SYTE issued 16,583,980 shares valued at $3,316,796 for Lynchburg.net. That works out to $976 for each of Lynchburg.net's 3,400 subscribers. In contrast, ELNK's 4.6 million subscribers are currently being valued at $205 each. Additionally, each share of ELNK, which is currently trading at 7 1/4, is backed by $5.77 in cash. From SYTE's December 7, 2000 8-K:
sec.gov
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Effective November 22, 2000, we have consummated the acquisition of FRE Enterprises, Inc. and FRE Communications, Inc., both Virginia corporations (collectively doing business as "Lynchburg.net")in exchange for 16,583,980 shares of Sitestar Common Stock for 100% of the outstanding shares of Lynchburg.net. Effective upon the closing of the acquisition, we issued 12,437,985 shares of our Common Stock and have reserved 4,145,995 shares of Common Stock that we have agreed to issue on the third anniversary of the acquisition based on certain contingencies. The certain contingencies are related to potential unrecorded and unknown liabilities. Sitestar used a market price of $0.20 per share to determine the amount of shares issued and reserved to Lynchburg.net. The market price was determined by taking the average closing price of Sitestar's common stock for an eight day trading period starting November 6, 2000 and ending November 15, 2000. The aggregate purchase consideration for Lynchburg.net based on the number of shares issued and reserved multiplied by the average market price of $0.20 per share is $3,316,796.
Lynchburg.net is an Internet service provider, web development and computer sales and service company based in Lynchburg, Virginia. As of October 31, 2000, (i) Lynchburg.net provided Internet access, computer sales and service and other Internet services to approximately 3,400 customers in the Southern Virginia area and (ii) its estimated revenues for the ten months ended October 31, 2000 were $1.45 million. Based on our current estimates we believe that Lynchburg.net's annualized revenues would be approximately $1.75 million for the fiscal year ending December 31, 2000. |
