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Log On America's One-Stop Access Dream

It's a red, white and blue week for Internet IPOs.

On Tuesday we looked at the pending initial public offering of Web etailer Value America. Today we look at the IPO of another company whose name also employs the not-so-subtle tug of patriotism - Log On America. (And if we want, we can do USA.NET tomorrow.)

Whereas recent IPO debutante OneMain.com strives to be the national ISP for rural and small-town customers, Log On America (LOA) is targeting cities with populations between of 200,000 and 1 million.

Based in Providence, R.I., LOA is a regional ISP - and a CLEC -- with dreams of becoming a one-stop provider of Internet, telephone and cable TV services, primarily to businesses in Northeast metropolitan areas.

The strategy is to build this line of services through acquisitions, hence the IPO. LOA is hoping to raise up to $23 million in an offering of 2 million shares priced at $10 each (though the trend lately for Internet companies is to jack up the offer price on the eve of the IPO, so this figure may go up).

LOA is no newcomer; the company has been around since 1992. But the financial statements submitted to the SEC cover only 1997 and 1998, and they paint a picture of a modest regional ISP with only nine full-time employees. Revenue grew from a meager $352,000 in 1997 to a still-meager $760,000 last year. (Perhaps LOA should stand for Log On Anybody). Compare this to two of the public ISPs with small market capitalizations: OneMain.com, which had $56.7 million in revenue and more than 600 employees last year, and FlashNet, which had $26.9 million in revenues last year and about 250 employees.

Worse, despite the pending IPO cash, the company is poorly positioned for a marketing blitz. Right now there are only two marketing and sales employees, and no distribution channel in place. And the company intends to allocate only $2 million from its IPO for a promotional campaign - hardly the war chest necessary to compete for customers against national ISPs such as AT&T WorldNet and MCI Worldcom.

LOA says it will use $5.5 million from the IPO to upgrade its network, and another $4.95 million for acquisitions. That's a plan, but with no real revenue history and a tiny staff, that's all LOA has to offer right now, a plan. LOA's Nasdaq ticker symbol will be LOAX. Underwriter is Dirks & Company.



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