AUGUST 16, 2000 ---NACT---
Todays Hot OTC Full Profile is NEWAGECITIES.com Inc. NACT is well off its $4 highs of earlier this year and is positioned well for value investors in its current price range. NACT announced that it successfully debuted the Company's affiliate program, as well as a set of new business-to-business Internet services at the recent International New Age Trade Show, the largest industry trade show in the world...As well, NewAgeCities.com Announces New Online Business-to-Business Portal, This New B2B site is designed to generate monthly revenue and a larger membership base.
.NEWAGECITIES.COM Inc. (OTC BB: NACT)
Recent Price: $0.30
52 Weeks Range: $0.21875 to $4
Shares Outstanding: 7.2 million
Public Float: 2.7 million
Projected Sales (2001): $27.82 million*
Projected Net Income (2001): $1.08 million*
Projected EPS: (2001): $0.15 per share*
Stock Rating: Strong Buy
Short-term Target Price: $2 to $3
Long-term target Price: $5 to $6
Company Website: http://www.newagecities.com
* The projection is based on the acquisition of two companies.
- We rate NEWAGECITIES.COM Inc. (OTC BB: NACT) "strong buy" for strategic and aggressive investors. NACT is positioning itself to become a leading provider of Internet Community-building and electronic commerce services for the New Age population and to create one of the most demographically targeted Web sites on the Internet. The New Age population consists of over 38 million people in the US who spend an estimated $40 billion annually on a variety of different products and services.
- NACT is in negotiations to acquire two New Age leading companies. The plan is to combine these companies and employ new technologies to create one entity with significantly higher revenues and profits than these three generate separately. In the past, the company is focusing their efforts on generating large amounts of traffic to the site by utilizing cutting-edge Web technologies that foster many return visits. Management intends to instill a sense of community in its users by providing software such as free user home pages, free Web based e-mail, as well as topic specific chat rooms and discussion boards. These, and other technologies will keep users returning to the site, offering a strong customer base for sales of products, services and advertising. The company's goal is to build their websites into a leading online destination for members of the New Age community. We believe that successful execution of this strategy will help newagecities.com realize revenue growth through expanded e-commerce offerings as well as advertising and marketing opportunities.
- NACT's new strategy is to combine three companies, two traditional and one Internet, into a market leading Click & Mortar entity that will spawn additional expansion in revenues and profits by offering products and services to both retailers and wholesalers over the Internet. NACT has developed the software to accomplish this objective and has created a business-to-business portal to support its unique niche in this $40 billion marketplace.
- Combining the core business resources of these three industry leaders will enable the New NACT to experience greater growth, with reduced costs, than any of the three could achieve on a stand-alone basis. New developments would include: reducing costs by moving all operations into the acquisition's existing facility to reduce overhead expenses and facilitate the sharing of resources, including: technology, marketing, office personnel & management, A/R and A/P, shipping and receiving, customer service, printing expenses, capitalizing on existing wholesale customers for development of merchant owned Web stores; creating an e-commerce logistical fulfillment system to support online commerce for other retailers; leveraging NACT technology and marketing skills to substantially increase online revenues for the acquisitions; leveraging NACT technology to automate processes and reduce staffing; increasing the acquisition's market share by adding their products to the new distribution chain; increasing overall sales by introducing product lines to new markets such as chain bookstores, nature stores, health food stores and more mainstream gift shops; increasing the acquisition's catalog sales by the addition of a limited outside sales force; increasing the acquisition's sales by utilizing outbound telemarketing and increasing the acquisition's sales by implementing small order fulfillment for online stores.
- The Internet is a catalyst that is very likely to produce the greatest changes ever in the way American consumers access and select services and products; NATC is uniquely positioned to benefit from these changes. According to Forrester Research, only about 50% of U.S. households will have access to PCs by the end of 1999. According to Cerulli Associates, of those households with PCs, about one-third (33%) are online. There still remains strong potential for growth within the United States. Another data resource firm, International Data Corporation (IDC), estimates that the number of Internet users in the U.S. will increase from 56 million at year-end 1998 to more than 137 million by the end of 2002. The rapid growth in the number of New Age consumers has created a marketplace for products and services that outside advertisers need to reach. Newagecities.com offers a means for these advertisers to reach this market in a manner not possible in more traditional advertising media.
