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CYBERBUCKS—Five Companies Take Plunge Off Springboard

Daou Looks to Dallas; Talks Merger With

Perot Systems Corp.

For high-tech start-ups seeking capital, the place to be earlier this month was UCSD Connect’s Springboard luncheon at the Hilton La Jolla. Just ask Jerry Skillett, founder of 24-7-digital.com, an Encinitas business to business company that sells digital images via the Internet. “Our company was received very well. At the end of the presentation we had about 30 inquiries for more information,” Skillett said. Some 500 attendees at the annual event Aug. 10 weren’t there to eat lunch but to get a look at five selected start-ups, all of which were carefully screened and coached by Connect advisors.

The crowd included investment bankers, venture capitalists, accountants, attorneys and marketing people. It’s the type of audience most high-tech entrepreneurs would die for.

Each company had seven minutes to give an overview of their business, who they were, and make their pitch for funding. Skillett was looking for $2.5 million. That’s in addition to some $750,000 he raised earlier this month, and the seed capital of about $1 million he and a partner put up about a year ago to launch 24-7 digital.

In a year’s time, the company has earnings of $600,000 on $1.6 million in sales. Next year, sales are estimated at $12 million.

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Skillett’s presentation obviously went well. The firm should obtain the money he was seeking by Oct. 15, although he declined to divulge the sources for the investment.

“It’s really a celebration of entrepreneurship,” said Abi Barrow, Connect’s director of programs about Springboard.

The finalists for the event are selected from a group of companies that take part in breakfast panels held throughout the year.

The companies are either in high-tech or biotech, and early stage, meaning they have some seed capital but not much else.

Since the program was established in 1993, more than 150 companies have refined their business plans, and secured funding through their participation, Barrow said.

Besides 24-7- digital, other firms at Springboard were Acculaser, Inc.; BuyMoreProduct Inc.; Gray Scale Technologies Inc. and Psynomics.

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Daou In Talks With Perot: Daou Systems, a San Diego-based provider of integrated information technology serving the health care industry, said it has been holding merger talks with Perot Systems Corp., a Dallas-based information systems provider started by H. Ross Perot, who ran for president in 1992 and 1996.

Neither company said much more than discussions have been held, and that a price has not been agreed upon nor has a final agreement been signed.

Daou reported it lost $3.4 million on $16.1 million in revenues for the quarter ended June 30, compared with a profit of $60,000 on revenues of $27 million for the like period last year.

For 1999, the company reported a net loss of $8.9 million on sales of $103.4 million.

As part of its quarter, Daou recorded a restructuring charge of $827,000 related to the elimination of some 200 positions to bring the employee count to about 500.

Perot, with some 7,000 employees, had profits of $93.6 million on revenues of $1.14 billion in 1999.

Traded on NYSE, Perot’s stock has ranged between $8.87 and $27.94 for the past 52 weeks. Daou was trading between $1.34 and $5.75 on Nasdaq for the same period.

Anacomp Bleeds: Anacomp Inc., the Poway-based document management services company, previously had warned investors its third quarter wasn’t going to be pretty, and it wasn’t. It lost $43 million on revenues of $88.9 million, compared to a loss of $12.5 million on sales of $106.2 million for the like period last year.

For Anacomp’s nine months ended June 30, it lost $70.4 million on revenues of $295.6 million, compared to a loss of $41.9 million on revenues of $333.1 million.

Following the news, Anacomp’s shares fell farther below the netherworld floor of a dollar, ending the trading Aug. 14 at 44 cents. Its 52-week range is 34 cents to $19.18.

Among the contributing factors to Anacomp’s financial woes was a decision the company made earlier this year to close down its manufacturing unit. The company set aside $9 million to cover costs associated with that move last quarter, which included $1.9 million in severance payments.

Anacomp already said it is in default of a loan agreement but has reached agreement with its senior lenders to amend its credit line that will reduce its access to the line. It also said because of its reduced liquidity, it will be unable to make the interest payment on its subordinated debt due Oct. 1.

Anacomp has retained Donaldson, Lufkin & Jenrette as advisers on its financial problems.

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HNC Declares Dividend: HNC Software Inc., a San Diego maker of predictive software, said it will issue a dividend to all HNC shareholders that will complete HNC’s spinoff of Retek Inc.

HNC owns 40 million shares, or 84.5 percent of Retek, which operates retail.com, a business-to-business platform catering to retailers and their suppliers.

The exact formula for the dividend distribution in the form of Retek stock on Sept. 29 to HNC stockholders will be determined according to the number of outstanding HNC shares, the company said.

HNC also announced it has authorized a stock repurchase of up to $30 million.

ViaSat Spins Off New Entity: Carlsbad-based ViaSat Inc., the maker of satellite telecommunications equipment, said it will be majority owner of a new company that would center on a patented digital processing technology.

The new company, called TrellisWare Technologies Inc., would be headed by Thomas Carter, the former vice president and general manager of the Electronic Systems Group.

In other news, the company reported earnings of $1.95 million on revenues of $36.6 million, compared to earnings of $1.8 million on revenues of $17 million for the like period last year. The company reported some $2.7 million charges related to acquisition costs of the satellite networks business of Scientific Atlanta.

At the close of the quarter, ViaSat had $165 million in back orders compared to $39.5 million as of June 30, 1999.

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Funding Finds: Ensemble Communications Inc., a manufacturer of broadband wireless equipment, closed a $60 million round of financing that included the likes of Cisco Systems, Dell Ventures, and Goldman Sachs Group.

NextLeft, a Woodland Hills-based E-business firm, said it raised $10 million in second round financing, part of which will go towards its May acquisition of San Diego-based Systems Engineering Associates. Together with an earlier purchase of a separate San Diego company in April, NextLeft has 95 employees here, and 22 at its Woodland Hills headquarters.

MedroniX Inc., a semiconductor firm serving the wireless and Internet industries, said it secured an operating line of credit of $1.5 million from Silicon Valley Bank.

Start-Up 101: The San Diego Regional Technology Alliance is putting together a half-day seminar from 8 a.m. to noon Sept. 9 at the Regency Plaza Hotel in Mission Valley on what it takes to launch a successful high-tech business. The assembled experts will speak on intellectual property protection, financial management, banking, E-commerce, human resources, and finding the perfect site. Included on the panel are representatives from Alitum, AOL, Silicon Valley Bank, Ameranth Technologies and Integrant Inc.

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Comdex Registration Deadline Nears: Sept. 1 is the deadline for this year’s Comdex/Fall 2000, the big high-tech trade show in Las Vegas, which runs Nov. 13-17. This year’s event is expected to draw some 200,000 attendees, and more than 2,100 vendors, according to the California Trade and Commerce Agency.

Send financial and M & A; cyber news to Mike Allen at mallen@sdbj.com.


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