Here's the Q & A from the conference call...
I will now open the call for questions.
1st Question
Mr. Joseph Barth - Josephthal, Lyon & Ross
Joseph: My question is - we're half way through the 3rd quarter at this point in time - what do sales look like?
Rainer responds: - I don't think at this point in time, we're in a position to release that. We will leave that to our next quarter release. We've taken a very conservative approach to the release of our numbers here, and I want to continue this and not create any expectations out there. I believe the best for the company would be to release those sales numbers at the time when they're due.
Next Question
Mr. Todd Headrick - Interstate, Johnson and Lane
Todd: Hello Rainer, I'm not really concerned about the sales, because we never really know what the sales are, I'm worried more about the current health of the company. From looking over your Q's it looks like you have about $1.2 million in cash, which you have a 90 day loan it was due yesterday, how are we going to pay this back? Your accounts receivables are going down dramatically and so are inventories. This is not a good sign for cash flow. Can you enlighten us of the financial health of the company?
Rainer: Sure, we believe that we sit quite comfortably with our cash position. The loan that you mentioned has already been extended, so it's not going to be collected. We have other opportunities on the credit line side. We also have additional opportunities to bring additional funding into the company without adding dilution to the shareholders out there. We have a new controller in place who under Mark Bestow his name is Jereme Putikan who very aggressively is collecting our receivables. The reason why our inventory wen down is because we sunsetted a whole bunch of products, so it obviously will go down. I do believe that from a financial position we really do have nothing to worry about, we're extremely confident Todd, that we will have all of the finances that we need to aggressively market our new and promising products.
Todd: Why is this company continuing to run as if it was a private company? You do not respond well to the questions on product sales. We're not really looking for a projection we're just trying to get a feel of where the company is. It's always like Cracker Jack, it's like at the end of the quarter we don't know what we're getting,. whether it's a profit or a loss. Is there any way that the company can guide us in a healthy direction?
Rainer: There are certainly ways to guide the public and we might implement a technique better than we have in the past. As you might know we also have new auditors on board - Grant Thornton, and we've been sitting together with them quite intensively already and we might even change the structure of our recording mechanisms in accord with our auditors to make these numbers easier and understandable because, I admit it is somewhat confusing, but we are clearly adhering to gap requirements here. I know they're not always easy to understand so Mark, Grant Thornton and us have sat together and we might change the format of that and we might also come up with a format Todd, that's guides you better into the future. But I don't want to shot from the hip today in this conference call, I think everybody today will be very pleased how we will improve our communications with the investment community and how we will guide you in regards to numbers going into the future.
Todd: One last question. What warrants you and Taylor both taking down prospectively $239.000 and $185,000 with a 16.3% increase in salary and $500 car allowance when the company continues to lose money?
Rainer: Good question. And Daniel and I already have taken the steps according and will decrease that and I think you all will be happy with our involvement in that area.
Todd: But what is the decrease?
Rainer: The decrease is quite substantial. We'll release that on our next numbers.
Todd: OK, Thank you
Rainer: Thank you Todd
Next Question
John Garrett - Robinson, Humphrey
John: Good morning, I'd like to ask, can you comment on anything with John Shaw. Is he still with the company or has he left?
Rainer: John Shaw is no longer with Syncronys. In the restructuring process that Mark and Daniel talked about, we eliminated the position of VP of Communications in the Company.
Next Question
Todd Headrick - Interstate, Johnson & Lane - (Follow up Question)
Todd: Rainer, since it's obvious that people aren't asking questions, I'm going to go ahead and cover some things. BigDisk - we gave away for 2 days - I was wondering what the outcome of the promotion was?
Daniel Taylor: Thanks Todd, we gave away approximately about 75, 00 free downloads and we had online sales, I think of about another 2,500. What we're looking to do here, the strategy underlying this is to really cease the market because this is a brand new category. We will be adding to BigDisk which is a pretty significant functionality which makes the giveaway copies now valuable as generating upgrade revenue. NT support and network drives. This means that a user, example on the network drive support can access hard drives anywhere across the network. This is what our research has shown as a pretty interesting feature. That's been followed by some of the influence makers we've been discussing the product with. So we think that the program is a very useful and low cost way to cease the market and generate the category potential that we see the product having.
Todd: Rainer, I guess it's back to you or Mr. Taylor - Can you enlighten us on the two lawsuits that have currently been filed against the company?
Rainer: Which ones are you talking about?
Todd: Is there that many?
Rainer: No, there aren't any so, I don't know what you're talking about.
Todd: Vinco.
Rainer: Vinco. No, this is the other way around, we have a dispute with one of our manufacturers. This is just a typical dispute in the coarse of business, nothing exceptional.
Todd: And powerpro software?
Rainer: Powerpro software is one of our small developers, this is a simple commercial dispute, this is not in major litigation a simple dispute as with any coarse of business. Otherwise, no lawsuits, let me repeat this.
Todd: Also, your OEM situation, it looks more like a shipment of coupons and demos rather than pre installed software that you're paid for.
Rainer: Maybe Daniel wants to address that, but it's certainly not just simply coupons. OEM and direct marketing has many faces today, hang on.
Daniel Taylor: As you know OEM has many different complexions, one of the key things for us is being able to leverage inexpensively, potentially at no cost in broadest demand that's what guided our structure in the deal with Askey. We have no up front costs what so ever in distributing products through them. We're currently in discussions to expand beyond the half million modems that they're we have under contract now. The plan there, is really to create OEM products that they burn a the CD and their expense and for us to use that for us to gain access to users. Who that try the products, and then upgrade easily by just pushing a button and connecting on the website or picking up the phone and calling the 1 800 number. What they've already got then, the product installed in their computer, and a simple access code enables them to upgrade so we keep our fulfillment costs to a minimum. Those are the concerns that motivated us to do the deal the way that we have done it there. On the Western Digital deal, we're currently in discussions with doing a more classic OEM style arrangement, but I don't want to get ahead of myself here, we all have a number of other discussions. Our creativity on the OEM side is really going to just enable us to open many doors that are not available to companies that are just thinking of in a classic OEM structure.
Matt Brown - Blair & Company
Matt: Yes, I was not present at the beginning of the call so I don't know if this question may have already been answered. On the products that were sunsetted, which products now does the company or remaining with the company are being marketed?
Rainer: The products that are remaining basically now, and Daniel can better address this are: BigDisk, Zipper, EyeCatcher and Windrenalin. These are our leading products, and they are in the sales channels, being marketed strongly and aggressively and improving in sales.
Matt: One other quick question. On the note that matured or was supposed to have matured on the fifteenth and you guys were supposed to have extended that - what is the extension date?
Rainer: Probably about 3 months
Matt: Thank you.
No Additional Questions - Thank you for your participation, please feel free to contact any of us with any additional questions you may have. |
