Special Situation Report: April 19, 1999
HotStock News
Dear HotStockNews Subscriber,
This following report was written by the StockQuest.net team and was
approved for release by Collectibles Entertainment, Inc. The
StockQuest.net
team has performed due diligence on the Company and selected it as a
stock
pick, which is now featured on their web site at
stockquest.net.
HotStockNews.Com acts only as a distributor of this report to their
subscribers to create extra marketing exposure of the
Company for a disclosed fee as provided in the disclaimer of this
report.
HotStock News has reviewed this report and agrees with the contents
herein
and the potential of the Company. The report is located at
hotstocknews.com
************************************************************
Dear StockQuest Subscribers,
Our "Current Stock Profile " for April 19,1999 features NetNation
Communications, Inc., a well established Canadian company in the red-hot
field of Website Hosting. NetNation is currently trading under the
symbol
CBET at 4 13/16 bid, 5 1/16 ask. Please take the time to review the
profile of this exciting company at
stockquest.net
to learn more about why we believe NetNation has such great potential.
StockQuest Inc.
We now present to you our "Current Stock Profile" for April 19, 1999:
Collectibles Entertainment Inc.
[ A name-change application, from Collectibles Entertainment, Inc. to
NetNation Communications, Inc., was submitted. ]
(OTC BB: CBET)
Bid - Ask: 4 13/16 - 5 1/16 (April 19,1999)
Recent Corporate Development:
On April 8, 1999 it was announced that Collectibles Entertainment
(CBET), a
"shell" company, had acquired NetNation Communications Inc., Canada*s
largest E-commerce & Web-Site-Hosting solutions provider, in order for
NetNation Communications Inc. to become a publicly traded company. After
the conclusion of the transaction, Collectibles Entertainment Inc. (as
the
amalgamated entity) has 14,547,000 basic and 15,097,000 fully diluted
shares outstanding. As a group, the shareholders and employees of
NetNation
own over 66% of the outstanding shares of the Company. Mr. David Talmor
(MBA, CPA), President & CEO of NetNation, has been appointed as
President,
CEO and Director effective immediately, while Mr. Ernest Cheung,
President
of Collectibles Entertainment Inc. will stay on as Director. The company
has applied to change its name to NetNation Communications Inc. and for
a
symbol (ticker) change at the same time. Once the change becomes
effective, the symbol CBET will be dropped and investors who want to
follow
the company or purchase shares will need to use the new symbol.
NetNation's
website, netnation.com, will be updated continually with the
latest information regarding these changes.
Company Profile:
NetNation is a leading provider of Web Site Hosting and related enhanced
Internet services to small and medium sized businesses. With over 17,000
domain names registered and about 6,000 business web sites hosted by
NetNation worldwide (as of March 31, 1999), NetNation is the largest web
site hosting company in Canada and one of the top 50 worldwide. The
Company
focuses on delivering reliable, flexible and high quality
Internet Web Site Hosting services that are backed by first class
customer
support.
Web Site Hosting is sometimes referred to as "Web Site Outsourcing"
where
web hosting companies rent space on their professionally maintained
infrastructure. They provide the computer hardware, the Web-server
software, connectivity to the Internet, backup services, and on-site
staff
that a customer requires to maintain a Web presence. This service saves
the
customer's investment in a dedicated computer and high bandwidth
communication line, as well as the labor costs involved to maintain the
smooth and updated operation of the web site. Customer savings by this
outsourcing are normally two-thirds or greater than the cost of an
'in-house' solution. Additionally, NetNation's products and services
enable
its customers to create, update and grow their Web sites faster than any
internally developed solutions.
