>>I also wanted to let the thread know that I have requested, and received, a transcript of the Investors' Forum discussion. I am in the process of culling out the extra dialogue and I hope to have a summary of the more important bullet points within the next day or so. Once this has been completed, I will post it to the thread.<<
Here is a lightly edited copy of the introductory comments Don Sandford (NSI's President) made prior to the Investors' Question and Answer session for this forum. For the sake of this post, and any subsequent discussions about what was said, I have changed the comments to read as if they were made in the third person.
When I have completed the clean up of the Q & A section, I will post them as well.
Crazy Canuk
____________________________________________________________
Net Shepherd
Highlights of the Investors' Forum Conference Call
December 1, 1999, 4:30 pm
Introduction by Peter Hunt V.P. Corporate Affairs, followed by comments by Don Sandford - President NSI
The proposed agreement with Vanenburg and ClickChoice.com will be going to a special meeting of Net Shepherd shareholders in January or February of the new year.
The management of NSI met with the head of Business-to-Business Research at Forester, the leading American Technology and E-commerce research company to discuss NSI's business model and their technology.
The major reason why NSI didn't generate $10 million in revenue this year has been largely due to the delay in the commissioning of ICMS 2.0.
The revenue they were to generate in Q3 and Q4 from that... year 2000, had been passed over (or delayed) because the system took longer to commission than they had originally expected. That is why costs are higher and their revenues are lower.
Don Sandford is not desperately concerned about this situation.
In the original financial forecast they had for the year 2000, they made a plan of attack which had the first two or three quarters of the year 2000 making up the losses in revenue that they expected in Q3 and Q4 of 99.
They lost revenue because they are not fully in production with a system that they had sold to their customers.
Reducing delivery times is a very high priority for Net Shepherd.
Their application companies have very ambitious go-to-market strategies.
These application companies can really successfully leverage the platform that they are building with ICMS 3.0. They can use the current platform as well.
They do need capital and access to software resources in order to get to market and speed to market is important.
Net Shepherd needs to deal with the issue of its Internet presence and particularly its presence in the United States. They are not that visible to investment capital people and other technology companies that are operating in the U.S. and they want to improve their presence. Therefore they have made very specific decisions about putting their applications company in the Silicon Valley and in other high-tech centers in the U.S.
Where they locate their offices will depend upon the markets they're trying to serve. Places like New Jersey, Atlanta, Pasadena all make sense for them. The more work they do in those areas the better technological partners and business partners they develop and the more visible they become for investment bankers.
This deal enables them to put together types of partnerships that enable them to become financially commercial.
They need to address the issue of how they get to NASDAQ. They want to move to NASDAQ largely because of the liquidity and visibility it provides, but more importantly they can develop go-through financing strategy, financial partners that can put you into the big league on the Internet and make Net Shepherd the kind of play that we've seen with other high-value Internet stocks.
So that's what's really behind this deal. It's been called an enhanced business transaction for a number of reasons.
Number one, they had the opportunity to work more closely with the Vanenburg Group and the ClickChoice, two companies that they have developed a relationship with over the last two years.
They are very comfortable working with these people. They find them highly professional and they can bring a lot to Net Shepherd in terms of moving them to the next level.
Now, in order to accomplish rapid software development, they have elected to work closely with Vanenburg in the development of software teams that are located around the world. These teams can augment and support the development teams that they have located in Calgary.
The $7.5 million U.S. ($11 million Canadian) of resources Vanenburg is putting up allows them to reduce the platform development cycle time very, very quickly.
They want to use that money to invest in ICMS 3.0 which has some outstanding functionalities that don't exist in the current ICMS 2.0.
Second, their applications companies have an appetite for consuming cash as they position themselves in the markets which are all very high-growth. Their new companies are all future high-revenue-generating business potential companies.
It is very attractive to have a situation where they can acquire $11 million U.S. ($17 million Canadian) in capital to finance the operations and go-to-market strategies of their applications companies.
They now have access to the capital to fuel their applications businesses - each of which they believe are ideal candidates which have business potentials equal to that of the platform.
The Vanenburg group of companies has a portfolio of businesses in Europe and some of them have synergy with Net Shepherd. They believe there are other applications companies that they will develop with Vanenburg which will actually expand the business opportunities for their company.
One very good example of that is the ability to use Net Shepherd's platform with some of the other Vanenburg companies to create the next generation of web enabled ERP software. This is one of the reasons why Vanenburg and Jan Baan is particularly interested in their technology.
Jan Baan is a very impressive individual. He certainly puts them into the league of all the major Internet and IT players in the world. This is a man that has the same level of visibility and prestige as Larry Ellison and many of the other people that exist on the Internet today, and he will bring to Net Shepherd a lot of credibility as their Chairman. He'll give them access to investment banking resources that they don't currently have access to today and perhaps more importantly, he'll give them access to business partnerships and networks of people that they also don't have available to them now. So it really does enhance their ability to enter into the world stage with the capital, the technology and the people that they need to do this.
When you look at the two organizations (Net Shepherd and ClickChoice), not only is there a potential - integration between their business intelligence and their consumer intelligence business, but there's also very good synergy between their people.
Net Shepherd has very strong technical capabilities and ClickChoice has very strong marketing capability. They also demonstrate a very high level of project management capabilities.
Many of the organizational requirements that exist between their businesses can be filled by people in both of those companies.
The organizational and technology integration that exists between these companies brings the application of their platform for Internet filtering and the target marketing applications that will make it very attractive from an investment point of view under the roof of one company.
Some of the reasons why they have gone in this direction . . .
It puts Net Shepherd on an entirely new platform and positions them very well to move into a U.S. listing next year. This listing will be highly beneficial to freeing / extracting the value for shareholders that have been with them this far.
They expect to keep their promise of moving towards a bigger listing in the U.S. likely in the second quarter of next year. That's something that they will have to qualify for and they will be going for as quickly as the transaction actually closes.
There is a lot of enthusiasm for this particular transaction within the company because it takes them to a new level in terms of technology development and capital available for go-to-market strategies. It also radically enhances the Board of Net Shepherd. It also allows them to integrate the two organizations technologies for a better, more focused, story. |
