LCSG Report just out, stock beginning to move:
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BFN PREMIUM STOCK PICK NEWSLETTER
March 4, 1999
Issue #4
A Business Financial Network Publication
bizfn.com
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LCS Golf, Inc.
Exchange and Ticker: OTC BB: LCSG
52 week trading range: $0.125 - $1.78
Recent: $1
Shares outstanding: 6.2 million fully diluted
Float: 3 million
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LCS GOLF: THE CHEAPEST INTERNET RETAILER? We certainly think so.
It has been a while since we issued a comprehensive update on LCS Golf.
There was a dry spell of news from LCSG, and the significance and breadth of
the most recent acquisition of Golf Promo Direct, Inc. took a little time to
analyze. Within this report, we outline projected revenues from all of LCS
Golf's components. The bottom-up price targets generated as a result of
those revenue projections are as bullish as ever. Some of this report
builds upon past reports, so some information contained within may be
familiar. We have many new subscribers who may not be familiar yet with
LCSG, so we have written this report with a review of past material. Also,
because of the synergistic nature of LCSG's acquisitions over the past
several months, it is important to see how the different business components
build upon one another.
LCS Golf is a holding company taking advantage of opportunities in the golf
and golf-related industries, specifically via the internet. LCS Golf
acquired 100% of GolfUniverse.com golfuniverse.com on Sept. 9,
1998. GolfUniverse.com's revenue will be derived from two sources:
advertising at their web site and online commerce. As a total information
and commerce site for golf, they should attract a substantial amount of
revenues from equipment manufacturers, resorts, and more broadly, anyone
interested in targeting this affluent demographic niche.
GolfUniverse.com has established the Universe Store, an online catalog, from
which they will collect commissions from suppliers who sell through the
site. They will stress both the business-to-business sales and retail
customers. Golf shops, country clubs, driving ranges, and sports equipment
stores will be able to purchase from multiple manufacturers at one site. The
great thing for LCSG is that they will not have to carry any of the
inventory. They really have latched on to a great business model and married
two rapidly growing industries: online commerce and golf.
The web site golfuniverse.com is hog heaven for any golf lover.
The site has a database of 24,000+ golf courses, and a directory of products
and service providers addressing every possible golf-related need.
Another significant deal was announced on Nov. 19, 1998 between LCS Golf and
Play Golf Now Inc. They announced a joint venture in which they would
cross-market goods and services through all media, especially through their
web sites, golfuniverse.com and playgolfnow.com.
Play Golf Now sells discount golf memberships. Members receive discounts at
golf courses, driving ranges, resorts, and they also get deals on golf
instruction and equipment. Specific deals include discounts at 2,000 golf
facilities throughout the US, Canada and Europe, 2,100 hotels inns and
resorts in the US, Canada, Mexico, Caribbean and Europe, and 3,000
restaurants. Play Golf Now gets revenues from sales of its Golf discount
card and advertising on its web site and newsletter. They also get fees from
joint marketing and the renting of their mailing list database. The company
has marketing alliances with Golf Digest, Quest International, Marriot
International, Ezlinks golf, IMALL, PC world shoppers showcase and others.
Revenues generated from sales on the GolfUniverse.com site will be split on
50/50 basis. The two sites will also cross promote each other's web sites
through banner ads located throughout their respective sites. Commenting on
the joint venture, Play Golf Now President, Alex Bruni stated, "I am
thrilled with our new association with LCS Golf. E-commerce success is a
direct function of site awareness and Play Golf Now participates in a
Partners Program with over 300 unique websites linked to
www.playgolfnow.com. The greater the awareness of a web site equates to
greater number of hits which results in more sales. It is clear that
GolfUniverse.com and Play Golf Now are perfectly complementary and
synergistic. By combining our efforts and marketing capabilities, our
ability to be successful increases exponentially. I look forward to a
long-term relationship with Dr. Michael Mitchell and LCS Golf. The joint
marketing of our golf membership programs is just the beginning for our two
companies.''
The company's acquisition of Play Golf Now Inc. (http://playgolfnow.com )
was an excellent strategic move by CEO Dr. Mitchell. The company achieves
vertical integration with an expanded range of products and services for
golfers and LCSG significantly increases its web presence with this one
acquisition.
On Feb. 4, 1999, LCS Golf (LCSG otc bb) announced that it acquired a 100%
interest in Golf Promo, Inc. Golf Promo is an internet direct marketing firm
that with a database of 3.2 million golfers. The database gives LCS Golf
the capability to:
-- Direct market specific Golf Universe and Play Golf Now products and
services.
-- Offer the marketing capability to other companies wishing to target
market their
own products, services and web sites.
-- Drive traffic to the GolfUniverse.com and Play Golf Now web sites.
LCSG's acquisition of Golf Promo, Inc. expands the vertical integration and
deepens the horizontal integration. The synergies are truly tremendous and
the combined online presence and e-retail potential is far more valuable
than the sum of the original parts.
Commenting on this newest addition to the company, LCS Golf President and
CEO Dr. Michael Mitchell stated, ''Golf Promo, Inc. is a critical and
invaluable component to our organization. Our ability to cost effectively
and efficiently target market golfers is now largely unparalleled. This
acquisition will be instrumental in significantly increasing not only our
overall business but also the rate in which we can grow our business."
Other Sources of Revenue:
Late last year, LCS Golf acquired Mister B III, a Florida-based developer,
manufacturer and distributor of home health and therapeutic magnet products.
