Editor Note: In mid-October, we rebroadcast without comment an electronic
newsletter issue of the 'Kaiser Bottom-Fish Tracker', written by John
Kaiser, who has strong connections to the Vancouver, B.C., investment
industry and who noted in the newsletter that he owns 310,000 Meteor
shares.
The newsletter, issue 99-037, was an in-depth look at Meteor Technologies,
its investment in ThoughtShare Communications and various issues
surrounding them. We knew you would find it interesting and informative.
(If you didn't receive a copy of this newsletter, please Reply to this
message and let me know; I'll send you a copy by return e-mail.)
Management wanted to review the newsletter issue in detail before
commenting, in part because it contained a considerable amount of
speculation. Here, now, are their comments. /Peter Morgan, Editor, Meteor
Monitor
--
Meteor President Jonathan George says that many of the comments that Kaiser
makes about the underlying value of ThoughtShare Commmunications [TSCI] and
its software, and the uncharacteristically low value of Meteor's shares
currently, are valid.
"This is a good investment for Meteor Technologies," he says, "and it has
the potential to be an even better one. We have thought from day one that
the involvement of TSCI's management, and the other partners in our
relationship with TSCI -- Simon Fraser Univentures and DNA Media -- are key
components in creating truly innovative and useful Internet programs. They
have attracted credible scientific funding, they are all resourceful
people, with an equally good sense of the business and technological
challenges."
"On the other hand," adds Meteor director Fred Fabro, who was recently
appointed as Meteor's representative to the board of TSCI's directors,
"Kaiser also speculates about a number of potential uses for Thoughtshare's
software, which may be possible some day, given enough time and money.
However, we feel investors should clearly focus on what's achievable with
today's technology. TSCI's programming doesn't operate in a vacuum. In many
ways, it has to keep step with the development of the Internet and browsing
software as much as it has the ability to be a leader in those areas."
In his newsletter, Kaiser says, "The general feedback from the brokerage
industry has been that brokers and analysts love the story, but hate the
structure. That is code for saying that they see enormous upside potential,
but cannot see how they can plug themselves into this profit potential.
Meteor has 21.3 million shares fully diluted, with full dilution injecting
$1.4 million into the treasury. Of this amount the core insider group
accounts for at best six million shares, leaving a fairly large float. Such
a structure does not represent a strong hand for the insiders, though it
appeals to me because of the promotional leverage the stock would enjoy
once the largely grassroots shareholder base gains confidence that the
Thoughtshare project is fully on track with competent leadership. For now,
a key sticking point is that Meteor owns only 35% of Thoughtshare."
As a solution to what he views as a problem, Kaiser claims 'a consensus,'
presumably of people to whom he has spoken, that Meteor and TSCI should
merge in some way, and "so as to put 100% of the project into Meteor."
George says this isn't something that's easy to discuss publicly. "We can
neither confirm nor deny the rumours that there have been merger
discussions, however that is one of many business options for Meteor that
any responsible manager must consider."
Both George and Fabro agree with the Kaiser newsletter statement that,
"When Silicon Valley [investors see] the viral growth of a product that
works, [they] will be at Thoughtshare's door in an instant. What intrigues
me about Thoughtshare is that it is a Canadian-born concept with
world-class potential that is a sitting duck to be co-opted by the
Americans. In the meantime, it is an IPO in progress with the difference
that anybody who figures out the story's potential can freely buy the
stock."
Kaiser's newsletter also discussed some possible revenue models for TSCI,
based on a couple of possible ways in which TSCI could market and
distribute its software. In one, he talked about the 'Acrobat' approach, in
which software giant Adobe Systems, over the course of several years, gave
away a program called 'Acrobat Reader', while charging for a companion
piece of software, called 'Distiller,' which created the files that
'Reader' used. The files were high quality, easily shared images of
documents that had previously been created by hundreds of other types of
software programs. That strategy was successful over the long term because
users of 'Reader,' though numerous, weren't interested in buying the
program just to look at a file. But the smaller number of document creators
were interested in paying pretty good money for 'Distiller' to create the
files if there were sufficient 'Reader' programs.
Another revenue model Kasier discussed assumed TSCI would create what he
called a 'parkade' type of website on the Internet where files created by
its software would reside, allowing anybody on the Internet to use the
files. "Such a site would be a search engine not for specific pages on the
Internet, but for the tours or "knowledge objects" that string together
themeatically linked web pages. So rather than punching "gold" into Yahoo
and coming up with a bunch of sites like the World Gold Council, you might
check thoughtshare.com to see what useful gold sites and pages within them
somebody like Frank Veneroso has pulled together into a "tour." Whereas the
indices of the main search engines that point to related web page addresses
are built anonymously by workers or software, the Thoughtshare index is
populated by items custom created by experts and celebrities who either
already have name brand value, or might even achieve brand name status by
virtue of their Thoughtshare tours. Thoughtshare.com could thus become a
significant portal with very high eyeball traffic that can attract banner
advertising. Advertising can be sold not just for the home page, but also
linked to actual tours or sections within the classification index."
Kaiser also wrote about a "third model whereby Thoughtshare licenses its
tour parkade to any web site that wants it. One of the special features of
a 'TS Tour' [Kaiser's name for a possible reader-type program] likely to
emerge is that it will have special hooks that allow it to dock on a 'TS
Tour' parkade. The parkade in turn will have features that count the number
of visitors to a tour, allow them to vote on the tour, and offer a unique
discussion thread related to the tour or 'knowledge object' that allows a
community to develop that is specific to a tour.... If desired, posting and
tour taking rights can be password controlled by the web site. The parkade
makes it easy for the website's owners to highlight pages within complex
sites without actually meddling with the site itself. The parkade also has
obvious applications for corporate or government intranets.... The
proliferation of these parkades would result in a mind-boggling
interweaving of the Internet, which would acquire an organizational
structure far surpassing that which the search engines currently provide."
Kaiser even considers a fourth model, in which TSCI is sold to one of the
companies that owns a major Internet browser, such as Microsoft or America
On Line.
Meteor/TSCI director Fred Fabro says the strongly divergent possibilities
for making money from TSCI's software that Kaiser discusses simply shows
the range and power of the potential, not the limits, for both ThoughtShare
and for Meteor's investment in it. But he cautions investors that Kaiser is
only speculating on what might be possible, not reporting on the directions
that TSCI is actually taking. "You could also just as easily add 'None of
the above' or 'All of the above and some more besides' to Kaiser's list,"
he says, concluding, "There are discussions underway around our boardroom
tables about how to maximize the revenue for all of TSCI's shareholders and
investors, of which Meteor is the largest."
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