It's true that LONE's stock price was as low as three cents before the reverse merger agreement was announced. I intended my post as an observation and not as a buy recommendation. Communicata is a British internet consulting company that plans to use their shares as a potential publicly traded company as aquisition currency to become an e-business incubator as well. The U.K. market for internet incubator companies and e-business companies in general is extremely hot. Any investment in LONE at this point is more than a shot in the dark but not much more. Their is obviously the potential for great upside here but the terms of spin-off aren't yet known (such as how many shares LONE has outstanding and what the distribution ratio will be). My guess is that whether or not LONE is a good buy here will be determined by how well Communicata executes on its very amibitious growth plans next year. Here Communicata's statement about the reverse merger I took from their website. Keep in mind that LONE has been planning to use the other two subsidiaries they have for reverse mergers as well so hopefully there will be two more down the road.
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Communicata signs letter of intent to go public through a reverse merger with LifeOne
E-business is generally defined as the process of conducting all of a company?s transactions electronically. Communicata is a Scotland-based e-incubator and developer of e-business solutions. In the United States, there has been a rapid proliferation of e-business companies to accompany the explosion of Internet businesses. In the United Kingdom and Europe, however, the explosion has yet to occur. Communicata is an established e-business solution provider that can also provide all the services and infrastructure for creating new e-businesses in the UK and Europe from scratch in less than 90 days. It is uniquely positioned to exploit the coming tide of e-business development in the UK and Europe. Currently, there is no market leader and the competition is fragmented. Communicata already has a prestigious client base for whom it has developed special applications, and in November 1999, Oracle Corporation named Communicata its top e-business solution developer in the UK, and one of fifty top e-business solution developers in the world. Communicata is well placed to assume the market lead.
On February 23, 2000, Communicata and LifeOne, Inc., a small public company, announced a reverse merger that will provide all of the benefits and valuation of an Internet public company. The Letter of Intent can be viewed at www.edgar-online.com//bin/esearch. Enter the symbol LONE for LifeOne, Inc. After the reverse merger, Communicata shareholders will hold 90% of the outstanding stock. Communicata will not assume any of the liabilities of LifeOne in this transaction.
Products and Services
In the UK and Europe, Internet start-ups and existing businesses needing any or all of a range of e-business services have had to rely largely on web design companies feeling their way in e-business. The design, implementation, and maintenance of e-business solutions often require significant technical expertise in many areas, including electronic commerce systems, security technologies, database programming, mainframe and legacy integration technologies, and advance user interface and multimedia production. In addition, companies seeking to realize the benefits provided by e-business can face daunting challenges, such as the need to mesh business strategies, keep up with new and changing technologies, and continuously update content.
Communicata has developed six modules that enable companies to match their e-business ambitions to one or more of the modules. The modules are listed as:
Website development; Communicata is distinguished by the use of a relational database to create the website
Intranet development; Communicata uses database technology to tailor intranet systems to user requirements
Extranet development; again, use of relational database technology allows for personalization thereby ensuring that data remains confidential
E-Commerce; Communicata has the ability to seamlessly integrate this module with other modules to allow clients to benefit from shared use of data between those modules
Knowledge Management; a Communicata principal is on the leading edge of mining this essential asset
Customer Relationship Management; the use of Oracle software provides a considerable competitive advantage over those not using relational database software.
The six modules are based on three core Communicata products. The Content Management Server allows clients to update their own website content. The Commerce Server includes the ability to log shopper-tracking data, update merchant catalogues online, provide detailed catalogue usage statistics, and includes a stock management function. The Exchange Server provides for a range of matching techniques including allowing buyers and sellers to match each other through a website, online tendering, auctions and direct matching, such as recruitment.
With additional financing through public and private offerings, Communicata will be able to increase its client base by capitalizing on a select group of services, some of which have already been initiated by Communicata. Communicata has developed a number of training packages to address the huge demand for information and guidance about e-business. Training and consultancy services will feed each other as well as lead to providing special project applications for clients. Communicata has a portfolio of such applications developed for major corporate clients such as The WM Company (a subsidiary of Deutsche Bank), and CGU Direct, which sells vehicle and travel insurance over the web. E-commerce hosting is another service Communicata would provide as it has hosted websites for its clients since 1995. Communicata also plans to offer order processing and fulfilment at a high level of customer service to its e-commerce clients.
E-Incubator
Since Communicata is an e-commerce leader in Europe, many new Internet companies approach it for financing, systems advice and mentoring. In that Communicata will soon have access to the public equity markets, it will be able to accelerate its e-incubator business development. Communicata is currently negotiating with several companies to be the initial e-incubator candidates.
The Market
In the UK, an estimated 3.5 million small and medium-sized enterprises (SME?s) are being forced to address developments in the use of the Internet by their competitors, customers and suppliers, but lack the resources and infrastructure to develop e-business. Many large companies are also feeling the competitive pressure to develop a separate e-business in addition to their existing business. The European community is commonly known to be several years behind the United States in e-business and e-commerce development. The market is wide open for an enterprising company that has the knowledge and skills to be an e-business product and service provider. Communicata aims to become the most recognized and trusted creator of e-businesses in the UK by providing the most comprehensive service available.
Financial Model and Investment Return
The financial projections have been reviewed by several Internet analysts and are based on what are believed to be realistic sales targets. They include costing of necessary resources.
Communicata?s fee structure will be a mix of product fees, per diem fees, maintenance fees, and performance fees reflecting the mutual success of Communicata?s systems and clients.
The company has absorbed most of its start-up losses and has been profitable for the last two years. The company has a tax loss of ($220K) available to offset future tax liabilities. The projections show revenue of $815K for the current year and a small profit to allow adequate investment in the company?s future. The projections for the next fiscal year assume one spin-out.
Financial Data 1997 1998 1999 2000 (p) 2001 (p)
Revenues($?000) 414 379 449 815 14,138
Pre Tax Profit (Loss) (19) 21 35 33 3,707 |
