IPO Preview: Digital Cinema Destinations

| About: Digital Cinema (DCIN)

Based in Westfield, New Jersey, Digital Cinema Destinations (NASDAQ:DCIN) scheduled a $16 million IPO with a market capitalization of $36 million at a price range mid-point of $8 for Wednesday, April 18, 2012. S-1

DCIN is one of 9 IPOs are scheduled for the week of April 16th. Full IPO calendar here.

DCIN Managers: Maxim Group; Dominick & Dominick.

DCIN is essentially a blank check IPO that intends to grow by acquisition and intends to make a large (for them) acquisition with most of the IPO proceeds.

Both current operations of the proposed acquisition are currently generating 'profit & loss' statement losses.

DCIN is trying to generate investor enthusiasm based on acquiring and converting theaters to digital formats. In general "Roll-ups"* aren't particularly attractive in the economic climate, even if the financials are attractive, which DCIN's are not.

*"Roll-ups" refer to the combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.

Digital Cinema Destinations Corp. is a motion picture exhibitor dedicated to transforming movie theaters into digital entertainment centers.

Pro forma for the IPO-related transactions, DCIN will own and operate 73 screens in eight theaters, up from current 19 screens in three theaters prior to our planned acquisitions.

DCIN's goal is to own and operate at least one theater in each of 100 locations throughout the United States, which, depending on the number of screens in each theater, may approximate 1,000 screens.

DCIN plans to acquire historically cash flow positive theaters. DCIN intends to create an all-digital national footprint by selectively pursuing multi-screen theater acquisition opportunities that meet DCIN's strategic and financial criteria. DCIN expects to upgrade the theaters to digital platforms if they have not already been upgraded.

DCIN currently operates theater located in Westfield, New Jersey (the "Rialto"), Cranford, New Jersey (the "Cranford") and Bloomfield, Connecticut (the "Bloomfield 8"), consisting of three theatres and 19 screens.

DCIN acquired the Rialto and Cranford on December 31, 2010 and the Bloomfield 8 on February 17, 2011. All theaters are multi-screen theatres and contain auditoriums ranging from 90 to 275+ seats.

DUAL STOCK CLASS = no accountability to public shareholders.
Each share of Class A common stock will be entitled to one vote per share. Each share of Class B common stock will be entitled to ten votes per share and will be convertible at any time into one share of Class A common stock. Outstanding shares of Class B common stock will represent approximately 67.9 %

DCIN expects to net $14 million from its IPO. DCIN intends to use $11 million to fund the cash portion of the Cinema Centers proposed transaction purchase price, $1.1 to repay debt, and the balance for working capital.

If DCIN fails to consummate the Cinema Centers acquisition, DCIN plans to use the money for future acquisitions and general corporate purposes. This IPO report is based on a reading and analysis of DCIN's S-1 filing which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.