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Exhibit (a)
New York, NY, July 26, 2000 - Virtual Communities, Inc. (NASDAQ: "VCIX") today
announced a major initiative to focus primarily on developing and marketing
software for Web development and site management. In line with its new strategy,
the Company intends to sell its portfolio of online ethnic communities.
The Company also announced that it has signed a Term Sheet with Intercoastal
Financial Services Corp., which previously arranged a round of financing for
VCIX by several institutional investors in April 2000, for a follow-on
investment through a $5.5 million private placement of Convertible Preferred
Stock and Warrants. The Company is currently finalizing documents related to the
proposed financing.
VCIX currently owns a 60% interest in Cortext Ltd., an Israeli software
developer with whom it has been jointly developing next-generation web
development and site management software. Cortext software, based on object-
oriented technology, includes built in support for XML (Extensible Markup
Language), and for sophisticated business-process modeling. "Based on four
years of experience managing online communities, we know the demands that come
from meeting the daily challenges of managing content-rich B2C and B2B
marketplaces," said Avi Moskowitz, CEO and President of VCIX. "Advanced
technological solutions can make a great difference. Cortext software has
allowed us to do things that conventional Web site technology cannot. It
dramatically lowers the time to market for creating or expanding online
intranets or extranets and significantly reduces the total cost of owning and
managing digital assets. We believe that managers of fast-changing and high-
traffic Web sites need and want this kind of solution."
VCIX also announced today that it has signed an agreement to acquire an
additional 20% stake in Cortext Ltd. Upon the completion of the acquisition in
Q4 2000, VCIX will own
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more than 80% of the software developer. Additional details of the purchase were
not disclosed.
As part of its strategic shift, the Company is seeking one or more buyers for
VirtualJerusalem.com, VirtualIreland.com, VirtualHolyland.com, VirtualItaly.com
and VirtualIndia.com. "These are highly interactive, ethnic portals for Jewish,
Irish, Evangelical, Italian and Indian communities in the United States. We
believe they are attractive assets for companies devoted to e-commerce and the
ownership and management of profitable, growth oriented Web properties,"
according to Moskowitz.
Effective immediately, VCIX will scale back the operations staff supporting its
online communities and move most non-sales or marketing related functions to the
Company's subsidiary in Israel, reducing the number of its employees by about
one-third and producing substantial cost-reductions. "We will have a more
streamlined operation going forward," Moskowitz said. "Published research tells
us that the Web applications software market is one of the most rapidly
expanding segments in the global information technology industry. We have
approached leading Web strategy and implementation firms to team with us in
delivering our Web applications technology to the market, and we're confident we
have the right solution at the right time."
