Here is today's email update from Mr. J. Leach, Pres. and CEO of InfoCast...a very nice summary of achievements and go-forward prospects for InfoCast:
To Fellow Shareholders, Prospective Investors and Friends of InfoCast:
It has been several busy months since my last communique on InfoCast’s operations so I want to take this opportunity to
bring you up to date on the significant progress that we have made over the past six months months – including the negotiation of a major acquisition, i360 Inc. This brief update is in advance of our Annual Report to Shareholders for the year ended March 31, 2000 which we expect will be available in August for our September Annual Meeting.
As I stated in our last communique, our preference is to send these letters via e-mail. Thus, I ask that if you are receiving this letter in hard copy via fax or “snail mail”, please provide us your e-mail address by e-mailing our Investor Relations Department at “investorrelations@infocast-corp.com” (or by telephone –1-877-338-8889). In that way you are assured of
receiving all company news on a timely basis.
Our Market and Where It Is Going
It was just over 12 months ago that the Application Service Provider (ASP) acronym was coined. In response to enormous
market potential predictions by leading market analysts and Wall Street’s unbridled enthusiasm, many existing and new
companies declared themselves as part of the ASP industry. Significant amounts of capital were raised by these companies to fuel ambitious growth plans.
So what has been happening in the market? Well, not surprisingly, the road from a great concept to reality is somewhat longer than originally estimated and none of the emerging ASPs have yet shown substantial revenues. That is not to say that the markets are not there–it just takes a bit longer and there are some potholes en route. But that is one of the reasons that the ASP sector was hit so hard during the spring tech stock price collapse – most of the high profile ASPs fell 65 to 70%.
Also the market sector is starting to differentiate – a sure sign of maturity and greater investor/customer knowledge. A recent market analyst report segmented the industry into three groups:
Hosting ASPs – largely former ISP’s (Internet Service Providers) with existing data centers, who are offering a value added outsourcing service to utilize their excess computing resources. This segment is rapidly commoditizing and will continue to face stiff price competition
Application ASPs – ASPs who host “best of breed” third party software and provide access to those applications on a “per use” basis. These companies are the ones who captured Wall Street’s imagination last year; however they are now finding that there is a considerable amount of customization required to make these applications work for the customer, which takes time, requires system integration talent and erodes margins.
e-Enabling ASPs – this group provide proprietary solutions to customers in an ASP or “pay per use” format. Accordingly, customer value is both in the uniqueness of the solution as well as the variable cost pricing model.
InfoCast has chosen to position itself in this latter category – e-Enabling ASP – as we believe that greater and more sustainable shareholder value can be created in that segment. Since most of us get confused with much of the technical jargon around the Internet and the New Economy we have come up with the following simple definition of our business:
"We develop, provide, host and support unique "e"- enabling solutions".
Our unique solutions - customer contact centers, e-Learning and, following the i360 acquisition, custom portals – provide the tools for our customers to enter the e-Commerce world expeditiously and in a cost effective manner.
Our Operations
When I joined InfoCast, the development teams were nearing what everyone believed was the final leg of the development
process – it always takes longer due to unforeseen hurdles, nevertheless we can now say that all of our technologies are commercially available. I would say that we were also suffering from “trying to do too many things at the same time”. Over the past number of months we have introduced a greater degree of degree of focus into our operations in order to shorten our time to market.
Value-Added Hosting
Our main Calgary data center turned up the first customer mid way through our F2000 Q4 and revenue has been building
steadily since that time. In March we formed a new strategic alliance with Computer Associates which provides us access to CA’s Enterprise Data Centers (the first Canadian EDC is being built adjacent to our Calgary data center) as well as to CA’s custom software capabilities. We are the only ASP with whom CA has established a strategic relationship.
