Destiny Media Tech Inc (DSNY)

[Hugodrax]

Yes DSNY has a $8.8M market cap, is currently cash flow positive, and has $2.05M in cash, or 3.7 cents per share.

With say $1M they could buy back 11% of the stock.

There are a few things they are probably thinking about:

1) It would increase the price and liquidity which would help Steve get more liquidity to fight the company in the lawsuit.

2) They might be thinking "we are so thinly traded now that buying back stock would reduce liquidity even more after the buyback"

3) Fred may have a reason for wanting to hoarde cash - e.g. if the U.S. weakness might be be the start of something deteriorating.

4) DSNY trades 12K shares per day, which is literally like $2K at these prices. May not be practical.


All are valid.

I haven't been tracking the lawsuit but one thing in the back of my mind is that a settlement with Steve might include no cash to him, but agreeing to sell back some or all of his shares back to the company. That may be the end game here and why Fred might be hoarding cash.

Eg. if the stock goes to 10 cents they could pay $2M to Steve in retiring his shares. Although I'm not sure if they can do that from a regulatory standpoint without offering to other shareholders. Rules are complicated on that. Might be a way to structure it.

Of course Steve may be on tilt and irrational so who knows.


There are a few comments i find a bit worrying in the transcript:


"US revenues were flat, where a consistent 5% growth in US independent was offset by decline from one US major customer."

I'm worried that is Universal

"Revenue from our European customers was down 6.7% due to declines from certain of our major Scandinavian and Sweden labels."

Also the word "major" could that be Universal as well?


"The increase in marketing expenses was associated with increased client engagement efforts focused on areas where we've seen some recent declines as I just mentioned."

Hopefully the horse hasn't left the barn here.

Reading between the lines I wonder if Universal and/or other "majors" are starting to move on from PlayMPE???


"Our lack of appropriate investment in Play MPE had strained relationships with customers, hindered our ability to grow and threatened existing revenue, and we've known about this for quite some time."

Universal is 43% of revenue as of last Q, or $396K. That 43% was the same last Q so there is stability for now.

The company should probably sold IMHO. A buyer could probably knock $500K off of G&A and perhaps $300K from sales and marketing. Maybe do earnings of $1.5M or so, sell it for 10x that and you'd have a $0.27 exit, nearly a 2x from here.

Not sure who the buyer would be though.