NetNation's main sources of revenue are derived from providing web
hosting,
server co-location and domain-name-registration services. The company
sells
its products and services worldwide directly to customers and through
"value added resellers" (VARs) and "original equipment manufactures"
(OEMs). The company has customers in 90 countries and
currently has a geographical revenue mix of 57% United States, 25%
Canada,
and 18% international. In the web hosting industry, critical success
factors are: service, distribution and price. NetNation has worked hard
to
create a competitive advantage in all of these factors.
hostindex.com, a well known web hosting index guide, ranks
NetNation as the 5th best web hosting company in the world for April,
1999
while tophosts.com, an Internet guide and directory of
web hosts, ranks NetNation as the 6th best web hosting company in the
world.
NetNation is well positioned in the growing areas of Web-Site-Hosting
and
Domain-Name-Registration. Forrester Research in their Telecom Strategies
report concluded that "Web hosting will become a US$5 billion industry
by
the year 2000" and that "Web hosting is here to stay". The February 1998
issue of Windows Magazine stated that "Web hosting is red-hot, an idea
whose time has definitely come".
NetNation plans to expand its opportunities by offering a broad range of
enhanced Internet services. It will aggressively market these services
both
in North America and internationally to expand its market share as a
leading provider of Web Site Hosting services to small and medium sized
businesses.
Industry Overview:
In recent years the use of the Internet has grown rapidly. Numerous
factors
have contributed to this growth including the large and ever growing
number
of personal computers, improvements in the Internet network architecture
itself, and faster, easier, and less expensive Internet access. The
enormous amount of information and growing electronic
commerce uses of the Internet will continue to fuel this growth.
International Data Corporation (IDC) projects that the total number of
Internet users worldwide will grow from 65 million in 1997 to 291
million
by 2001.
The Internet today represents a growing and substantial opportunity for
virtually any business or organization that wishes to interact in
innovative ways with offices, employees, customers, suppliers and
partners
around the globe. Both small and large business enterprises are
recognizing
their increasing need to take advantage of the Internet by establishing
Web
sites. As a result, reliable and high-performance web site hosting
services
are becoming increasingly critical to mainstream enterprises. Due to
this
ever growing importance, many enterprises are seeking to outsource these
functions in order to ensure reliability, high performance, scalability
for
rapid growth, sophisticated performance monitoring and expert
management.
According to Forrester research - "the installation and operation of a
web
site or server at a outsourced service provider's point of presence - is
exploding". Their research concluded that most firms go outside to get
Web
sites up fast and save money. Forrester Research concluded that this
trend
will continue and that those web sites initially outsourced will stay
that
way and will not be brought in-house.
It should be stressed that customers tend not to change web hosting
service
providers once they have established a web site with a particular
company.
Moving to a different provider can cost the customer significant time
and
money. There is also a potential for downtime during the transition from
one provider to another. This can be highly undesirable for web sites
that
are making a significant contribution to a company's revenues or
operations.
Paramount to the outsourcing decision for a potential customer is saving
money. Most companies are finding it to be too costly to keep pace with
the
rapidly changing world of the Internet. The skill and technology demands
present a significant barrier to in-house development for all but
the largest IT departments. Usually a company will save at least
two-thirds
of the cost of an in-house solution due to lower communications costs,
equipment and labor. This can represent many thousands of dollars per
month
in savings to a company. Speed in the time to market and the increased
quality and service reliability were two additional important reasons
why
Forrester Research feels outsourcing will continue.
International Data Corporation ("IDC") estimates that web site hosting
revenues generated by small and medium sized businesses in the U.S. will
grow from $217 million in 1997 to over $3.4 billion in 2000, a 150%
compound annual growth rate. Dataquest Inc. predicts the overall
web-hosting and server collocation market will soar to $2.6 billion in
the
year 2001 from $283 million in 1997. Forrester Research Inc.'s estimates
are even higher at $5.4 billion by the year 2000.
At the end of 1997, only 7% of small businesses had a web site,
according
to IDC. However, IDC expects small and medium sized businesses to
generate
the vast majority of the demand for outsourced web site hosting services
in
the future. Many of these businesses find an outsourced web site hosting
solution extremely effective because they lack the technology
expertise, IT resources, capital or ability to bear the time-to market
risks required to install, maintain and monitor their own web servers
and
Internet connectivity. IDC estimates the market for basic web site
hosting
and enhanced Internet services in the United States, will grow from
approximately $352 million in 1997 to over $7 billion in 2000.
