Jeffrey, INNI releases another terrific product and a great story...
This article from the KALAMAZOO GAZETTE, is the first public reference to the new I/NET business venture in Internet based encrypted offshore financial assets management. In my opinion,this product has a huge potential and is transportable to any offshore center in the world. Watch this one carefully!!
Regards, F. Goelo + + +
PS: I know this stock very well, having bought in early January at around 7/8 and sold over half of the holding at around 1 7/8. Last close: 1 7/16. I expect $4.00 within a short period. For the record I still hold 25,000 shares long.
kz.mlive.com
Having seen the worst of times, I'Net Inc.'s dynamic duo are now seeing some of the best
Sunday, February, 28, 1999
BY LYNN TURNER
KALAMAZOO GAZETTE
I/Net Inc. made its first fortune in the mid-1980s.
Since then, the local computer software technology firm has lost its fortune twice but is riding high again these days with IBM as a regular customer (and 4 percent shareholder), some good products in the pipeline and the two steady leaders at the helm.
Just last week the company announced plans to soon unveil an Internet-based program that would allow people with offshore financial assets to management from anywhere in the world using a highly secured encryption system.
"In Kalamazoo, a lot of people have called me the unguided missile and Steve (I/Net President and CEO Stephen Markee) the reins that keep me in a straight line," said James Knapp, founder of the company. "I have a lot of energy, lots of ideas of things we could do. And he, being the MBA/CPA with the respect of the community and whatnot, would be the guy who would be holding me in and making sure I don't step on my tongue and make a fool of myself all over the place."
During the past year, the company at 643 W. Crosstown Parkway released a World Wide Web server product that allows IBM's AS/400 business computer systems to deploy Web sites (called the Netscape Enterprise Server), it reported a profitable year (earnings of $287,896 on revenues of almost $1.8 million) and it expects to acquire a complementary business this summer.
Still going at age 17
Knapp and Markee are looking forward to acquiring Consolidated Graphics Group Inc., a privately held computer graphics and marketing firm based in Cleveland. Their hope is the combination will move I/Net's stock listing onto the Nasdaq SmallCap Market and help I/Net expand into new markets. Currently, its shares trade on the over-the-counter market under the ticker symbol INNI.
The purchase will shake up I/Net's hierarchy. Consolidated's chief executive, Ken Lanci, who was an original shareholder in I/Net, will become chairman and CEO of I/Net. Markee will become president and chief operating officer. And Knapp will remain chief technology officer. But Knapp and Markee are used to change and used to ups and downs.
Knapp, 49, started I/Net in Kalamazoo in 1982 after leaving Doubleday Bros. & Co., where he was data processing manager. He is a forceful personality who started working with computers when he was 15 and since then has been considered something of a computer genius. He taught missile computer guidance systems while in the U.S. Air Force and has lectured at the Massachusetts Institute of Technology and other institutions of higher learning.
Markee, 53, is rather quiet and low key. A licensed certified public accountant, he has a master's degree in business administration and was an assistant auditor general for the state of Michigan for three years in the early 1970s before becoming director of internal auditing at Western Michigan University in 1975.
The two met at Doubleday in 1978. Markee, who was vice president in charge of planning, was Knapp's boss.
The name I/Net was originally an acronym for "Informed Networkers," Markee said, but it was only used for a short time. I/Net, the company, started as a software job shop - creating solutions to other companies' problems. Knapp said that after he got the company "to the point where I had people willing to invest millions of dollars," he went back to Markee and asked him to be his boss again. That was despite huge differences in each man's style. By Markee's admission, the two haven't agreed on more than a handful of things since they met.
But the two have an easy camaraderie. They break in on one another's sentences and sometimes finish them. And there's no tension when one corrects the other's story.
"The thing that made me decide that I wanted to do it, besides just being with Jim again, was the idea that if ... he (Knapp) went out and got rich and famous and I wasn't part of it, having had that opportunity, I would never forgive myself," Markee said.
Fortune No. 1
I/Net's earliest claim to fame was developing in the mid-80s technology that allowed the compression of image data to the point where it could be transmitted over a telephone line, as are photos on Web sites today.
"Nobody had ever done it before," Knapp said. "It was hot. And we had people who were trying to throw money at us back then."
Unfortunately, he said, the company took the money. They relied on venture capital and failed when those investors took over management of the company.
After eight months and $2.1 million, they announced they were leaving and putting the firm into bankruptcy with $4.6 million in debt, Knapp said.
Legally, the two could have walked away from it all. Morally, they felt compelled to repay the debt, Markee said. So they personally guaranteed to pay off the corporate obligation.
Between fortunes
At about that same time, I/Net was working on a computerized photo system for the Kalamazoo Board of Realtors and developing a way for Borgess Medical Center to digitize X-rays and a voice recognition system for radiologists. The latter would allow radiologists to speak and have a computer write their reports.
"Everything we did kept us going," Knapp said. "It provided payroll checks to the kids who worked for us and helped us pay back the debt we owed to everybody else."
But it was the computer data imagining work they had done that drew the attention of IBM.
An IBM representative told them that data imaging - to IBM's way of thinking - involved a black and white document, 8 1/2 inches by 11 inches, with type on it.
"It didn't take me too long to figure out, 'Hmmmm, it seems like it's pretty easy to do compared to everything I've been doing here," Knapp said, referring to the work he had already been doing to integrate color and digital images.
ADSTAR - Automated Document Storage Transmission and Retrieval - was created in 1987 and helped mark I/Net as a pioneer in computer imaging and voice recognition work. Knapp and Markee showed what they had been able to wring from IBM's older products.
