DSS Inc (DSS)

[coolerheadsprevail]

http://investors.jivesoftware.com/financials.cfm

FYI to the board...

Jive apparently released their Q yesterday, a day earlier than expected. Here are key points that I was able to glean from a quick cursory review:

(1)
Jive reports 3rd party royalties under the line item "Cost of Revenues: Products", where it is buried with numerous other components of their product costs. Specifically, in the footnotes they state:

The increases in cost of revenues for products in the three and six-month periods ended June 30, 2013 compared to the same periods of 2012 were primarily due to the increases in products revenues and included the following:

* a $0.6 million and a $1.0 million increase, respectively, in third-party royalties

Keep in mind that the settlement was only entered to on 5/14/13, so anything that would have been reflected in Jive's Q would have only reflected 1.5 months worth of royalties.

(2)
Further in the footnotes it states:

In May 2013, we entered into a settlement and license agreement with Bascom. The cost of such settlement was consistent with amounts accrued for settlement and was not material to our business, financial condition, or results of operations.

If I recall correctly, Jive had accrued $100k for this in their prior financial statements, right? In any event, the primary takeaway here is that -- as expected -- royalties from Jive are not only immaterial to DSS/Bascom, but also immaterial to Jive itself. Anyone who understands DSS/Bascom never expected a massive multi-million dollar payday from Jive to begin with.

What is interesting is that if Jive is stating that the $100k they accrued was "consistent" with the cost of the settlement w/regards to the bottom line impact in the Q, then would it mean that we can extrapolate out the $100k over the 1.5 month period and project annual royalty payments to DSS/Bascom to be around $800k? If so, that is actually more than I had personally expected from a company the size of Jive.

(3)
Jive's revenues for the 6 months ended June 30, 2013 have grown almost 40% compared to 2012. So this trend may translate into a continuously growing revenue base for DSS/Bascom going forward.