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[southacresdave]

DRJ..$2.35..Dreams, Inc

This is currently the approx. 170th largest internet retailer ($85M this year having grown 40%). They sell sports clothing and memorabilia through Fansedge.com. They also run 70 sporting websites for others, including Walmart, JcPenney, Sears, Chicago Bulls, Washington Wizards, San Diego Chargers, Philadelphia Eagles, the University of Miami and U of Texas, plus more. They have already said they are going to do $60M in the 4th Q (and I estimate they will beat earnings forecast of 14 cents).

They have 3 business division:
1. Where they do promotions with individual athletes (about $2M/year n revenue).
2. Manufacture cases, frames, boxes for sports memorabilia (about $11M/year in revenue).
3. Retail operations. $85M from their e-commerce site, website syndication, and $12M or so from 9 stores (8 in the Chicago area and one at the University of Oklahoma they inherited as part of another deal).

A few highlights of recent developments:

There stores are not the normal "brick and mortar"--they are designed more for use of their kiosks that send business back to their website. They see the kiosk as a real growth factor in the future. They just started a pilot program with the kiosks in 120 JcPenny stores with the idea of expanding out to all 1000.

They are making a big push to get into selling all fans clothing/memorabilia for individual college teams. They started with the University of Miami and Texas and plan on expanding from there quite a bit in 2011.

They plan on getting quite a few more NBA teams and NFL team's sportwear websites.

They just purchased a clothing manufacturer in November. They plan on cutting out the middle man for all the college teams they sign up in the future and being the manufacturer and distributor for all their fans apparel.

They closed on a secondary last summer and a new line of credit this fall. They feel that with them being cash flow positive from here on it that, baring a large acquisition, they don't need to worry about raising any more funds.

Their earnings are weighted heavily to the 4th Q. They were EBITDA positive for the first time in a quarter (that wasn't the 4th) this fall (if you back out the one time costs for the refinancing and stock sell). They plan on being EBITDA positive from here on it in the future.

STRENGTH: They are making a big play in building up their e-commerce site. They are increasing their website syndication by making a push to take over the contracts of major professional and college teams sports websites in the U.S. and increasing their sales dramatically. They plan on integrating their manufacturing process more into the equation to reduce costs even more. Their kiosks (whether in more of their own stores or in the connections they have with the major retailers) will aid their expansion.

CONCERN: Their number one source of revenue is the NFL. Obviously if there isn't a season it will cause a revenue hit. Won't last forever though since the NFL isn't disappearing. The stock hit $3.11 on Feb 9th after the JcPenney kiosk deal was announced. It's pulled back to $2.35. Earning will be released on March 28th (announced during the Roth presentation).

That's just a summary of things. I'm too lazy to write it all up. Here are some links to make it easy for you to research more if you desire:

http://www.fansedge.com/

Roth Presentation http://www.wsw.com/webcast/roth24/drj/

Last CC call http://www.visualwebcaster.com/event.asp?id=74230

JcPenney kiosk deal http://www.proactiveinvestors.com/companies/news/12169/dreams-expands-offering-with-launch-of-jc-penney-in-store-kiosks-12169.html

Press releases of all the deals they have with major retailers and sports teams: http://www.dreamscorp.com/pressreleases.htm