We are not in the pure Hosting business – our first priority is to host our own unique applications. But we have developed a “value added hosting” offering which is a complete program that walks the customer, whether a software vendor or an e-business, through the process of Discovery, Development and Delivery en route to the web. We also help software vendors work through the process of enabling a product into a web enabled service offering. Many of our customers know they need to be on line, but they are so intimidated and confused by the New World that they are frozen into inaction. Our DDD program takes the mystery out of the process and helps them get to the finish line expeditiously. Our value added hosting customers represent a variety of successful businesses: NevadaBobs.com (on line retail golf portal); English
Practice.com (English as a second language portal); IMark (audio books distributor); Applied Terravision (fixed asset
management); MPower (wireless application provider), Dental Card Services (cost plus based insurance) Vela (insurance
provider to Trader.com) and Facet (multi-stakeholder decision support system) . Each of these customers chose InfoCast value added hosting to move their business forward onto the web.
Virtual Contact Center
Our Virtual Contact Center technology was completed and tested during the first half of 2000. We have now dedicated
significant resources to our sales and marketing efforts. Initial market reaction is very positive and we are in advanced discussions with several large call center operators and telcos, with the view to initial customer installations during the last half of this fiscal year.
Our target markets are existing call centers that wish to expand or become web enabled as well as green field operations that wish to locate agents remotely. We have all experienced the frustration of dealing with traditional call centers – InfoCast’s technology addresses these issues, including the frustration around agent availability, and equips agents with the ability to
respond to voice calls, emails, text chat and inquiries over the web.
E-Learning
Our e-Learning product line was commercially available in May and we started to deliver under our first major sale – a US $8 million, 5 year contract – in June.
I am particularly pleased at the pace that these training products are achieving some market recognition. We now have over 750 courses, from recognized content providers such as ITC Learning, Teach.com, and High Tech Campus, that we can
offer in either electronic or CD ROM format, delivered via our Virtual Learning Academy, When our Call Center suite of
training products is available towards the end of the summer, I expect that we will be positioned to dominate that market segment as we will have the only comprehensive web deliverable call center training package in the world.
Custom Portals
This is the technology that comes to us with the acquisition of i360 (the acquisition is now scheduled to close in mid August). The first customer, Britt Worldwide which represents over 1.2 million Amway independent business owners, started to come on stream in June. To date we have approximately 10,000 subscribers. The pace of sign ups, now at 100 to 200 per day, is
expected to accelerate in August as new dimensions of the offering are added and we introduce it to Britt Worldwide’s
international sales force in September. All of these customers are hosted in our Calgary data center.
We are building significant expertise in the multi-level marketing market which we believe will be the focus of this product going forward.
InfoCast People
Our team is now basically complete with the addition of:
Herve Seguin, a senior high tech public company financial executive, as Chief Financial Officer in January Wendy Berney as Vice President, eLearning in April Don Rudman as Vice President, Virtual Contact Centers, in May, and
Bo Woloshyn as Vice President, Marketing, in June.
A number of well qualified executives will also come on board in August through the i360 acquisition. We are already finding that our operating groups have complementary personnel skills; accordingly, I do not see having to add any additional senior management positions.
Corporate Progress
In December we completed the requirements to become a fully registered reporting company under the Securities and
Exchange Commission rules. This was a major milestone in our development as a public company and part of our program to raise our profile in the US domestic capital markets. To that end, I am spending time each month on Wall Street and we have been able to attract a research based firm, SmallCaps OnLine to initiate research coverage on the company. We remain committed to transitioning to the NASDAQ market and expect to commence that process immediately following completion of the i360 acquisition.
We have also started the process of attracting additional qualified independent Directors to our Board. In May Glen
Allmendinger, Founder and CEO of Harbor Research, was appointed to the Board. I expect to make two additional such appointments within the next few months.
What To Watch For,
Over the next number of months we will be concentrating on commercializing our technologies. We started the year with
negligible revenues – the objective is to build the revenue base rapidly such that by our fiscal year end we will be at a breakeven from a cash flow point of view. In order to achieve that goal, we will be working on:
1. Increasing our market leverage through a strengthening of our Strategic Relationships
2. Rapid penetration of the Multi Level Marketing sector
3.Acceptance of our Contact Center technology by a significant call center operator.
I trust that this communique updates you on the significant progress we have made to date and that I have imparted the sense of excitement that we feel about our short and long term prospects.
Jim Leech
President and CEO
July 17, 200 |
