Status as of October 15, 1999
The most exciting recent news was the Letter Of Intent to acquire Topology Systems, Inc. (TSI) This acquisition provides another completed section of the complex puzzle we have been patiently and methodically piecing together to fulfill our long term goal of becoming a sole source provider of products and services for Information Technology environments. The combination of Planet City's and TSI's business models gives us blanket coverage of commercial and government markets, with products and services appropriate to all types of business entities. Our two companies have no overlapping market area, yet we can combine our skill sets, products, and services to offer added value to each other's clients. This is a highly complementary relationship.
Note that TSI was only one of several acquisitions we have been considering over the past few months. TSI was the best fit for our existing business and resource models at this particular time. Other candidates were attractive, but their market focus was in different areas. The timing for Planet City's expansion into those other areas isn't right yet. We cannot afford to spread ourselves too thin at this stage of our development. For now, we will focus on building our software and services business by doing what we do best, thus building a firm foundation for future expansion into other software related areas.
In other acquisition related developments, we signed an investment banking advisory agreement with First Liberty Investment Group, Inc. (FLIG). The purpose of this transaction was to expand our capabilities for finding suitable business alliance partners, and/or acquisition candidates. We were already examining a few acquisition opportunities, and will continue to review potential targets when they are presented to us by FLIG. The acquisition trail has been fraught with frustration, as we were being presented weekly with opportunities from various sources. Some of those opportunities were very attractive at the outset, but lost their appeal quickly as we dug deeper into the accompanying facts. Still other opportunities had no chance at all of fitting our long term vision, and were just a waste of our valuable time resources. But, we couldn't just turn off the flow of candidates for fear of missing the one lump of coal that with Planet City's involvement would become a valuable gem. FLIG can help us by performing that first level of research so we can focus our attention on the candidates that pass their "inspection". We need to expand rapidly and intelligently to satisfy our aggressive growth plans. That's where FLIG comes in.
Recruiting efforts paid off handsomely with the hiring of Mr. Joe Genovese as the head of our Sales Division. His sales management experience is first rate, and his recent position with Ingram Micro was definitely an added benefit. At Ingram, Joe was "Vendor Product Manager" responsible for sales of the entire Computer Associates (CA) product line ... a position which taught him the ropes of dealing with internal CA procedures, and gave him the opportunity to acquaint himself with many of the CA sales management staff as he and CA jointly pursued large client sales. He is a certified expert on the use of many of their products, and he knows how to sell which products to which level of management in an organization. We're counting on robust CA product sales to increase revenue opportunities for our Planet City consulting services, because we intend on selling entire IT solutions, not just products. In particular, CA sales will improve our Web Services division potential with their "Enterprise Edition Solutions" (the "IT" series of products). Attracting Joe to our team was a major positive event. We can now leverage his knowledge throughout the rest of the sales organization. He has the talent, experience, and personal drive to make our Sales Division very successful.
Our Web Services Division, under Manager Bill Ulrich's leadership, successfully completed a manufacturing client's E-Commerce project. The client was pleased with the quality of the completed web site, and received very positive feedback from his clients. As a result, he has agreed to continue using Planet City resources for more services. Because of the high quality of Bill's web design work, we receive frequent word-of-mouth referrals from his prior clients. This recently resulted in a contract for an online product catalog to be developed for one of the referrals. Another new client's rush project was approved yesterday and we have people working on it already. Other prospects are in various stages of the sales cycle. We expect this division to prosper in coming months as we focus on maximizing opportunities presented to us by the Computer Associates alliance. We also expect some large web project opportunities as a result of the increased business contacts from the TSI acquisition.
Interest in the Millennium Bug Compliance Kit (MBCK) blossomed after it was listed at the top of CNN.com's "Top 10 Y2K fixes for your PC". See cnn.com . Daily product downloads from our site more than quintupled for a while, and continue to maintain a much healthier volume than prior to the list being published. I attribute the increased popularity to the "Top 10" listing, to PC World's "Editor's Pick" selection, and to our expanded presence on joint venture web sites. However, even though interest in the product has picked up, sales are still lackluster. The public just isn't convinced they need to worry about buying a Year 2000 fix yet, as most PC Y2K product vendors are discovering. The free downloads are (should be) indicating to most people that they have an exposure to the Y2K, but convincing them to buy now instead of waiting until December is difficult because of the typical human "put it off to the last minute" mentality. The softness in sales is also partially due to the fact that the market is confused with many less expensive products that claim to fix the Y2K problem, but in reality are just hardware tester/fixers. The Y2K can affect a user's hardware, installed application software, and data files. The MBCK is a robust solution with support for all three areas. Those lesser expensive products don't really compete with the MBCK's capabilities, but they do compete for sales dollars, and could lull their buyers into a false sense of security. Those who buy the hardware-only products might not be fully compliant when the time comes.
There are a large percentage of PC owners who still don't know they have a Y2K problem. I encourage readers to go to mbck.com and get the free MBCK download to test out your PC hardware, your applications software, and your data files. The download and tests are free. If your PC is Y2K affected (the majority of them are, in some way), then you may sign up to purchase the $49.95 product and register it at that same site. You will receive a product key that will unlock the full functionality of the product.
Our partnership with Global Telephone Communication (OTC BB: GTCI) to promote the MBCK product in China has yielded very disappointing results thus far. Their attention has been distracted by the political situation and ongoing discussions regarding governmental controls in China, as well as their own internal growth and operational challenges. A PC based Y2K product is among the least of their worries. We have offered to assist them in promoting the new version of our product.
We continue to pursue large foreign mainframe Y2K projects through our alliances with Computer Associates (NYSE: CA) and ConSyGen (OTC BB: CSGI). These are highly competitive situations. The TSI acquisition gives us another solution to propose to those same prospects. These are huge opportunities which, if we are successful in landing the contracts, would last for many months, well into the year 2000 and possibly beyond.
We are also pursuing some large mainframe code renewal projects through our new TSI relationships, and hope to have some good news on those by year end.
Progress towards becoming a fully reporting company continues. Our lawyers are engaged in entering the information from Corporate HQ into the appropriate format required by the SEC. Meanwhile, the auditors are dealing with data from our subsidiaries. We expect to file our Form 10-SB in plenty of time to receive a "passing" grade prior to our February deadline.
A "Safe Harbor" statement follows my sign off.
Regards,
Terry E. Dennis, President & CEO
Planet City Corp (OTC BB: PINC)
The Private Securities Litigation Reform Act of 1995 provides a "Safe Harbor" for forward-looking statements. Certain of the statements contained herein which are not historical facts are forward-looking statements with respect to events, the occurrence of which involve risks and uncertainties. These forward-looking statements may be impacted, either positively or negatively, by various factors. Information concerning potential factors that could affect the company is detailed from time to time in the company's reports filed with the Securities and Exchange Commission. |
