Bermuda-based Mediconsult.com has been hit hard by the crash of new technology sector stocks and has been in a struggle to survive for the past year, until it found a buyout partner two weeks ago. Under the agreement Mediconsult's operations will be moved to the US.

I can imagine that it's a story of much anguish for Bermuda-based Robert Jennings, who founded the company along with Dr. Michel Bazinet in 1996 as an interactive Internet site for consumer and physician medical information.

The company has had the typical cash-burn of an Internet company, and has never made a profit.

The company went public on the Nasdaq in April 1999 with the sale of 4,800,000 shares at $13.00 per share. Then the stock went for a rollercoaster from a high of $18.81 in March 1999 to its current level of about 19 cents. Ouch! While providing an online forum and information database, Mediconsult.com earns its revenues from pharmaceutical firms by providing information to doctors and patients about the use of their products. Unfortunately the business plan hasn't quite attracted the volume of revenue to offset the costs.

"We have incurred substantial costs to design, develop and implement Internet-based marketing and advertising programmes for clients, to build brand awareness and to grow our business,'' the company stated in its filings with the Securities and Exchange Commission. "As a result, we have incurred operating losses and negative cash flows from operations in each quarter since commencing operations. As of December 31, 1999, we had an accumulated deficit of $34.7 million.'' Mr. Jennings, who served as chief executive officer of Mediconsult.com until relinquishing the position last year (he's still chairman), controls about 26.4% of the company. He has also put about $5.1 million of his own money into it, as interest-free advances, to keep it afloat.

In 1999 the company spent $2.4 million in capital expenditures and $21.3 million on acquisition of subsidiaries. In that heady year of instant Internet millionaires, the company purchased Pharminfo.com, CyberDiet Inc.

(www.cyberdiet.com), Cyber-Tech (www.heartinfo.org), Inc., Mood Sciences, Inc.

(moodsciences.com), and what appears to be a key asset, Physicians' Online, Inc. (www.pol.net). The company also has partnership agreements with www.inciid.org, which provides infertility information, www.mydoctor.com, the Pharmaceutical Information Network (www.pharminfo.com), and www.storknet.org.

Then came the free fall tumble of the tech stocks in 2000 as many failed to start generating real revenues to live up to the hype. In its third quarter 2000 report Mediconsult.com revealed it had fired 100 employees (about 45% of its workforce) to reduce costs by about $1 million a month, closed its Toronto and New York offices, and restructured its Canadian operations.

Revenues for the quarter ended September 30, 2000, were $6.5 million, representing a 169% increase over third quarter 1999 revenues of $2.4 million.

Operating expenses (excluding depreciation, amortization, restructuring and impairment charges, option and warrant expenses and preferred stock dividend) for the quarter were $10.1 million, a $2.3 million decrease from second quarter 2000 expenses.

The net loss (including all the charges for depreciation, amortization, restructuring and other costs) for the third quarter 2000 was $25.8 million, or $0.48 per share, compared to a loss of $8.9 million, or $0.31 per share for the third quarter of 1999.

Still there's value there. Revenues for the nine months ended September 2000 were $17.3 million versus revenues of $3.7 million for the nine months ended September 1999, an increase of 365%.

But in November 2000 Mediconsult.com announced that it has sold HeartInfo.org to Quadrant HealthCom Inc., for an undisclosed amount. On January 2, 2001 it sold Cyberdiet.com to DietWatch.com Inc. for $250,000 cash and privately held common stock of DietWatch valued at $1 million, a sharp markdown from the original valuation in 1999 of $2.8 million.

Nasdaq also sent a warning notice to the company that its share price had failed to meet listing requirements and would be removed from the trading board. Mediconsult is appealing the impending delisting.

Mediconsult had been forced to look around for a saviour and on January 10, 2001 announced that it had entered into an agreement to merge with Andrx Corporation, a Delaware corporation, and Mediconsult Acquisition Corp., a Delaware corporation formed specially for the deal.

Andrx is a pharmaceutical company that also operates an Internet site called Cybear Inc., which is attempting to do the same gig as Mediconsult.com. It all sounds highly incestuous to me. Would you trust the credibility of the information? Mediconsult will become a wholly owned subsidiary of Andrx with shareholders receiving 0.143 shares of Cybear Inc. Upon completion of the transaction, approximately 57% of the Cybear Group Stock will be held by existing holders of Cybear Group Stock, 20% by existing Mediconsult stockholders, and 23% by Mediconsult's debtors who have agreed to restructure their debt as equity.

The deal is expected to be completed in the second quarter of 2001. In the meantime Cybear will provide money to keep Mediconsult operating as the company attempts "a significant reduction of its operating expenses'', according to the Press release.

It's unclear what role Mr. Jennings, 43, will have in the merged company.

After putting so much work and hope into sites designed to be virtual medical consulting rooms and riding so high, the bottom must feel like a very deep hole indeed. It is the profits that turned out to be virtual, at least so far.

Still these guys reaped the benefits of all the high spending, if brief, years of operating in a cyber rush.

Victim of technology turmoil Mr. Jennings, who is listed in the company's documents as being 42 in 1999, was paid US$525,000 in 1999 in his role as Mediconsult's chairman. Chief executive officer Ian Sutcliffe was paid $426,000 and director Timothy McIntyre of Pharma Marketing received US$1.3 million. Quite amazing when you think of how much the company was losing.

Mr. Jennings is also owner and president of Triathlon (Bermuda) Limited, a company which provides international business advice. He also serves as a director of MIT Ventures, Inc., a diamond mining company publicly-traded on the Vancouver Stock Exchange. He was not available for comment and no one answered Mediconsult.com's listed phone number in Bermuda. Mediconsult.com is not an unusual victim of the technology fallout.

A survey by The Standard this month reveals that hundreds of companies, representing five percent of the total listings, no longer meet the Nasdaq's basic requirements and fall into jeopardy of being delisted.

According to the research 257 companies have fallen below the Nasdaq's listing standards in the last six weeks alone.

Tech Tattle deals with topics relating to technology. Ahmed ElAmin is editor of OffshoreOn.com an Internet newsletter service that focuses on offshore financial centres. Contact Ahmed at editor y offshoreon.com or (33) 467901474.