CTCK email received, and since I own some CTCK...here's the mail.
Subject: [pettycash] New Profile... CTCK
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This small OTCBB company has acquired more private firms this year
than any other publicly traded company.
Craftclick.com, through thier agressive acquisition program, is
quickly cornering the e-retail trade of craft and hobby supplies. We
are looking for more acquisitions, including brick and mortar
companies. Furthermore, the company should be profitable by year end.
The full dd report is included for your review and should be used as
the beginning of your research on Craftclick.com.
God Bless And Good Trading.
Pettycash
CraftClick.com, Inc. (OTC-BB: CTCK)
CraftClick.com, Inc. (www.CraftClick.com) was formed in late 1999
with the goal of becoming the premier destination for both amateur
and professional buyers and sellers of arts & crafts products and
supplies. The company subsequently performed a highly-successful 60-
day concept-to-launch of CraftClick.com, creating the first
comprehensive on-line arts & crafts community in January 2000.
So far this year, CTCK has invested about $2 million to strategically
acquire 19 online arts & crafts related websites. Through this
acquisition strategy, CraftClick.com now controls the most-
significant entry points for arts & crafts on the Internet.
Currently, CraftClick.com has over 500,000 qualified members, and
anticipates doubling its membership by the end of the current fiscal
year (March 31, 2001). CTCK's website is averaging well over
600,000
unique visits per month with nearly seven million monthly page views.
CraftClick.com's network of web sites offers a wide array of
goods
and services to the arts and crafts hobbyist, from how-to lessons on
various projects (over 15,000 free craft plans are available) to a
large e-commerce section (featuring over 100,000 different arts &
crafts supplies and kits). Individual vendors can set up shop and
sell their craft products and supplies through the site. One of
CraftClick.com's most impressive attributes is its focus on
individual participation, which includes chat sessions, free commerce-
enabled web sites and e-mail, messages boards, and an extensive
library of do-it-yourself projects.
CraftClick.com has developed a new version of their website for the
United Kingdom. Acquisition and expansion plans for other European
markets are also being developed.
Deloitte & Touche, LLP serve as the company's advisors on all
significant buy-side acquisitions; they are also acting as fiscal
agent for future financings.
CraftClick.com IS RAPIDLY CONSOLIDATING THE ON-LINE ARTS & CRAFTS
INDUSTRY
In the United States, the arts & crafts industry is estimated by
trade sources to be about a $20 billion annual market.
The industry is highly-fragmented, with roughly 4,500 small "mom
and
pop" retail businesses. A few national retail chains (Hobby
Lobby,
Jo-Ann Stores, Michael's and A. C. Moore) dominate the brick &
mortar
side of the business. Michael's (Nasdaq: MIKE) is the single
largest
player in the industry, with sales of about $1.5 billion and nearly
600 retail outlets in 46 states.
According to a 1998 study by the Hobby Industry Association (HIA),
80% of U.S. households have at least one family member engaged in
crafts or hobbies, spending an average of 7-1/2 hours per week in
these activities. On a per capita basis, the estimated 81 million
crafters in the United States spend an average of $248 each year on
products and supplies.
However, despite the huge number of U.S. households online
(projections made by International Data Corporation suggest that 67
million U.S. households will be online by of 2002 - or, to put this
another way, there might be upwards of 54 million households with at
least one crafter online within two years), not much of the $20
billion in arts & crafts business is currently done online.
The HIA found in September 1999 that although 44% of respondents read
craft magazines every month (and 58% visited the magazine's web
sites
occasionally), only 11% had recently purchased craft products online.
CraftClick.com believes that the highly-fragmented arts & crafts
industry is "ripe" for an on-line solution (and
consolidation). It
is this lucrative business opportunity that CTCK has aggressively
worked on since late last year, buying up almost every significant
arts & crafts website in the U.S. market.
This is an essential strategic move for CTCK, as the big winners in e-
commerce tend to be the companies that apply on-line efficiencies and
interactivity to their industry before anyone else does. Being the
first company in a new Internet market niche generally yields
widespread name / brand recognition while creating formidable
barriers to entry for all other competitors.
