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  • Writer's pictureJesse Livermore

Cybits Holding AG - The German "Mantelgesellschaft"

Part of the Portfolio since 2012

A weird speciality of the German Market are so called "Mantelgesellschaften" (shell companies). There is an abundance of old, essentially gone under, worthless companies which still have shares.

Like with the now popular SPACs in the US those shell companies are sometimes used to re-list and/or recapitalize companies.

One the most famous one of the last 20 years is certainly the "Aktiengesellschaft Bad Salzschlirf" which was founded in 1900 and had a second life as Arques Industries.

This is certainly a story for itself. Arques Industries went from a stock price of EUR 2 in 2004 to EUR 40 in 2007 and reversed to essentially EUR 0 again. Unfortunately The Kapitalmarkthygienemuseum has no memorabilia of Arques Industries, yet).

As those shells are revitalised, sometimes huge swings in prices of those "living deads" can be seen.

Another Shell Companie was the former Sinalco AG. Sinalco (Sine Alcohole) is a German Softdrink/Lemonade, founded around 1900. When the original family sold Sinalco in 1970 to a Dortmund brewery several changes in Ownership occured. After an odysee of renaming and changes in ownership (1982 SIBRA Holdings, 1998 Detmolder Beteiligungs AG,) the shell was acquired by (infamous) WCM AG in the nineties and sold to (infamous) IVG Immobilien AG at the turn of the century.

IVG reported in 2001 that they sold their 80% shareholding to "Star 21 Networks AG". Some weeks later that deal busted.

After some time the IVG sold the shell company in 2006. The acquirer were close to (infamous) Florian Homm. At the AGM the name was changed to "Reality Capital Partners" which wanted to do big Private Equity and Real Estate. They wanted to invest EUR 500mn and have a "safe return of 15% ROE"... sure...

In November 2006 the company bought an asset called "Cybits Security Systems GmbH". They paid EUR 1,3mn for an stake of 15,4%. Later on the Shell was renamed to "Cybits Holding AG", its final name (yet).

They somehow managed to merge the rest of Cybits Security Systems GmbH into the shell and the company ended up with "Cybits" as its main operating asset.

Cybits had two segments:

1) Identification of customers in compliance with the German money laundering act.

2) Surf Sitter "Kinder sicher Online". An software tool / filtering tool manage access of internet usage of kids.

The identification software was the main product. German customers usually identify to bank accounts or other things via a service provided by Deutsche Post, called "PostIdent". The downside of (offline) Postident is that, that there is a quite bad conversion is so far as ~50% of all applicants follow the whole process through.

The Idea of Cybits at the time was to use the (then "red hot") secure Email, dubbed DE-Mail which needed a bunch of accreditation and their distribution partner 1&1 United Internet to establish their verification-solution as "state of the art". The long term game was 5-minute online verification for all kinds of services of f.e. bank accounts etc.

They gained some traction with adding German company called Maxdome (kind of a Netflix-Solution/age verification) and Lotto24.

But they never got any serious AAA-customers and/or Banks to implement their solution.

After an short "back to life" in 2010 to 2012 the company went under again. Lets see whether this shell comes back to life somewhen.

The emotional short would have worked out with -100% from 2012 to 2015.

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