stock package is out of line. This is nothing new to me when the 10-K came out. I invested in a PENNY STOCK, not a stock trading in the $50 range, not a stock in a $25 range, not a stock in a $10 range, not a stock in a $5 range. It is vital to realize that a great company may be a crappy investment if the stock price is overvalued. A crappy company my be a great investment if the stock price is undervalued. What the naysayers fail to analyze is the risk/reward in purchasing stock in this company that is CURRENTLY .29, not $29. (NOW ITS .15 .... more shares, but more progression in the business model, even with the Hwang resignation)
I look forward to hearing Marty's answers to the following questions, all of which I have concerns about:
1. The status of the "S-3". I have lived through S-3 financings, they are troublesome if not taken care of properly. I would like assurance that TSIG does not plan on taking more traunches from this deal as while the 2.5 mil will not kill this Company, further floorless financing could have a harmful dilutive effect. (THIS IS NOW MORE OF AN ISSUE SINCE WE ARE LOOKING AT 5-6 MILLION NOW.) At first I thought that the recent drop could be advanced shorting on the S-3, but I tend to doubt that is the case now. Those who profess knowledge state that this is a friendly...while I tend to place little weight on that fact, the key is that the stock cannot be converted until October. To short this far in advance for only a 2.5 mil traunch is potentially disasterous. If there was a 20 mil finance, the S-3 would have the ammo to short in advance this far in advance, but not at only 2.5 mil. The shorting, if any, could be coming from the professional hedgers and investors that flock to S-3 financing and inevitably short them to death. They do this for a living. They do not care what the company is all about. More times than not they succeed. But this, a relatively low S-3 financing, at this time, makes shorting a big risk here. Also, the buyout possibility of the S-3 makes shorting a huge risk in my opinion at this price. The company should look to Corporate sponsor, to take a stake in the Company, like a MSFT-type, and eliminate the S-3 debt. I will post later why I think a MSFT-type may be interested in taking this on.
2. RG's package and potential loan is somewhat alarming as well. Executive compensation must be in line with the market AND with the company's success. If we win, I have no problem with management winning either. I as a shareholder will not tolerate shelling out shares as candy, and I realize that has been done in the past. There is nothing I can do about that now. But I have been known to directly face management before about their executive compensation. I am a shareholder, an owner of TSIG. RG works for me. RG works for all of you. You are his boss. If there is something alarming, I suggest you exercise your right as a shareholder and demand answers and changes. RG's loan offer for the huge amount of shares must be eliminated as soon as alternative financing is available. Institutions will not give serious looks to this Company until that provision is removed. IF RG wants to establish a NASD listing and a corporation worthy of analysts recommendations, he must focus on running a Corporation that does not have the tarnish of deals that is currently on the Board.
3. I hope TSIG is aware of the recent degradation of this board and the valid concerns as well as the contortionist statements recently made. Why you ask?? Normally, a company shouldn't care less about these boards. In this case, I think its different. Why? Because at this time, the substantial portion of the shareholder base comes from these boards. This is not an AMZN or a MSFT, not yet. Those corporations can trade by themselves. I truly believe what is said here has a significant effect on the stock price. TSIG must be forward with information and allay the negative fears that have recently surfaced. I hope that as soon as Golin/Harris makes its push, then these boards will become less relevant to the share price. I am convinced that this will occur in the near future as a new shareholder base is formed when the awareness of TSIG.com and its great potential reaches the public. THE BOARD HAS SHAPED UP NICELY AND HAS BECOME INTELLIGENT AGAIN. THANK YOU ALL FOR BASICALLY STICKING TO INFORMING, NOT BATTLING OR BABBLING. (BACK TO DEGRADATION LATELY, CANT WE ALL GROW UP!!!!)
NOW THE POSITIVES......
As with all stocks, I make a decision to buy or not to buy based on the risk/reward with the current share price. The problem with most posters here is that they only take one side of the equation hype the hell out of it until it becomes painful to read. I have read the same arguments over and over and over again for the last 2000 posts or so over the past week. (LAST 5000 posts have been more painful than those 2000) I acknowledge the downside of TSIG, I also acknowledge the following benefits.....
