Flyt makes an acquisition:
Monday July 27, 8:00 am Eastern Time
Company Press Release
Interactive Flight Technologies Inc. Announces Acquisition and Growth Strategy and Elects New Director
PHOENIX--(BUSINESS WIRE)--July 27, 1998--Interactive Flight Technologies Inc. (NASDAQ:FLYT - news; ''IFT'') Monday announced that it has acquired the assets and business of Johnny Valet Inc., a retail dry cleaning plant in San Diego, for $800,000.
Johnny Valet had revenues of approximately $1.1 million for calendar 1997.
The acquisition represents IFT's initial foray into the dry cleaning business. As previously announced, IFT had concluded that its current opportunities are limited in the in-flight entertainment business.
As a result, IFT has been exploring various alternative business ventures that could make use of the company's two primary assets, approximately $40 million in cash and significant operating tax loss carry forward credits. The company has concluded that the dry cleaning business represents an opportunity for utilization of those assets.
The company believes that the highly fragmented dry-cleaning industry presents an opportunity for consolidation. The vast majority of the existing dry cleaners in the United States are owned by individuals, many of whom are a part of the aging population in the United States. The company believes that these ''mom and pop'' business owners will increasingly turn to public consolidators as their preferred exit strategy.
In addition, although many dry cleaning businesses produce significant and reliable net income and cash flows, the company believes that professional management, standard operating procedures, effective cash control, uniform site and location criteria, as well as customer service training programs and brand name marketing, can increase profits and cash flows. Finally, the economies of scale can make improvements in marketing and advertising possible.
As a result of these conclusions, IFT is planning to pursue a strategy to start or acquire a significant number of dry cleaning businesses in large population centers of the United States. The company wants to be a major operator in each geographical area in which it acquires or starts dry cleaning businesses and to build a brand identity in each market area.
IFT intends to implement standardized management and operational programs designed to result in greater customer efficiency, appeal and improved customer service.
Michail Itkis, chairman of the board and chief executive officer of IFT commented, ''We have done extensive analysis to identify an industry that would make the best use of our resources. We believe that the dry cleaning business is ready for consolidation and can benefit greatly from improved standard operating procedures and controls.
''We intend to be aggressive in acquiring or starting dry cleaning operations in major population centers. Our management has significant experience in the service industry with multiple locations. At the next annual meeting, which is scheduled for September 30, 1998 we will ask our shareholders to approve a change in the company's name to IFT Holdings Inc., which will more accurately reflect the anticipated nature of our business going forward.
''We will also ask our shareholders to approve a 5 to 1 reverse stock split which should eliminate any concerns about our Nasdaq National Market listing based on the trading price of our Class A common stock.''
Itkis added, ''Concerning our in-flight entertainment business, we are continuing to perform under our contract and letters of intent with Swissair.
''We have completed, and Swissair has accepted, the majority of the software upgrades that we were obligated to deliver and we are in the process of delivering additional hardware upgrades that Swissair has ordered. However, the company has continued to experience a lack of prospects beyond Swissair for additional orders of its in-flight entertainment systems.''
Separately, IFT also announced the election of Gary E. Hirth to the board of directors, effective July 22, 1998. Hirth is a practicing Certified Public Accountant with his own firm focused on auditing, business management and consulting, tax preparation and planning. Prior to starting his own firm in 1986, Hirth was director of finance for American Color Corp., a national graphic arts company.
From 1980 to 1982 Hirth was controller of Agri-business Research and Development Corp. and for the seven years prior was employed as an accountant by a CPA firm. Hirth received his Bachelor of Science degree in accounting from Arizona State University.
This press release includes forward-looking statements about the company that are based on management's current expectations. Actual results may differ materially as a result of any one or more of the risks identified below or in the company's filings under the Securities and Exchange Act of 1934, including without limitation, the inability of the company to locate, evaluate, purchase, start or operate dry cleaning businesses, the inability of the company to manage the hazardous waste issues associated with the dry cleaning business, the difficulties in achieving any additional profits or revenues from operating efficiencies or marketing in the dry cleaning business, potential cost overruns in connection with the company's current and future in-flight entertainment (''IFE'') systems contracts, failure of installed IFE systems to perform in accordance with system specifications, the failure to execute definitive agreements relating to the letters of intent with Swissair, the inability of the company to convince airlines to purchase its IFE systems, the failure of the company to secure sufficient financing to perform under any new airline contracts or to pursue and acquire dry cleaning businesses, the impact of competition and downward pricing pressures in the in-flight and dry cleaning businesses, the effect of changing economic conditions in the airline and dry cleaning businesses including changes in clothing styles and materials, the inability of the company to address labor, management and collective bargaining issues in the dry cleaning business, the impact of changes in customer patterns regarding the use of dry cleaning services, the impact of any changes in domestic and foreign regulatory environments, the company's inability to obtain requisite government approvals, technology changes, currency fluctuations, and the other risks and uncertainties detailed in the company's annual report on Form 10-KSB and amendment No. 1 to the annual report on Form 10-KSB/A for the fiscal year ended Oct. 31, 1997. |