- As a means of expanding the marketplace for New Age products and services, the company will be further developing its business-to-business portal, newagebiz.com. Newagebiz.com is designed as an online conduit between retail storeowners and wholesale distributors. The site offers wholesale/manufacturer the opportunity to preview products and services in a manner that is cost- effective and timely. Wholesalers pay for the service of presenting their products and services at a much lower cost than traditional marketing. Retailers also benefit from industry news updates as well as business and marketing advice from industry leaders. One of the services offered at newagebiz.com is an affinity program that allows retailers to open their own commerce-enabled Web sites with point-and-click ease. NACT receives a percentage of all sales generated via these Web stores. In order to promote online commerce in this industry, NACT is creating an online mall at www.mindbodystores.com. Retailers using NACT's software will be given free placement in the mall; other retailers in this market niche will be charged a monthly fee. Mindbodystores.com will be promoted to consumer visitors to NACT's existing network of Websites.
- NACT price has recently been basing, enduring a downtrend from around the 0.50 level since June of 2000. The initial bottom remains to be 0.281 for 4 weeks through June, where a higher base supported by volume was supported around the 0.50 range. Charting suggest that a 20%-30% retracement is in order, the 0.75 -1.00 being ideal. However, considering the size of the float the current volume pattern compared to the stocks previous history, one could speculate the 0.75 level as a reasonably secured bottom. In consideration of the stocks recent move, one would expect all indicators to express an oversold condition. Especially when the trend rides near a 45° angle consisting of small bouts of consolidation. In such cases when a the trend persist, as in the case with NACT, the basic indicators of popular use, MACD, RSI and %R signal overbought and are rendered useless. We have yet to experience a confirmed technical breakout. Heavy volume could easily send this issue to a higher level of consolidation that will be confirmed only when other indicators come into line from their current oversold conditions.
- NACT is changing its business model now from a pure Internet play to a combination of an e-tailer and Click & Mortar entity, and accordingly, the company could have a major turnaround. The company is projecting impressive growth rates. We believe they are reasonable considering the rapidly expanding of sectors on the Internet. We believe a vertically integrated conglomeration of Internet community with a focus on building brand name and enhancing online features will be the high-margin sustainable Internet business model of the future. NACT is just fitted this business model nicely. We believe the stock is highly attractive to aggressive Internet investors and therefore rate this stock a strong buy. We believe the stock could make a major score if the company successful adopts its new strategy. The stock has been declined substantially since the stock peaked around $4 last March. We believe that NACT provides investors an opportunity to buy an emerging growth company at ground level prices with a target price at $5-$6 in the next 12-24 months.
Newagecities.com is using a broad range of e-commerce capabilities in offering products to New Age consumers. There will be a variety of company stores within the site, each focused on a different New Age area. In addition, the company is offering people the opportunity to open mini-shops where they can market their own wares as well as selected products from the company's database of products. Mini-shops are easy for a user to set up and provide a marketplace for Web users to buy and sell online to other users and visitors in an easy to navigate environment with newagecities.com deriving a percentage of all sales.
The company operates out of a 5,000 sq. foot office/warehouse space in Boca Raton, FL. The $500,000 data center housed at this facility is designed with security, scalability and redundancy in mind. The company has designed it's own proprietary software for site management, administration, and e-commerce. Through the utilization of this technology, the company has accomplished the following:
* 8.6 Million Impressions (or "Page Views") per month across the network
* 80,000+ Registered Users/Members
* 10,000 Products available online (both B2C and B2B)
* 4,000+ Pages of Static and Interactive Content
* The Internet's ONLY Live Video/Audio (or "See and Hear") Psychic Readings
* Merchants hosted in their own virtual storefronts.