1. Tremendous potential of increased revenues. The last 10-K showed revs in the range of 1-2 MM for the year. Taking what we have already announced, we have a $30 Mil deal with the Signature group. We have alliances with Babe Ruth and the Lifetime Learning. The Babe Ruth deal is clearly the smaller of the two, but nonetheless, should bring in a couple Mil in revs. The Lifetime Learning, if executed correctly, should bring in $50 MM to $100 MM at a minimum on a yearly basis. There is no doubt that ALOT more deals are to come. The rumors of McDonalds and Taco Bell have been mentioned. (THESE HAVE DIED OUT AND BEEN REPLACED WITH 4-H AND ECKERD RUMORS) While I do not figure these in my equation (I analyze of facts, not smoke and rumors), I do believe that any deal of that magnitude will not only increase revenues significantly, but will increase the credibility and recognition tremendously. I will be ultra-conservative and say that the company does 80 MM in revenues .... This does not account for ANYTHING coming out of Hwang and no more card deals and no more teleservice deals. Using 100 MM shares outstanding (NOT AUTHORIZED, BUT ISSUED), we would be trading at 1X revenues if the stock were at .80. Let's just say for argument sake that the 80 MM yields a 10 MM profit. .10 a share. If Golin-Harris positions us as an internet company with a unique marketing model, who knows what the market will define as a viable PE ratio. 20? 30? That yields a $2 to $3 share price. I view these facts as being the most conservative that I can considering that the projected revenues will continue to increase with Hwang's presence and the telemarketing division. (MY REVISED PE, REVENUE STREAM YIELD A MUCH HIGHER PRICE NOW THAN $2-$3...BUT LET'S KEEP IT THERE FOR CONSERVATISM SAKE. OF COURSE, THE WHOLE HWANG DIVISION IS DEAD FOR NOW)
2. Golin Harris. Same as above. Golin did not take this account because they are being paid. They have a reputation. I feel Hwang had alot to do with the Golin Harris story. Golin's mission statement and accomplishments are staggering. I am impressed. This is a perfect opportunity for Golin to shine once again. This is their chance to get a second generation AMZN. I believe they know the behind the scene deals and took this account on because of those deals that we don't know about, not the ones we do. (I SAY GOLIN IN FULL FORCE IN A MONTH OR TWO....WITH THE APPROPRIATE PREPARATION, THE END OF THIS MONTH COULD BE VERY EXPLOSIVE)
3. Business Model. The business model is unique. Internet advertising is not contemplated. Word of mouth, charity work, corporate partnerships will make this thing tick. Our advertising costs are paid to the charities by offering them a percentage of the revenues. What a brilliant concept to get exposure. This is a great human interest story. Golin will take advantage of this slant. It's as clear as day. THE NEW DISTRIBUTORS WILL BE ABLE TO PROVIDE THE PERSONAL SERVICE AND ATTENTION TO ACCOUNTS THAT TSIG WOULD NOT BE ABLE TO DO DUE TO THE SIZE OF STAFF. THE DISTRIBUTORS WILL MOTIVATE THE GROUPS AND WILL BE THE MEANS TO OUR ENDS.... ANOTHER BRILLIANT CONCEPT...WE GET PAID AGAIN TO HAVE SOMEONE ELSE PROMOTE US.
I can go on and on, but that's enough for now. I acknowledge the problems this company has. I will not be blinded by them. I am also aware of the great potential here. The key that no one has addressed here is the risk/reward..and that's what I tried to do here. Too many posts, in fact 99.999 % of the posts here look at one side of the equation. I am confident in my decision after doing my own risk/reward. The negatives here act as though this is a $20 stock. IF it were, then the concerns would play a much larger factor as the risk would be larger. This company deserves a much larger market capitalization at this time, IMHO, and some of the reasons why this stock is depressed is because of the panic selling created by this board, the market is aware of current numbers but not projected numbers, the valid concerns stated above, and most importantly, a real narrow shareholder base. Golin will change that. Right now the traders may have their way, but IMHO that will change in the very near future. Despite the real problems that I acknowledge.....
This company has the once in a lifetime potential...now lets see execution...
(NEW ANALYSIS: RG needs to step to the plate and put IN WRITING the goals, objectives, strengths, and weaknesses of the company in a mission statement. Moreover and most importantly, RG needs to clear his name in the investment public. We need him to confirm where these new shares are, if issued, and publicly deny any wrongdoing. The market is all about perception, and right now there is a real credibility issue. Its all speculation, but its there as perception. Clear your name RG, step to the plate and put your word on it!!!!) |
