Contacts:
Investor Relations: Media:
Ken Gruber Stacey Nield/Heather Fox
EVP & CFO Morgen-Walke Associates, Inc.
Cornerstone Internet Solutions 212-850-5600
212-343-9143 ext. 270 [email protected]
[email protected]
DRAFT - NOT FOR RELEASE
CORNERSTONE INTERNET SOLUTIONS TO BUILD OUT B2B ECOMMERCE UNIT EXCLUSIVELY
Company's Strategic Restructuring To Include Name Change
And 1-For-5 Reverse Stock Split
New York, NY--September 25, 2000 -- Cornerstone Internet Solutions (Nasdaq:
CNRS), a provider of comprehensive business-to-business (B2B) e-commerce
services and solutions, today announced a strategic restructuring to focus
exclusively on the growth of B2Bgalaxy.com, an operating unit that develops
industry specific business to business e-commerce marketplace and procurement
technology, focusing on improving profitability for buyers and sellers. As part
of this restructuring, the Company will discontinue its professional services
subsidiary and change its name to B2B Enterprises, Inc. In addition, the Company
will effect a 1-for-5 reverse stock split. The proposed name change and stock
split are subject to approval by shareholders at Cornerstone's special meeting
of shareholders scheduled for November 10, 2000.
"B2Bgalaxy is a highly scaleable, proprietary e-commerce solution, recognized
for its value to rapidly deploy vertical business-to-business marketplaces,"
said Andrew Gyenes, Chairman of Cornerstone Internet Solutions. "FOODgalaxy, our
first vertical marketplace, has achieved market leadership and acceptance in the
food service industry. The market opportunity for B2B e-commerce remains robust,
and we aim to capitalize on B2Bgalaxy's value proposition and the initial
success of our B2B marketplace technology to rapidly expand our market share
globally. We are confident that, through this restructuring and by focusing all
energies of the Company to execute our B2B strategy, we can achieve our
objectives of accelerating growth and increasing shareholder value."
David Rowe, President and Chief Executive Officer of B2Bgalaxy.com, said, "Our
strategy is to further strengthen the FOODgalaxy franchise domestically and to
enhance our technology through additional PowerProducts. We will leverage the
strength and portability of our technology by seeking licensing and partnering
opportunities with established entities internationally in the food industry and
both domestically and internationally in other industries. We expect to build
upon the model employed in our previously announced Telefonica and VETgalaxy.com
relationships."
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B2Bgalaxy.com was launched in July of 1999, along with its initial vertical
marketplace, FOODgalaxy.com. Since then, the Company has achieved the following
milestones:
- Topped 3,000 users of FOODgalaxy.com in its first year;
- Extended the direct sales force nationally;
- Signed significant partnership arrangements with Telefonica B2B;
- Expanded the PowerProduct suite to include PowerPurchasing and Power Vendor;
- Licensed PowerProduct software toVetgalaxy.com as its e-commerce platform;
- Received critical acclaim from Forbes Magazine and Restaurant Associations in
17 states for PowerProduct technology.
Ken Gruber, Executive Vice President & Chief Financial Officer, added, "Based on
the signed agreements to date for our B2B technology, we anticipate revenues in
fiscal 2001 to exceed $3 million. Cornerstone will eliminate 22 positions and
will realize additional savings through the closing of our New York City office,
as we centralize all operations in New Jersey. By eliminating our professional
services workforce and discontinuing the operation, we reduce our cash burn by
approximately $300,000 per month. The Company will take a one-time, primarily
non cash, restructuring charge of approximately $850,000 in its first fiscal
quarter of 2001."
About Cornerstone Internet Solutions
Cornerstone Internet Solutions operates B2Bgalaxy.com, which creates
industry-specific business-to-business e-commerce marketplaces that link buyers
and sellers and focuses on improving member profitability through the use of
PowerPurchasing, the award-winning marketplace exchange technology.
FOODgalaxy.com, a B2Bgalaxy.com Company, enables restaurants and other food
service establishments to post a customized inventory list online and provides
suppliers the opportunity to submit their latest product prices. This process
can drive down the cost of goods to buyers by as much as 20 percent and
significantly reduces the time traditionally devoted to the procurement process.
Additional functionality is available to distributors allowing them to increase
business from existing accounts as well as reduce their cost of new customer
acquisition.
Some paragraphs of this news release, particularly those describing Cornerstone
Internet Solutions', FOODgalaxy.com's and B2Bgalaxy.com's future business
prospects, contain forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Actual results could differ materially from
those projected in the forward-looking statements as a result of a number of
factors, including difficulties in implementing desired features, delays in
completing the B2Bgalaxy.com and various industry specific web sites, including
FOODgalaxy.com, technical challenges, cost overruns, changes in design,
competition, and so on, any of which could have an adverse effect on the Company
and B2Bgalaxy.com and its communities, including FOODgalaxy.com. Cornerstone
Internet Solutions' results could be impacted materially by its ability to
obtain contracts from prospects as well as its ability to deliver the contracted
solutions in a profitable manner. Factors such as these as well as those
contained in the Company's Annual Report on Form 10-KSB for the fiscal year
ended May 31, 2000 could have an adverse effect on the Company's results of
operations. In light of significant uncertainties inherent in forward-looking
statements included herein, the inclusion
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of such information should not be regarded as a representation by the Company or
any other person that the objectives and plans of the Company will be achieved.