It should be noted that web site hosting is not the same business as
that
of an ISP (Internet Service Provider, Internet Access Provider, or
Dial-up
Service). NetNation's web hosting services do not include the provision
of
any Internet connectivity or gateway access for its customers, other
than
their web site. Due to the nature of most ISP operations, they tend to
take
a local or regional focus unlike web site hosting which can be marketed
on
a worldwide basis with no local offices or access points. ISPs also
require
a significant infrastructure and operate on limited margins, usually
only 10
to 20%. The economies of scale enable web hosting companies to achieve
much
higher margin levels, usually around 80%.
Why NetNation (presently CBET) Warrants Serious Investment
Consideration:
1.) Favorable market conditions. The Company offers a ground floor
opportunity to participate in a growing service area of the new
information
age which is currently sweeping the world. The Internet, the number of
web
sites, and the number of users continues to grow dramatically. The
providers of services and support for this industry have the potential
for
tremendous growth over the next several years.
2.) Strong and consistently growing customer base. The Company has
demonstrated strong and consistent growth since its inception. The
Company*s web site hosting accounts, which totaled approximately 188 on
March 31, 1997 have grown to approximately 6,000 at present.
3.) Strong sales growth. The Company*s sales have increased sequentially
each quarter from 3/31/97 to 3/31/99. Sales went from C$41,831 in the
quarter ending 3/31/97 to C$579,013 in the quarter ending 3/31/99.
4.) Proven technology. The Company has successfully developed and
implemented proprietary software and processes to offer and maintain
excellent service. These technologies allow the Company to scale its
infrastructure so that it can maintain its rapid growth while still
providing cost-effective services to its customers.
Business Strategy:
NetNation's objective is to continue to be one of the leading global
providers of web site hosting and related Internet services to small and
medium sized businesses. To achieve this objective, the Company plans to
continue providing sophisticated web site hosting solutions at
affordable
prices. It will continue to build upon its proprietary technology giving
the Company a competitive advantage by differentiating its products and
services from its competitors. As use of the Internet grows the Company
plans to offer innovative and complimentary services to new and existing
customers. The company intends to build strong brand name recognition
through aggressive marketing of NetNation and its services in print,
online
media, and co-marketing with creators of web-site authoring tools. This
brand name recognition will allow the Company to expand its operations
in
North America and Internationally.
Competition:
NetNation is among the Top-60 web hosting companies world wide (as
measured
by the number of hosted web sites). The largest is Verio (which in the
last
year acquired Hiway, Best, TABnet and iServer). As there are relatively
few
barriers to entry, additional competition will be created from both new
market entrants and from existing competitors.
The Company feels that most of its competitors fit into two major
groupings, each having its own set of competitive weaknesses. The first
grouping and most obvious of the Company*s direct competitors are the
big
telephone and cable companies such as AT&T, BCTEL, Bell Atlantic, etc.
These large companies can't compete with the Company*s prices unless
they
subsidize the pricing of their services, and can*t compete with the
Company*s quickly evolving list of hosting features. Secondly, because
of
their large corporate size, it takes them much longer to develop and
incorporate new features into their hosting services. As a result the
Company feels it can maintain a lead over these larger competitors both
in
services and price.
The second major type of competitors are small companies. These
companies
usually have insufficient resources, lack the proper infrastructure,
sufficient Internet connectivity, and/or technical support. Typically
these
companies have congested network servers and slow internet connectivity
causing delays in website access and uploads. This can result in lost
customers visiting and exploring a web site through
abandoned connections. These small competitors also don*t have scalable
systems that can respond quickly to their customers growth requirements.