CraftClick.com HAS COMPLETED MORE DEALS IN 2000 THAN ANY OTHER LISTED
COMPANY
With a $1.4 million venture capital financing lead by Venture
Catalyst, Inc. (Nasdaq: VCAT), CraftClick.com launched their
superstore the week before Christmas 1999, and became the first major
e-commerce company to enter the arts & crafts industry.
CraftClick.com completed more acquisitions in the first half of 2000
than any other publicly-traded company. According to MergerStat,
CTCK acquired 19 niche Web sites (all privately owned - including
businesses in Canada and the United Kingdom) during the first seven
months of 2000. The deals were largely financed with restricted
shares.
Every one of CraftClick.com's acquisitions have targeted popular,
privately-owned arts & crafts websites with active, on-line
communities and large, extremely-targeted user bases of craftspeople
and suppliers. Several of the Internet arts & craft businesses
acquired this year by CTCK had previously invested upwards of $4 or
$5 million in market research, advertising, site development and
product launches.
In a 90-day period earlier this year, CTCK acquired 13 companies in
the arts and crafts field: CraftNetVillage.com; Art2Art.com;
Stamparoo.com; Crafter.com; TopCraftSites.com (Top 100 Craft
Sites");
GoStitch.com ("Stitches to Go"); Tolenet.com; Crafters.com
(Crafters
Network); CraftCentralStation.com; CraftsSearch.com; MakeStuff.com;
CraftCoupons.com; and, Stenciling.com.
CraftClick.com's REVENUES ARE INCREASING & THE COMPANY WILL BE
PROFITABLE IN 2001
Although CraftClick.com generates income from multiples sources
(including advertising, B2C, C2C and B2B transaction fees), the bulk
of CTCK's revenues (about 85%) will come from e-commerce.
Currently, the average transaction size is about $50, and about 20%
of sales are made to repeat customers. CraftClick.com sells over
100,000 arts & craft products through its e-commerce properties.
Product lines are competitively-priced below retail but maintain
healthy gross margins (about 30%). The company uses a virtual
inventory model and out-sources all product fulfillments to a well-
established distributor.
In the quarter ending June 30th, CraftClick.com reported revenues of
$298,000. Projections for the current quarter are that revenues will
exceed $500,000. Not bad for a company that has been focused on
building their business through acquisitions, and that has not spent
a single penny on advertising!
Management is confident that CTCK will be turning a profit within 12
months.
CraftClick.com HAS ONLY MINIMAL ON-LINE COMPETITION
Since CraftClick.com entered the Internet arts & crafts business
segment in January 2000, several other "craft super-sites"
have been
introduced, but none have been anywhere as successful as CTCK.
Notable competitors would include: Craftopia.com (launched in March -
backed by Santa Monica-based eCompanies); IdeaForest.com (backed by
Bain Capitals's bainlab); and Michaels.com (full e-commerce will
not
be launched until 2001). Another competitor, CraftShop.com, has
filed for Chapter 7 bankruptcy.
As a general rule, all of these companies offer a much more limited e-
commerce selection, their prices tend to be higher, and the
information content of these other web sites is pretty limited. Not
one of CTCK's competitors has a virtual community of crafters nor
100,000+ products for sale.
CraftClick.com recognizes that the Internet arts & craft industry
cannot support more than a few major players, and that the current
numbers will be reduced either by attrition or acquisition.
CTCK's
strategy, therefore, is to acquire most (if not all) of their
significant competitors, and thereby gain control over the most
significant entry points to arts & crafts on the Internet.
CraftClick.com HAS A TERRIFIC E-COMMERCE STRATEGY !!
CraftClick.com does not believe that crafters are all the same. They
also know that crafters are loyal to the specific craft disciplines
they practice. That's one reason why CTCK has focused on
building
the single-largest crafting network on the Internet.
CraftClick.com's network of 19 web properties is the most
comprehensive and most-heavily trafficked arts and crafts network on
the Internet
CTCK believes that by controlling all of the significant entry points
to arts & crafts on the Internet, that they will have created a
significant barrier to entry that will discourage many new entrants
into the field and make it almost impossible for current competitors
to catch up.
Each of the 19 CraftClick.com web properties operates as separate
businesses to the outside world. The only identification with CTCK
is a logo on the home page, which explains the site is "A
CraftClick.com Company".
