Gediminas Jasionis

The Questionable Potential of Tesoro Distributors, Inc. (OTC:TSRD)

by Gediminas Jasionis March 4, 2010
questionmark manTesoro Distributors, Inc. (OTC:TSRD) has been getting attention investors lately as discussions arise whether the stock has any chance to climb up. The company has declared their focus to be on the creation of value to shareholders and targeting to acquire other companies for expansion.

Of course, all companies make the same declaration; the only reason to believe TSRD would be to see actual material events happening. We've seen them acquire a floor and wall covering materials business, back in November, but the business was actually incurring losses, so we shouldn't expect much improvement in the company's capital structure as a result of that deal.

TSRD does not filing with the SEC and the only reports we have are unaudited statements dating back to September 2009. Since the company had no revenues back then, we can assume they now generate some $140 thousand per quarter after the acquisition. Nothing spectacular for a public company.

Concerning upcoming acquisitions, TSRD is targeting some stone fabricator and retail distribution business, but has confessed they don't have the funds to actually complete the deal. They are unsure if additional funds will be available under reasonable terms. Moreover the company they are targeting might not even be profitable as only positive EBITDA is mentioned in the press release but not a word on net profit.

In other words those who invest now are just hoping for this deal to occur, even though there are more obstacles than positive benefits to it. If the deal goes through though, such low floaters will find it easy to get excited.


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