Timhyma--DRJ---in the 3rd Q CC call, the CEO brought it up and there were follow up questions because in years past they had a problem in building inventory for their big 4th Q due to liquidity concerns. It's one reason they raised $6M last summer in a deal with William Blair Small Cap Fund (he got a good deal). That was necessary to allow them to get a new 3 year line of $20M credit with Regions bank at Libor + 3% (effectively reducing their quarterly interest payments from $450K/Q to $220K/Q)
In the CC call they said that as of 9/30 they had drawn upon the line of credit to $16.5M and figured it was drawn upon completely by the CC call. However, he said they weren't even concerned (unlike in previous year) because they were seriously cash flow positive in the 4th Q. (My estimate puts EBITDA around $13M for 4th Q).
In the CC call they also think from here on out they will remain EBITDA positive even in their weakest quarters (Interest and Depreciation now run around $800K/Q) and that, barring a major acquisition, they weren't worried about raising any more capital or have liquidity concerns for the future.
If the NFL is canceled for a whole season, that's a different ballgame. I don't see that. April 6th is the players trial on breaking the lockout. After that is resolved, they will start to negotiate. No one wants to ruin a $9B/year cash cow for the players and owners. It's gotten to be way to big to spoil.
In the Q&A there it came out that the NFL segment provides 35-40% of their business, but by 2012 with the number of colleges they are in negotiation with on taking on that they see college football being their biggest business segment.
For a $100M market cap stock, it has 4 analysts and bloggers following it. It's not going to be a quick mover IMO, but will move upward slowly as their business plan continues. It should garner a high p/e for their e-commerce business and growth rate (they do have the brick-n-mortar businesses but the CEO makes it clear that they are there to enhance the fansedge.com website, not to be a normal store just to do business in. It's more the kiosk idea and it's expansion that plays into it. If their kiosk trial period with JcPenney pays off---they already seriously increased JP's online sports wear website since they took it over--and they are allowed to expand to all 1100 stores....well, then, that will be a major pr to say the least).
Earnings will be released next Monday with a CC call. After that, a lot of questions will be answered and direction forward clarified. You may have to pay more per share, but concerns/risks should be reduced (other than the NFL).
Dave
