Key term: Accretive Acquisition = An acquisition that will increase the acquiring company's EPS. As they are expected to increase the acquiring company's future earnings, these acquisitions tend to be favorable for the company's market price. In essence, the price paid by the acquiring firm is smaller than the addition to its EPS.
Note: full effect may not be realized for quarter or so,,, but, majority of effect is immediate - IMO.
* .052 = severely undervalued
•SYTE * .052 – Updated, Clear, Concise Info...
•<b><u>Recent NEWS: Sitestar Corporation Posts Profits in Third Quarter 2005</u></b> Wednesday, November 16, 2005 11:31 AM – PrimeZone Sitestar Corporation (SYTE) , an Internet Service Provider (ISP) and computer services company, today announced that profits were posted for the quarter ended September 30, 2005. The company earned a net profit of $116,524 for the third quarter of 2005 and $344,333 for the nine months ended September 30, 2005. This marks the fifth consecutive profitable quarter for Sitestar.
<i>"Not only are we continuing to show our strength in profitability, but the addition of Idacomm's customers will increase our base of profitability,"</i> says Daniel Judd, CFO for Sitestar. <i>"We have effectively doubled our annual revenue stream, providing us the means to further the goals and objectives as set by our CEO." </i>
<u><b>*</b>Highlights:</u> <b>**</b>Profitable 5 straight quarters, first 3 quarters 05 and for the full yr 2004. <b>**</b>Income from operations increased $257,203 or over 118.0 percent and Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) increased 57.0 percent from $536,742 for the nine months ended September 30, 2004 to $841,017 for the same period in 2005.
•<b><u>Proving Strategy Works – Future Looks Bright:</b></u> **Primary growth strategy is to acquire Internet customers through acquisition. Have clearly demonstrated that can make a profit from such operations. Company has emphasized that Economy of Scale will lead to growing profits. <u>Economy of Scale</u> = As company expands through acquisition, revenues are growing quicker than operating costs and thereby leading to increased profits and cash flow. This should improve company’s financial position and allow for more and larger acquisitions – and the cycle repeats -- only as acquisitions get larger or come more frequently it will be on a greater scale leading to even greater potential for acceleration of profits.
<b>**</b>Recently acquired a profitable ISP operation that doubled revenue. Recent 10Q shows that if included the recent acquisition (IDACOMM) as if effective January 1, 2004 and determine pro forma earnings – they would have been $.02 for 2005. It is then indicated that this number may be low due to cost reductions and operating efficiencies (i.e., Economy of Scale) that are expected as a result of the acquisition. This points to substantial increase in earnings going forward. In fact, current trailing earnings are around .005, showing that as a result of acquisition they have now quadrupled on a pro forma basis to .02.
<b>**</b>Company has stated goal is to reach 100,000 customers by summer 2006. This would be around 5 times current customer base and would correspond to 5 times greater revenue – but – even greater increase of earnings/profits due to Economy of Scale. Can think of this as linear (or upward sloping straight-line) revenue growth and corresponding exponential (or upward curved) earnings growth.
<b>**</b>P/E fluctuates considerably due to volatility of price – however, with reasonable assumptions of future earnings, P/E of 15-20 consistently shows future share price, if goals achieved, a multiple of 5-15 times higher – depending on share price at time of calculation.
•<u><b>Reduced Shares: </b></u> Sitestar Corporation Cancels 20% of Its Issued Shares, Wednesday, December 01, 2004, 3:27 PM - BusinessWire. Reduced more shares since this PR – and more may be coming. CEO states more shares possibly targeted for cancellation.
•<b><u>Current Outstanding Shares:</b></u> 86,013,305 --- Restricted: 34,843,805 --- Float: 51,169,500. Numbers per contact with TA on 10/24/05. Note that Insiders recently converted $120,000 debt owed into 4 mil shares. 6,218,305 shares in treasury. Insider’s own approx. 31%. Current Insiders have not sold a single share.
•<u><b>Rid itself of CD:</b></u> Sitestar Pays off Ex-Convertible Debenture Holders, Monday, February 28, 2005, 11:21 AM - BusinessWire.
•<u><b>Strong Balance Sheet:</u></b> 3rd Q 05 10Q shows cash flow positive and positive shareholder equity of $574,151 – up $236,523 from last quarter and continuing steady improvement.
•<u><b>Company Goals: </u></b> To be achieved by end of Summer 06: 1. To increase customer base to over 100,000 2. To increase revenues and net profits substantially 3. To continue mergers and acquisitions 4. To pay down existing debt 5. To raise additional capital for larger acquisitions 6. To introduce new products for broadband customers 7. To become a nationally recognized Internet Service Provider 8. To greater expand markets and coverage area 9. To provide better customer support and customer satisfaction 10. To increase stockholder equity 11. To increase the awareness of company and stock
•<b><u>Notables: </b></u> *Churn is a potential issue. This is the loss of customers, believed mostly due to switching to other ISP. *Full accounting of shares needed. Less than 1 million shares that were due the company in deal were delayed in delivery from other party. CEO has indicated that he is addressing the situation, but has yet to announce final closure. *VOIP, Wireless and Broadband over power lines are all possibly in the future. CEO has indicated that plans are to provide VOIP, and other broadband offerings are being explored.
•<b><u>CEO = Frank Erhartic, Jr. </u></b>has founded own company and has degrees in both Management and Finance.
•<u><b>The Big No’s:</b></u> No convertible debentures, No S-8’s, No preferred stock issued. No need for financing to support existing operations through share dilution or otherwise - cash flow sufficient to support operations. No outstanding litigation/lawsuits. No R/S per CEO. No deals with Laurus or Cornell. No share dilution used for last few acquisitions. No outrageously high salaries for CEO and counterparts.
•<b><u>Sitestar Corporation is </u></b>a nationwide Internet Service Provider (ISP) and computer services company offering a broad range of services to business and residential customers. Sitestar's wholly owned subsidiaries provide narrow and broadband Internet access, Web-hosting and design services, computer sales and repair and other technology-related solutions to its residential and business customers.
Posts: 74 | From: Midwest | Registered: Dec 2003
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