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Infonautics, IBS Interactive, First Avenue Ventures Merge

Infonautics Inc. , IBS Interactive Inc. and First Avenue Ventures Inc. are merging in a three-way strategic combination to create a publicly held venture technology company called Digital Fusion Inc.

The mostly stock deal will create a new company that will have 1999 pro forma revenues of approximately $40 million, with 400 employees in 11 cities.

Digital Fusion "is being established to restore a disciplined approach toward creating, operating and implementing successful Internet strategies and businesses," company officials said.

The new company plans to provide corporate clients, venture capitalists, entrepreneurs and incubators with both the framework and the resources required to develop Internet technologies.

"The problem with the new economy is that there's too much new and not enough economy," said Rich Masterson, chief executive officer of First Avenue Ventures Inc.

"Digital Fusion will respond to growing concerns in the marketplace for restoring a rational methodology for building and managing businesses in the New Economy."

Masterson will become chairman and chief executive officer of Digital Fusion. He is also the founder and former president of US Interactive , an Internet professional services firm.

Van Morris, presently Infonautics' chief executive officer, will become Digital Fusion's chief operating officer. Nick Loglisci, presently IBS Interactive's chief executive officer, will become Digital Fusion's president.

At launch, the resources of Digital Fusion will include:

-- IBS Interactive's experience in creating technology solutions for blue chip clients in the healthcare, pharmaceuticals, financial and insurance industries as well as government institutions

-- Infonautics' portfolio of Web properties -- which includes sites such as Company Sleuth, Sports Sleuth, Job Sleuth and Entertainment Sleuth -- and its more than 1.3 million registered users of its Sleuth sites and over 105,000 paying subscribers to Electric Library as well as its holding in bigchalk.com, an Internet-based education company.

-- First Avenue Ventures' global partnership with Cross Atlantic Capital Partners, a venture fund management company with $270 million in assets and 23 portfolio companies.

Infonautics and IBS Interactive stock will be converted to Digital Fusion stock at fixed exchange ratios. Shareholders of both companies will receive one share of Digital Fusion stock for each share of Infonautics or IBS Interactive stock that they own.

First Avenue Ventures will invest $6 million in the new company and its shareholders will receive shares of Digital Fusion preferred or common stock, which will represent approximately 4.5 percent of the outstanding shares of the new company.

The combination is intended to be tax-free to the shareholders of IBS Interactive and Infonautics.