OK Here goes...not too many in attendance,but the 'hard' questions were asked and Ed answered them, admitting that some of the answers were frustrating (to him as well as us) because there is no news to report.
Will Amex delist AXC? They have responded to letter from Amex asking for an exception to delisting rules, need exception because the company lost money the past two years. Do not have a response back yet, no time frame when they could receive it.
ADS sale: the strategy was to sell when this part of the company showed a profit in order to get a better deal. They got two offers, but one wanted the patents too, and the other was too low in price. Market for storage has tanked so deals are harder to make because acquirers stock prices have fallen too far in value. Doesn't see much improvement this year, but still looking for a buyer, including the first potential buyer and a new company that they have been talking to. ADS has a inventory problem because ordered parts ahead of sales, and will be working very hard to reduce inventory by end of year. Have been looking at a line of credit to finance inventory until it's sold. Still trying to sell Colorado Springs property, but nothing he can announce at this time. Big bonus paid to head of ADS for making it profitable and bringing in more clients.
Biggest expenses will continue to come from streaming video side. Current expenses for iNextv and AENTV are 2 million per month for making 250 episodes per month. They are getting between 35,000 and 75,000 viewers per day and see this increasing quickly over time. Scaleability is not a problem because they use Akami (sp?). They have new products coming very soon (after the meeting Karen mentioned HGTV as one of the potential clients). So, they are getting more business but still not enough to make a profit, especially with ADS problems. TV1 is more service based business including webcasting, and is well positioned technically. Again, making progress but the crash of .coms and advertising, has made the sledding tough. They still have an office in Berlin but only one production facility in Munich, all of which is on hold because no money to fund this part at the moment. Have been talking with venture capitalists and private investors but due to slow down in funding in general, things are taking longer. Want to IPO iNextv, but it can only happen if/when market improves.
ITG: Patents were filed about a year ago, takes about 18 months for review, so should be getting them this year. Don't want to license ITG at this time, would prefer to provide encoding services for others until iNextv and AENTV are better known. ITG patents deal with "3 cosine transform" which acts like a filter. When the video is bad, contrast is emphasized, and as the video gets better, resolution is emphasized. First generation ITG came out about 18 months ago and it was designed to take low bandwith and make the picture better. 2nd generation came out 9 months ago and is aimed at broadband. 3rd generation will have new procedure for sharpness as well as a better picture at less bandwidth. Less bandwidth is important because the cost to clients will be less. I can't remember when this will be deployed but my fuzzy brain cells tell me it is testing now and soon in use. Going to trademark this.
Wireless will work with ITG as long as user has RealPlayer or Windows Media Player. If wireless chooses another standard then they will have to look at customizing ITG.
Have been diligent with enforcement efforts on patent infringement and licensing agreements for video and DVD. Royalties will continue to come in but won't pay all the bills. Selling syndication is gaining momentum across the internet but getting more advertising dollars for company branding is still slow. Because the internet has crashed for advertising in general, many companies are not spending their dollars here, and traditional ad companies are downplaying the importance of ads on the internet.
So, is this company going to survive? Ed was adamant that it would,but admitted that it could be very ugly for the rest of the year. Best case scenerio was that they could scrap through this year, adding more debt basically. If money runs out in August, when short term debt is due, then company's fate will be in debt holders hands. It seemed to me that Ed knows that he would not be around if the worst happens. Will the worst happen? Beats the hell outa me... but I know that there are assets here worth a lot. Whether we will see them stolen or sold remains to be seen.
Not happy, not surprised, not smart,
CMM |