As a result, Big Blue set the Kalamazoo-based newcomer up with what - at the time - was expected to become IBM's next super computer system introduction, the AS/400. The AS/400 is still a cornerstone computer system for business today.
Knapp introduced the I/Net-assisted AS/400 to then-chairman John Akers. He, in turn, had Knapp show it to IBM's worldwide board of directors, which meets only once every four years.
"That relationship with the IBM board and the management committee of IBM, within months of that, led IBM to agree to make an investment in I/Net," Knapp said. "That's where we really took off."
The company invested a total of $7 million - $4.3 million as a minority shareholder and the rest an infusion of capital for the ADSTAR program.
Those were major agreements that were almost lost, however, because of bad weather.
Bumps along the way
On June 21, 1989, exactly one year after the board presentation, Knapp and Markee were headed to New York City to complete their agreements with IBM. But fog grounded almost all morning flights out of Kalamazoo and, despite Markee and Knapp's willingness to pay several thousand dollars for last-minute accommodations, charter flights out of Kalamazoo were also grounded.
Knapp and Markee said they managed to fly into Detroit and catch a Continental Airlines special into New Jersey - for each adult ticket sold, the promotional flight allowed two children to fly free.
"Jim and I are heading off to the biggest deal in our entire lives," Markee recalls with a laugh, "and Jim sits down next to these two overweight ladies that had him sitting in the aisle... Kids are running up and down, throwing spit balls. To me, it was one of the funniest sights. I can still vividly see the expression on his face wondering, 'What in the hell is going on?'"
The duo say they made their big meeting in New York with no time to spare after riding with a New York cabbie who couldn't find the place where the agreements were to be consummated. The cabbie drove them to Wall Street but could not find the address.
"Now the time was getting critical," Markee recalled. "We've got a huge amount of stuff to get through by the end of the day. So Jim rolls down the window - he's sitting up front - and starts yelling at people, 'Do you know where 1 Chase Plaza is?'
"By yelling out the window and having people giving us directions, we were able to make it. We got there. We closed the deal - all the deals."
The men headed back to Kalamazoo that night but only got as far as Dayton, Ohio, where they celebrated their success with a pizza and soda pop.
"We show up at the hotel and we have a pizza, some soda pops and $7 million in a suitcase. Well, it was all wire transfers," Markee said.
He said he and Markee just stood "looking at each other saying, 'This is unbelievable.'"
Another start
The money let I/Net pay off it's past debt and start some new projects. In 1993, it went public in order to help bankroll some of those potential products.
A principal project was a diskette-based bit of computer technology created by Knapp to link people looking for jobs - primarily soon-to-graduate college students - with large employers looking for talent and interested in shopping for it nationwide. Called CareerNet, the product ran well and is currently on the Internet. But five years ago, it didn't take off as had been expected, Knapp said.
A $1.6 million marketing campaign introduced CareerNet on ABC radio and MTV but was targeted at young people instead of parents. That generated few sales and was, Knapp said, "a big mistake, a huge mistake." Parents and grandparents have the money to buy the product (which cost about $99) for their kids.,
During the same time period, I/Net was working on a voice recognition system for use by pathologists at International Research and Development Corp., a research laboratory in Mattawan that performed pre-clinical testing on pharmaceutical products. Because I/Net was flush at the time, it decided to front the money needed to develop the system, Markee said. But that $200,000 investment grew to $400,000, and then $600,000, he said. IRDC's finances, meanwhile, swung from healthy to heavily indebted after it purchased Carme Inc. of California. IRDC's president and others at Carme were found in 1995 to have falsified earnings reports for 1993 and 1994.
IRDC filed for bankruptcy in fall of 1995 and left I/Net as it's second largest creditor. Markee was ultimately able to retrieve only 10 cents on each dollar owed the company - approximately $60,000 on a $600,000 debt.
I/Net had borrowed working capital against the money owed by IRDC and after IRDC failed, I/Net's note was called. The company subsequently laid off 35 of 50 workers in 30 days.
"We shrunk the company literally 75 percent in that time period because we had just been banged," Markee said.
Beating Big Blue
Left with about 10 paid workers, and five working without paychecks, who were dedicated to IBM contract projects, some of the programmers developed a Web server for the AS/400. I/Net offered it first to IBM, but Big Blue declined, saying it was working on its own product. I/Net's hit the market more than a year before IBM's server and was well received by businesses who wanted to update their AS/400s.
"We put our site on the Web and all of a sudden we were getting calls from all over the world," Knapp said. "People were finding out about us on the Web and buying products from us. It was fun. It was great they were willing to do that."
Success included a call from a Los Angeles-based businessman whose son had found out I/Net's Web server and immediately offered to invest in I/Net. Knapp warned him off. But the businessman, Stephen Wallace, chief executive officer of Pacific Brokerage Services, pushed ahead with an investment of $750,000.
"I think he was more impressed with me telling him not to invest in us at that time because we were real shaky," Knapp said.
The new capital allowed let I/Net to rehire some programmers and create new products such as the Webulator/400, a product that lets existing AS/400 applications run on the World Wide Web through any browser without needing to change software codes.
A smoother ride
In July 1997 IBM agreed to distribute I/Net's Internet and Intranet software products in North America through all of its marketing channels.
Now that I/Net's roller coaster ride has flattened out, Markee is adamant that he'd do it all over again.
"Absolutely," he said. "Without hesitation. I'd do things differently, but I'd do it again."
The funny thing, now that company finances have smoothed, is the banks are calling, he said.
"People call and ask if we want money," he said with a chuckle. "We're not rolling in dough, but we're comfortable."
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