It is unfortunate that so many people consider the three recent acquisition deals as "failures". What people fail to realize is that it would have been a much larger failure to complete the deals.
According to SEC guidelines on disclosure, when it becomes highly probably that a deal will go beyond the general discussion phase, a company must disclose the information to the shareholders via an 8K filing or thru a major business wire. When the Seminole, FMW, and Frontline deals came out and there was a general understanding as to what each party was getting in the merger, then the acquisitions had to be made public, even if it was prior to any due diligence by the company.
After the company thankfully did conduct due diligence, they pretty much found that Seminole was a joke (apparently they must have misrepresented their assets and financials), FMW fell into bankruptcy during the due diligence (owner of FMW had another bankruptcy of a sister company which thru FMW into bankruptcy as well), and Frontline apparently went back to the well and demanded twice what the original letter of intent terms were for. Thankfully for us, CEO John Whitman upheld his fiduciary interest of the shareholders and backed out of these deals. It would have been a much greater failure to close the deals. Whitman and the auditors basically save our (and the company's) ass.
We probably shouldn't forget the fact that Whitman and the company has successfully closed 4 deals since last September, so 4 out of 7 is still a winning percentage. And in those deals, for less than $900K in restricted stock Chronicle gained $3 million in tangible assets and nearly $2 million in annualized revenue.
Despite the recent downturn in the stock price after the day-traders left (nice bounceback), the underlying strength of the company has continued to grow. In 1996, the company did $345,000 in revenues. In 1997, they did $695,000, 1998 more than doubled to $1.7 million in revenues, and 1999 they're projecting $2.5 million in revenues.
Right now the company is focusing on getting their financials out to get compliant. The audit is complete to my understanding, it just has to go thru the various reviews and signoffs. I believe the August 10th conference call was selected to give the company and auditors enough time to complete their reviews so that we should see audited 1998 numbers by the CC.
I have kept in close contact with the company during the prolonged quiet period, and while the company may appear to be a calm duck on top of the water, underneath they've been paddling away like crazy. From what I'm hearing, the company and Whitman have continued to target acquisition candidates that have a high chance of completion that have much more synergy with the company than the three previous acquisition targets (by the way, I don't think FMW is totally dead, CRNC may pick up some assets in bankruptcy for much better terms than the original deal).
In talks with Whitman, he is absolutely dead serious about getting CRNC off the OTC-BB and on to a larger market. He is the biggest shareholder in the company, the largest cash contributor, and stands to gain more than any of us to see the stock price increase in value.
There's much more coming soon. I'm trying to confirm several things in the rumor mill, hopefully will have more to post soon.
Gator
P.S. Don't forget to get signed up for the conference call :-) |
