Capital Alliance Group - CPT (CDNX) Message Board

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Gold/Mining/Energy : Capital Alliance Group - CPT (CDNX)

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To: keith massey who wrote (482)	7/30/2000 7:32:37 PM
From: keith massey	Read Replies (1) of 960

IRIX... I'll take a break from my AGM posting for a minute. Personally I think the Irix purchase was a brilliant move. According to the latest new release for the 12 months ending June 30, 2000, Irix reports that the combined revenues from the Canadian and U.S. branches was approximately $1.6-million with a net income of approximately $400,000. Irix has also demonstrated an impressive growth rate over the past few years and a nice client and partner list (e.g Yahoo). I recently talked with Mr. Chu about the current growth rate and was stunned when he told me that they expect IRIX to do over $3 million in revenue this current year and would remain profitable. Forgetting about any revenue from SEG this would result in CPT having consolidated revenues of over $6 million this year and continue to grow rapidly. Add all the revenue streams from SEG into the picture and it just gets better. The amazing thing is that CPT is only paying $150,000 in cash and $100,000 in shares for Irix. Before I got to the part in the news release that stated what they were paying I was expecting a multi-million dollar price tag. However it makes senses for Irix to sell 51% to CPT extremely cheap because CPT will be able to dramatically expand their business and make the remaining 49% stake held by these individuals worth more. SEG will have partners around the world who have extensive advertising budgets. Add to this CPT’s current connections in China and it is no wonder that Irix wanted to be taking over by CPT. Should it make any difference that a minority stakeholder is a relative of Mr. Chu... not at this price!!!!! They are buying the company for less than EARNINGS... if this is a payoff to a relative it was the worst one I have ever seen! Don’t forget that the valuation of Irix and the vote on the acquisition did not include any relatives. Now lets just think about the what this means for a second. Since this deal is being purchased under SEG so the SEG balance sheet will show the consolidated revenues for Irix. When SEG does its IPO this means it will already have some nice revenue numbers to add to revenue from the transaction side of the business .... just what is needed for a great IPO... GROWING REVENUE. However the other aspect to consider is the money that SEG will save from advertising. The company plans to do an aggressive advertising campaign which doesn’t come cheap. First off – 51% of all money spent on advertising design, multi-media, etc. comes right back to the company through Irix... big savings. In addition, as CIBT expands I am sure they will use the services of Irix which will flow into SEG. Plus I would expect partner companies such as CIBT to get good discounts on their advertising budgets. Another little known fact is advertising companies get a healthy rebate on advertising cost (e.g. TV commercials). So lets say it cost SEG $2 million to do a long string of commercials on CNBC. Since they are now a recognized advertising agency they could get the 10% rebate back and save $200,000 on the commercials. In my opinion this Irix deal will pay for itself in far less than one year.

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