The B2bstores.com IPO is the ultimate in buzzword abuse. Here's B2bstores.com's plan -- take a six-month old company public, use a hot business-to-business buzzword and lure a few gullible investors to raise cash.
Don't fall for it.
There is no gentle way of putting it -- B2bstores.com looks like a Wall Street prank. And this prank is expected to price Thursday for trading on Friday. What's next? LinuxLinux.com? B2Becommerce.com? WirelessinChina.com? Buzzword.com? Justgiveussomemoney.com?
B2bstores.com: Give it a chance?
B2bstores.com (profile), formed in June 1999, doesn't have any revenue (none, nil, nada, zip), but is betting that investors won't read the prospectus. And some investors will fall for it. These folks are the same traders that chase anything business-to-business, anything Linux and anything wireless.
B2bstores.com, which primarily peddles janitorial supplies, knows how the buzzword game works and named itself accordingly. Now the company hopes you'll pay $10 a share for a small cap Nasdaq stock and fund a $30 million round of financing. B2bstores.com is asking retail investors to be its sugar daddy.
The company (Proposed ticker: BTBC) is offering 3.5 million shares with hopes to raise $30 million or so after expenses. Gaines Berland, a relatively unknown underwriter, is managing the deal.
B2bstores.com, which lost more than $2 million since inception, mostly because of stock compensation plans, said it plans to become a one-stop business-to-business commerce stop just like PurchasePro.com (Nasdaq: PPRO), VerticalNet (Nasdaq: VERT), FreeMarkets (Nasdaq: FMKT), Ariba (Nasdaq: ARBA) and Commerce One (Nasdaq: CMRC).
The key word is "plans." The company hasn't done anything yet.
But once you give B2bstores.com some money, it plans "to provide access to business services, auctions and business-related information and content." The company also intends to market itself, develop the site, repay debts to principal shareholder Enviro-Clean of America and give officers some cash bonuses.
The company said 58.7 percent of the proceeds will fund sales and marketing and 29.7 percent will go to general corporate purposes. The remainder will repay Enviro-Clean for start-up costs and pay officers.
Here are just a few reasons you should avoid this wannabe B2B powerhouse:
- Lack of focus -- The company currently sells cleaning products, office supplies and computers. It hopes to expand to "flowers, collectibles, vacation packages and other ancillary products." That's quite a collection of goods. For an example of what happens when a company tries to be all things to all customers, look at Value America (Nasdaq: VUSA).
- The company is just an idea at this point -- B2bstores.com does have a Web site, but lacks a back-end infrastructure and has to develop its auctions, community and other key parts of the business. B2bstores.com was obviously formed as a vapor company that could quickly cash in on an IPO.
It also has to hire people. B2bstores.com has six full employees and one part-time employee. The company also uses six to eight independent contractors on a project-to-project basis. Meanwhile, management lacks "significant experience in managing a company or overseeing a company's rapid growth."
- When the company gets revenue it has to split some of it -- "We will not retain all revenue generated through our web site, which will make it more difficult for us to become a profitable business."
The company has an agreement with Netgateway, Inc. (Nasdaq: NGWY) through February 2001 to provide e-commerce processing and other technology services. Under the agreement, B2bstores.com has to share equally all advertising and "click-through" revenue generated through the web site. "We also pay Netgateway a small percentage of all revenue generated through sales of products through our web site."
Revenue, when B2bstores.com gets it, will come from product sales, service referral fees and commissions, advertising, "click through" fees and vendor management fees.
Back in November, we reported that eUniverse (OTC: EUNI) filed to be listed on the Nasdaq national exchange and was waiting for approval.
It's still waiting. EUniverse, a Web entertainment and e-commerce company, has volleyed comments with the Nasdaq, but appears close to getting approval. "We're hoping it will be within the next 60 days," said CEO Brad Greenspan recently.
The comments are standard practice. EUniverse files for the listing with the Nasdaq and the exchange returns with requests for more information. Once the comments are worked out, the company is ready to go.
But eUniverse can't afford many more paperwork delays. The company is in a race to beat some of the competition to the Nasdaq. Snowball.com, an eUniverse competitor, filed to go public in December and has Goldman Sachs as lead underwriter. In addition, Bolt, a Web community for older teens, also filed in December with Morgan Stanley underwriting its IPO.
Meanwhile, eUniverse is getting a lot of attention in the press for all the wrong reasons. A hacker stole credit card data from eUniverse recently. That's some attention eUniverse probably didn't want.