* A multitude of value-added content and services:
Original Daily Horoscopes
Original Daily Meditation
Original Weekly Columns
"Email-a-Psychic" featuring four renowned Spiritual Intuitives
Customized Natal Astrology Charts
Internet-Only Numerology and Tarot "Oracles"
The company's network of sites provides a rich set of offerings within a variety of New Age microniches. These sites include
http://www.newagecities.com - community based e-commerce and information portal
http://www.newagesound.com - e-commerce enabled Internet-only radio station
http:// www.newagebiz.com - business-to-business
http://www.psychicities.com - promotional site for psychic readings
http://www.jilldahne.com - promotional site for world-renowned psychic Jill Dahne
http://www.loveoils.com - e-commerce site for the sale of tantric items
http://www.mindbodystores.com - NACT hosted merchant Web stores.
Newagecities.com's wholly owned subsidiary, Top Dog Multimedia, is a full service video production and multimedia firm. The company's services include all phases of television, video, web-casting and multimedia production. In addition to processing content for the newagecities network of web sites, the company's client list includes the Discovery Channel, Home Box Office, ESPN, MTV and the FOX Network. Top Dog is also one of the few providers of closed captioning services in the state of Florida. The management and staff of newagecities.com consist of a team of professionals with experience in business, the New Age market and the Internet. Their combined expertise has provided the leadership necessary to build newagecities.com into a market leader after only one year of operation.
Newagecities.com will allow people who do not own Web stores to offer products that newagecities.com offers via an affiliate program. The affiliate program allows anyone with a Web page to list an item for sale on his or her existing page. The product can then be purchased through newagecities.com, with the Web page owner receiving a commission. This type of program offers newagecities.com a facility for a wider reach into the Web.
The term "New Age" is typically used to refer to a set of beliefs and practices that originated in centuries past. These include aromatherapy, astrology, crystal energy, eastern philosophy, natural health, psychics, UFOS and a host of other topics. Although each of these areas is distinct from the others, they are all considered within the umbrella concept of "New Age."
Although the term "New Age" has come in and out of vogue over the years, the ideas that it represents have shown a steady growth in public interest. Oftentimes items that fall into the New Age genre are classified within a more mainstream category. The book sensation, The Celestine Prophecy, by James Redfield, is a prime example. The book has sold over 7 million copies to date and is clearly a "New Age" title, although it is commonly classified as fiction. Other best-selling book examples include Conversations with God, by Neale Donald Walsch, as well as the myriad of best sellers by Deepak Chopra. These and other New Age books are found on the shelves (and Web sites) of all major book retailers in various sections of the store, including psychology, religion, self-help, philosophy, UFOs, etc. Overall, it is clear that the market for New Age products can be quite substantial. In fact, preliminary results of a forthcoming study (New Editions New Age Consumer Survey, Sophia Tarila, Ph.D., New Editions Retailers) reveal the following encouraging facts about New Age consumers:
The average age is 44, with a majority between the ages of 30 and 59. Two-thirds have college degrees and 41% have completed post-graduate work. The average New Age consumer spends over $1,000 annually on New Age items. The New Age consumer base is estimated at over 38 million. New Age industry sales average over $40 billion dollars annually.
These statistics represent values for the United States only. The Internet offers the possibility of tapping into the larger worldwide New Age market.
The average New Age consumer is also very close to the average Internet consumer. Ernst & Young recently released a survey of online shopping (The Second Annual Ernst & Young Internet Shopping Survey; Ernst & Young, 1999) which highlighted the following facts about online shoppers:
68% are over 40 years old
94% have had some college background
46% generate $50,000 plus in annual income
The New Age population is a large and under served market segment that desires interaction, communication, a sense of community and an environment that caters to their particular needs. New Age consumers build their own communities off-line. We believe they are interested in extending these communities onto the Internet because of the opportunity for interaction on a larger scale.
For many in the New Age community there is also a need for access to products and services that are not commonly available. Most New Age products are purchased at small retail stores that specialize in this industry. However, in many areas where these stores are not present, New Age consumers are somewhat limited to those products available in more mainstream outlets. Even those that have New Age stores in their vicinity are often disappointed because these stores can only stock a small amount of products.