CTCK's strategy of acquiring online portals, affiliates and e-
commerce websites reduces the cost of customer acquisition ($4 vs. an
industry average of $82), and denies competitors a strong position in
the online community. Within a few short months, CraftClick.com has
developed a network of companies that controls all significant entry
points into the online arts & crafts business.
CraftClick.com's established membership base and high customer
retention rate allows a greater percentage of CTCK's capital to
be
allocated to marketing and branding efforts. In this manner, CTCK
can leverage its existing customer base and site traffic to launch
promotional activities via many different channels: e-mail, on-site,
direct mail, run-of-site banners, affiliate programs, keyword
banners, etc.
Through advertising and marketing, CraftClick.com drives web traffic
into the network via its e-commerce opportunities and portal sites.
Simultaneously, CTCK actively promotes its affiliate and affinity
programs to bring traffic through non-CTCK network properties.
Several cross-promotional strategies that drive traffic within the
network from the portal sites to the affiliate and e-commerce sites
are also in place.
CraftClick.com plans to continue acquiring websites that further
enhance its presence in the on-line arts & crafts business - from
niche sites with a loyal following of crafters to portal sites with
the ability to actively drive traffic through the CTCK network.
WE BELIEVE THAT CraftClick.com IS SIGNIFICANTLY UNDERVALUED BASED ON
VALUATION MULTIPLES FOR OTHER e-COMMERCE AND INTERNET CONTENT
COMPANIES
Compared to its peers, it's safe to say that CraftClick.com is
significantly undervalued. Based on the valuations awarded to its
better-known competitors, CTCK's market capitalization should be
at
least four times greater than it currently is. When you consider the
fact that CraftClick.com will be turning a profit within 12 months,
the apparent disparity in valuations becomes even greater….
Here's why.
CraftClick.com's management reports that the Company
currently has over 500,000 registered members.
Over the last several months, the CTCK web site has been
averaging about 650,000 unique visitors per month (6 to 7 million
total page views).
All of CraftClick.com's traffic and membership data has been
compiled by PCDataOnline.
With these figures in mind, let's look at how CTCK's current
valuation ($18.06 million based on 19.84 million shares fully-diluted
and a current share price of $0.91) stacks up against the rest of the
industry according to some valuation multiples compiled by
WebMergers.com.
For Internet content deals, the median transaction had a weighted-
average multiple of 99x (129x for e-commerce deals), based on the
value of the acquisition and the number of unique visitors per
month. In comparison, CTCK is only valued at 28x.
Bond & Pecaro, Inc. have compiled valuation data for Internet portals
and retailers based on the number of subscribers and monthly unique
visitors. If we think of CraftClick.com as an arts & crafts portal,
then CTCK's valuation of $28/member or $36/unique visitor is far
less
than the current range of $400 - $450 for similar Internet portals
and $640 to $810 per member for Internet retailers.
Compared to the big boys, CraftClick.com's valuations are
miniscule:
soon-to-be profitable CTCK has a market capitalization per user
(member) of $28, whereas the major e-tailers (Amazon.com, eBay,
PriceLine.com, etc) have valuations ranging from $1,000 to more than
$2,500 per user.
Lastly, CraftClick.com has been a stellar performer in the area of
Customer Acquisition Costs. To date, CTCK has spent about $4 to
acquire each customer, compared to an Internet industry average of
$82.
CTCK SHARE STRUCTURE & RECENT TRADING RANGE
Total Issued & Outstanding: 17,906,110 common shares &
139,000 Series A Preferred
Warrants (strike price = $1): 645,000
Fully-Diluted: 21,896,945
Public Float: Est'd @ 1.8 million
52-week Trading Range: $0.84 to $4.75
Last Trade (August 21, 2000): $0.91
CraftClick.com is a fully-reporting company. Financial statements (10-
K and 10-Q Reports, 8-K Filings, etc.) can be accessed through
www.FreeEdgar.com or through the Company's website (
www.CraftClick.com/aboutus/investor_relations.cfm), along with stock
information, charts, quotes and corporate news.
FOR ADDITIONAL INFORMATION, PLEASE CONTACT:
Michael Lafferman @ Metropolitan Capital Partners, Inc.
Phone: (310) 358 - 9977
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