Mister B III is a leader in therapeutic magnet technology and this
acquisition fits in extremely well among the golf equipment product line.
Golfers are generally fit, and interested in their health. They are also
generally older and fairly affluent. That is a very good target demographic
for home health and an alternative therapeutic remedy such as magnets. The
internet is clearly an ideal distribution system for such products.
On Dec. 15, 1998, LCS Golf announced that Joe Namath will be the national
spokesperson and appear in an infomercial to market the therapeutic magnet
products of newly acquired Mister B. III. Under the terms of the agreement,
Mr. Namath will use and endorse the magnet products publicly. Additionally,
the company has received licensing rights to use Mr. Namath's name and
character in connection with advertising, promotion, sale and distribution
of the endorsed products.
Commenting on the agreement with Mr. Namath, LCS Golf's President and CEO
Dr. Michael Mitchell stated, ''This is a major coup for LCS Golf. Clearly
Joe's name and reputation precede him. I am confident that Joe's endorsement
through our infomercial will be highly effective in dramatically increasing
sales of the therapeutic magnets. Mister B III has a terrific product with
distribution into major high-profile retail chains. The infomercial coupled
with the offering of the product on LCS's GolfUniverse.com will perfectly
compliment the marketing effort.''
Golf Promo, Inc.
The database of more than 3 million golfers obtained in the Golf Promo, Inc.
is a great target audience for the magnets and other therapeutic products.
This leads to the hidden revenue potential of the other Golf Promo
databases. Although the firm's primary focus is in target marketing to the
golf community, it also maintains an extensive database of individuals
associated with travel, healthcare, and the stock market. As such, direct
marketing efforts will be able to be executed for other industries in
addition to golf. Target marketing efforts can be undertaken with
segmentations by state and geographical regions of the country. In fact,
Business Financial Network is considering send out a mailing about our web
sites and newsletters to about 200,000 golfers within the New York and
California databases.
If after increased marketing of the list, LCS Golf can send out mailings to
1 million golfers 300 days/year, then LCSG will generate $1.2 million in
revenue. The potential of the non golf databases is also very large. The
stock market list could be rented at a rate of $.20 per email to 100,000 or
more interested parties each week. That along would be another $1 million
in annual revenue.
Potential Revenue Sources
Revenue Projections Our Projections
(Stated by Co.)
Mister B III w/o infomercial $6 million $6 million
Mister B III Infomercial $7-10 million $10 million +
Ecommerce $1-2 million $5 million
Golf Promo Direct None stated $3 million
LCSG conservatively projected Mister B III revenue of $6 million and
infomercial sales of an additional $7-$10 million. I do not have firm
numbers, but I have been told that the Ginsu Knives' infomercial generated
$100 million, so the $10 million figure is a number we think is very much a
low ball estimate. The company estimated revenues from e-commerce of $1-$2
million. With the acquisition of Play Golf Now and Golf Promo synergies,
that number should rise in excess of $5 million.
So we will put an estimate of at least $24 million in revenues for 1999. At
1X sales, that is about a $3 1/2 stock price; at 2X sales, that's a $7-8
stock price; and at 3X sales, that's about $11 1/2. We have been using 2-3X
sales in our stock price projections which is about a 90% discount to the
price to sales ratios of other internet companies, even after the recent
correction. Given our confidence in the company and the management, we
reiterate our previously 6-12 month price target on LCSG to at least $5 and
our 18-24 month price target to $10.
DISCLAIMER
Business Financial Network is not a Registered Investment Advisor or a
Broker / Dealer. Readers are advised that this electronic publication is
issued solely for information purposes and is not to be construed as an
offer to sell or the solicitation of an offer to buy.
The opinions and analysis included herein are based on sources believed to
be reliable and in good faith but no representation or warranty, expressed
or implied, is made as to their accuracy, completeness or correctness. This
information is not intended to be used as the sole basis of any investment
decisions, nor should it be construed as advice designed to meet the
investment needs of any particular investor. The foregoing discussion
contains forward-looking statements which are based on current expectations
and differences can be expected.
The information contained herein has been provided by the Company to
Business Financial Network for information purposes only; in addition, the
information contained in this report is not intended to be a complete
discussion of information regarding some of the current and/or intended
business activities of the Company.
Readers are urged to consult with independent financial advisors with
respect to an investment in the shares mentioned herein. Investors should
review a complete information package on the Company, which should include,
but not be limited to, the Company's annual report, quarterly report, press
releases, as well as all regulatory filings. All information contained in
this report should be independently verified with the Company mentioned
herein. Any opinions expressed in this report are statements of judgment as
of the date of publication and are subject to change without further
notice, and may not necessarily be reprinted in future publications or
elsewhere. Neither Business Financial Network nor its officers, directors,
partners or employees / consultants accept liability whatsoever for any
direct or consequential loss arising
from any use of this report or its contents.
Employees and/or principals of Business Financial Network may purchase
shares on a voluntary basis in the open market and may buy or sell shares
in this company or others without prior notification depending on market
conditions and personal financial circumstances.
THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE
INVESTING IN ANY SECURITIES MENTIONED. INVESTING IN SECURITIES IS
SPECULATIVE AND CARRIES A HIGH DEGREE OF RISK.
We encourage the reader to review the investing information available with
the Securities and Exchange Commission ("SEC") at sec.gov and /
or the National Association of Securities Dealers ("NASD") at
nasdr.com. Readers can review all public filings by the Company
at the SEC's EDGAR page. The NASD has published information on how to
invest carefully at its web site.
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