Selected Financial Results: NetNation's Summary Income Statements For
the
Years ending 12/31/97 and 12/31/98 (Audited by KPMG) are shown in detail
at: stockquest.net
The Sales figure for Ql/1999 (the quarter that ends March 31, 1999) is
Cdn$579,013. As of March 31, 1999, the Company has about 6,000
customers.
(*) Important Note: Although the annual financial reports (for both 1997
and 1998) are audited by KPMG, the quarterly financial reports for the
quarters of 1997 and 1998 are Un-audited.
Employees:
As of December 31, 1998, the Company had 25 employees, 5 of which were
in
sales, distribution and marketing, 9 in engineering and service
development, 6 in customer service, technical support and Accounts
Receivable/Accounting Solutions and 5 in finance, management and
administration.
Key Management:
David Talmor, 40, Chairman of the Board of Directors, President, Chief
Executive Officer (CEO) and Director
Joseph Kibur, 26, Chief Operating Officer (COO) and Director
Ernest Cheung, 48, Director
Mr. Talmor has served as Chairman of the Board of Directors, Chief
Executive Officer and a Director of the Company since February 1997. Mr.
Talmor has over 15 years of, both, Electronics Engineering and Financial
/
Business (CPA & MBA) experience. Mr. Talmor was employed by MacDonald
Dettwiler & Associates Ltd. (MDA), mda.ca, the leading
Canadian
company in the field of Satellites' Ground Station, as a
Business-Development Manager; by ELDAT Communications Ltd.,
eldat.com, an Israeli company that deals with Wireless ESLs
(Electronic Self-Labeling Systems), as VP
Business-Development & Strategic-Planning; by MAGIC Software
Enterprises Ltd. (a NASDAQ company), magic-sw.com, as VP
Finance
& Administration and Secretary; by MOLDAT Technologies Ltd.,
moldat.co.il, an Israeli company that is the ASIC
(Application
Specific Integrated Circuit) Design Center of TOSHIBA in Israel, as
President & CEO; by Kesselman & Kesselman - Chartered Accountants, the
biggest accounting firm in Israel (associated with Coopers Lybrand), as
a
CPA; and, by the Israeli Air-Force at the Electronic Warfare R&D
Department. Mr. Talmor is a CPA, holds a B.A.
in Accounting, Economics and Statistics and an M.B.A., all from Tel-Aviv
University. In addition, Mr. Talmor holds an Electronics diploma from
both
"The Technological Institute of Tel-Aviv" and the Israeli Air-Force.
Mr. Kibur has served as Chief Operating Officer of the Company since
February 1997. Mr. Kibur has been in the computer field for over 10
years.
While doing his bachelor's degree at Simon Fraser University (SFU), he
published an Internet Starter Kit for SFU's Internet access services. He
has computer programming skills in C, C + +, Modula-2, Smalltalk, GPSS,
Simscript II and Pascal. As the founder of SFU's Internet club and
Captain
of the Track and Field team, he has excellent
communications skills and peer management. (Mr.Kibur was also the 1993
Canadian Champion in X-country running and has represented Canada in 6
International competitions).
Mr. Cheung has served as Director of the Company since April 7, 1999.
Since
1996 he has been a Director of BIT Integration Technology, Inc. (ASE).
From
1994 to 1996 he was Vice President of Finance and Director of BIT
Integration Technology, Inc. of Toronto, Canada. From 1992 to 1995 he
has
served as a Director of TelePacific Investors, Inc. (CDN) since 1995.
From
1993 to 1994 he was Vice Chairman,
TelePacific International Communications Corp. of Vancouver, B.C.,
Canada.
>From 1991 to 1993 he was Vice President of Midland Walwyn Capital, Inc.
of
Toronto, Canada. From 1984 to 1991 he was Vice President and Director,
Capital Group Securities, Ltd. in Toronto, Canada. Mr. Cheung received
an
MBA in Finance and Marketing from Queen's University, in Kingston,
Ontario
in 1975, and obtained a Bachelors Degree in Math in 1973 from University
of
Waterloo, Ontario.