Spirituality, wellness, alternative health and other New Age concepts have recently garnered significant attention in the mainstream press with articles and stories appearing in Barrons and Time, and on CNN. According to a recent CNN report (March 2000), in the 1960's approximately 20 percent of Americans were interested in spirituality. More recent polls now indicate that this number has swelled to over 80%. A recent Business 2.0 (June 2000) article reported that in 1984, 56% of Americans felt the need for spiritual growth and that this number has swelled to 82% in 2000, the sale of religious and spiritual books shot up 59% between 1992 and 1994.
Percent of Americans Interested in Spirituality Along with the increase in public interest in New Age ideas has come an increase in the sales of related products and services. While these products and services may not be labeled as such, they clearly fall within this marketplace. Oftentimes items that fall into the New Age genre are classified within a more mainstream category. The book sensation, The Celestine Prophecy, by James Redfield, is a prime example. The book has sold over 7 million copies to date and is clearly a New Age title, although it is commonly classified as fiction. Other best-selling book examples include Conversations with God, by Neale Donald Walsch, as well as the myriad of best sellers by Deepak Chopra. These and other New Age books are found on the shelves (and Web sites) of all major book retailers in various sections of the store, including psychology, religion, self-help, philosophy, UFOs, etc. Additional New Age concepts that have entered into everyday life include candles and aromatherapy. These products can now be found on supermarket shelves all over the world. Overall, it is clear that the market for New Age products is quite substantial. In fact, preliminary results of a forthcoming study (New Editions New Age Consumer Survey, Sophia Tarila, Ph.D., New Editions International) reveal that the market is estimated at over 38 million people with average industry sales of over $40 billion dollars annually in the U.S. alone.
The company believes that creating an online destination specifically designed for New Age consumers is crucial to marketing to this population. The rapid growth in the number of New Age consumers has created a marketplace for products and services that outside advertisers need to reach. Newagecities.com offers a means for these advertisers to reach this market in a manner not possible in more traditional advertising media.
In terms of international markets, the company expects that some portion of their traffic and revenue generation will result from markets outside of the United States. Many New Age ideas originated outside the U.S., and now the Internet makes it easier for cultures and ideas to spread globally. Additionally, many markets outside of the U.S. have no access to the myriad of products and services offered at newagecities.com.
In terms of competition, we have found no Web sites devoted to the New Age community that contain the breadth and depth of information, interaction, entertainment and merchandise available at newagecities.com. Several content areas of newagecities.com are currently available at other sites; however, we believe they too lack the completeness of NACT sites. The ability to offer high quality "See & Hear" psychics appears to be unique to newagecities.com. Other sites offering psychic readings either do so via phone, e-mail or video with text chat.
The company is using the following strategies to reach out new age population:
Increasing Membership - One of the most valuable assets of any Web site is its members. Typically members account for a large percentage of all product purchases. Members also offer a target demographic category of users for advertisers as well as other marketers and us. Membership is free and simply requires that the user list some basic information, such as name and e-mail address. Membership benefits include access to areas reserved for members, special members-only services and discounts on selected products. It is our intention to increase membership by actively marketing and promoting the site, as well as constantly refreshing and updating the content and other features.
Building Brand Recognition - The key to attracting increased numbers of users to our site is to build brand recognition. Our strategy for enhancing brand recognition consists of maximizing our exposure to the New Age population through both on and off-line advertising and marketing opportunities.
Enhancing Online Features - In order to encourage more visits and increased lengths of stay, we will constantly be updating our content, products list and service offerings. We are constantly seeking new features to bring in user traffic and keep their attention.
Updated Content - To encourage return visits, much of the content available on newagecities.com is updated on a regular basis. Items such as daily horoscopes, new item reviews and updated articles keep people coming back, offering additional opportunities for advertising and product sales.
New Features - New Internet technologies and interactive Web software will be introduced all the time. To the extent that any of these new developments complement our existing features and meet our strategic goals, they will be implemented on the site.
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