Each director will hold office until the 1999 Annual Meeting of
Stockholders and until his successor is elected and qualified or until
his
earlier resignation or removal. Each officer serves at the discretion of
the Board of Directors (the "Board").
It is the Company's intention to expand the Board in the near future to
include potential representation from new equity investors along with
the
addition of one or two independent outside directors, to create a board
with a total of five members.
Press Releases:
Apr 13, 1999 - NetNation Communications Inc. joins forces with
Miva Corporation to unleash E-Commerce solutions to the masses
Apr 08, 1999 - NetNation Goes Public
Apr 01, 1999 - Collectibles Entertainment, Inc. Makes
Announcement
Feb 26, 1999 - NetNation and HyperBanner team up in a
co-marketing agreement
Feb 03, 1999 - Collectibles Entertainment, Inc. Makes
Announcement
Nov 13, 1998 - NetNation and EuroSeek Announce a Major
Marketing Alliance
Oct 07, 1998 - NetNation Founding Member of VeriHost
Aug 12, 1998 - NetNation introduces SmartWHOIS a
smarter-faster domain search engine
Aug 20, 1997 - NetNation and Network Solutions (InterNIC)
announce new Agreement
Technical Analysis:
Because NetNation was a privately held company prior to April of 1999,
there is no trading history with which to base any technical analysis.
However, the share price of the newly combined companies, now trading
under
the symbol CBET, should begin to reflect the value of the NetNation
acquisition as news of this event becomes more widespread.
Conclusions:
NetNation is an established company which provides web hosting and
related
enhanced Internet services to small and medium sized business with
aggressive plans for future growth. The Internet, the number of web
sites,
and the number of users continues to grow dramatically. The providers of
services and support for this industry, especially NetNation, have the
potential for tremendous growth over the next several years. These
factors
combined with strong web site and sales growth lead us to believe that
NetNation has excellent long-term potential.
Contacts:
For more information contact:
Investor Relations of NetNation Communications
E-mail: ir@netnation.com or
Tel: (604) 688-8946 or
Fax: (604) 688-8934
Disclaimer of StockQuest.net:
The information contained in this profile has been derived from sources
which we believe to be reliable and does not claim to be a complete
statement of all data relevant to Collectibles Entertainment, Inc.
(CBET)
or NetNation Communications, Inc. This report is for information
purposes
only and is neither an offer to buy nor an offer to sell CBET. This
report
does contain forward-looking statements.
This security involves a high degree of investment risk and volatility.
Before deciding to make a purchase or sale of any securities featured on
our website or in our reports, we encourage and recommend consultation
with
a registered securities professional. Investors are cautioned that they
may
lose all or a portion of their investment if they decide to make a
purchase
in any of the companies contained in these reports. The accuracy and
completeness of the information presented on our web site and within our
reports is only as reliable as the sources they were obtained from. As
compensation for research, presentation, and dissemination of this
information StockQuest, Inc. received a fee of US $3,000 cash from
Collectibles Entertainment, Inc.
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© 1999 HotStockNews.Com is owned and operated by
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construed as a solicitation to buy or sell securities. As with
any penny stock, the Company "Collectibles Entertainment, Inc." involves
a
high degree of investment risk and volatility. All investors are
cautioned
that you may lose all or a portion of your investment if you decide to
make
a purchase in this stock.
It should be understood that there is no guarantee past
performance will be indicative of future results. The accuracy
or completeness of the information on our web site or within
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HotStock
News received a fee of US $7,000 cash from Collectibles Entertainment,
Inc.
as compensation for the distribution of this report to their
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This report was written by StockQuest.net, Inc. and was approved for
release by CBET. HotStock News acts only as a distributor of this report
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Information presented on our web site and within our reports
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We encourage our readers to invest carefully and read the
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Securities Dealers (NASD) at: nasd.com.
Readers can review all public filings by companies at the
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