But somewhat appropriate. hahahaha
DL began the meeting reiterating it takes time to execute with very large players. Their goal remains : invest, nurture and spin off. They still hold controlling interest in other investments but only 4% in theAudience.
As of Mar 31/13, Divisions included : Ortsbo, Deal Frenzy , Magnum and Sweet Card. Investments included : Itibiti , Tunezy , CapThat, Velvet Red, Lexifone , Yappn , Poynt and theAudience.
Mentioned this morning's NR of Sprylogics buying Poynt and INT selling it at a profit within 5 mos. Sale of Itibiti was a $3.5M transaction ( bought it for 2M ) and they still have a 40% stake in the operating company with ongoing revenues of 30% to $5M , up to 40% thereafter and secured perpetual rev share of 40% for first 2 years. Also retained 1 seat on the Board. Noticed a significant revenue increase immediately with new Itibiti team which helped them realise the value in selling off divisions to a single devoted team who can dedicate the resources needed for growth/monetization.
PB then spoke about Ortsbo having a real market experience and validation. The 4 differentiators for Ortsbo as a high fidelity experience are : social casual style , real time , embedded in a use model and tuned for a content domain. ( ie. Ortsbo can translate slang and abbreviations ! ) Ortsbo is still on the right path for spinning off.
1. Customer Care is #1 priority for monetization. Mentioned something about a 40M pages CC and communication was flawless. Also, in a satisfaction survey conducted whereby users used Ortsbo vs native language translators....Ortsbo was rated equal and in fact, slightly better than the user experience with native language translator.
Ortsbo makes all agents multi-lingual. Challenges of Global Customer Care : logistical at offshore centers , increased cost of multi-lingual agents if even available and distribution issues. Ortsbo creates dramatic value and is a 10 fold value proposition ( ie. Ortsbo is 1/10th the cost ). Ortsbo is embedded in existing chat and CC tech and process. Ortsbo is tuned for specific customer to increase fidelity experience. Monthly subscription pricing of Ortsbo aligns with agent labor module and expands opportunities for languages and combinations.
Ortsbo is partnering with large outsourcing operations ( BPO's ) and have good traction with them. Huge confidentiality issues as companies don't want public to know it's offshore.
BPO Market - $162B by 2015
7.6M agent seats
2.6M multi-lingual seats
Potential market opportunity of $1.6B
Contact Centre Market :
$486B by 2015
8.8M agent seats
2.2M multi-lingual seats
Potential market opportunity of $1.3B
Ortsbo is a GAME CHANGING VALUE PROPOSITION in a global market. BPO Market only represents a fraction of the entire market so also working directly where able.
2. Gaming is #2 Priority - trending towards more social and global
$178B by 2015
$48B accessible market
5% estimated market penetration for language services
potential market opportunity $2.4B
Ortsbo is working with several gaming companies and gaming companies very sensitive. Gaming is secondary priority b/c of longer lead times for revs.....wait for new product launches etc.
3. Social Space # 3 priority
A big market but no market numbers
Gave an example of GreBids and their solar panels are from Asia but their customers are from Europe and North America.
Ortsbo's main competition is Lionsbridge's GeoFluent and recently Ortsbo went head-to-head with them and beat them out. Supposedly Lionsbridge is following them into gaming but PB hasn't seen evidence of that b/c he's talking to all the large companies.
Ortsbo Senior US listing in on plan and PB thinks we're on the best path.
Ortsbo spin-out different from the norm so learning experience for all even for lawyers, regulators etc involved with listings on reg basis. ie. Junior Cdn Co to Senior US Co. and tech co. to boot. A real balancing act to meet both Cdn and US regulations as they are in complete opposition to one another at times. ( ie. NO pre-disclosure allowed in US prior to IPO vs pre-disclosure req'd in Canada )( think I got it right )
DL then spoke about Sweet Card and unveiled the " BlackBox Loyalty " program ( Brad Parry responsibility ) which is a customized loyalty program....the art of personalized loyalty. It is a customized debit market and so much more. They hope it comes to market but no guarantee.
Yappn has been receiving flipping amazing feedback ( DL's words ). Yappn has 100M shares, INT owns 70%, controls 60% of that so basically owns 42M shares which are currently in a restricted lockdown. Yappn had a $51M market cap at may 29/13. They are completing final stages and getting set for beta testing. DL will be in LA next week where it will be "previewed" before beta. Entertainment industry is very interested. You can start your own group but not alone....must have group. DL's handle is " BULLDOG". They have already started to execute on a commercial level. A Japanese Investor trade show environment is interested in bringing it to Japan.
INT sale of yappn assets was twofold.......1) to learn the US market and 2) they learned from Itibiti the benefits of a devoted team.
Yappn office in NYC currently but will probably be headquartered in LA. All the money is in LA now, not Silicon Valley.
Some Q & A :
1. Q. Is INT promoting Yappn? Who are Yappn partners?
A. Yappn has shareholders who are not INT shareholders and while INT is not doing any promotions, these other shareholders will do their own promotion. ( think he is referring to the promo piece we saw last w/end by Catalina )
Yappn has 28M shares owned by partners ( all 3rd party arms length ) and will disclose these partners when allowed to. ( think they will be allowed to after the shares have been re-registered )
2. Q. Why were warrants re-priced?
A. Warrants re-priced to reduce cost of financing & minimize dilution. Saved 7-15% in commission when warrants lowered.
3. Q. Spin - out time frame?
A. Cant' say. Series A financing underway...looking to put together S-1, trying to do as fast as possible. Expensive process....ie. $200K for a short form prospectus
4. Q. Why Dawson James as underwriters for Ortsbo spin-off ?
A. INT received deals from 3 companies ( very, very reputable companies ). Chose DJ b/c they were the leader for US PIPE Market in early 2013 ( I have provided a link stating this.....http://www.dawsonjames.com/portal/1st_quarter_2013_pipe.pdf )
and DL thru the process DL realised he knew some of their senior mment and had a very high trust level with them from prior experience. Highly competent. DL stressed these bankers got to see EVERYTHING ( ie. contracts, business model/plan, projections etc ) and would not offer a deal if not satisfied with what they saw. JUNE AND JULY WILL BE VERY PRODUCTIVE WITH PATTERNS EMERGING. NO PRE-DISCLOSURE ALLOWED IN US SO THEY WILL BE GOING VERY DARK. ( should mention both DL and PB stated they empathized with shareholders and lack of info and if we thought we got very little before....it will be zero now )
5. Q. How are things progressing in China?
A. China is progressing better than expected.
6. Q. E-reader update/status?
A. E-reader still on the table
7. Q. Where are we on the hockey stick ( ie. hockey stick trajectory path )?
A. questions 6,7& 8 were asked at same time ....see A8 below
8. Q. New media revs increased from 150K Q3-2012 to $432K in Q3-2013.......did the bulk of these revs occur in March?
A. Its a SAAS model and revs get spread and should grow exponentially but have to load up on staff in prep'n for that explosive growth. Revs ramping up and seeing growth.
Game revs can be fixed fee/game , revenue sharing or subscription with social space.
ALL the deals are now REVENUE deals.
9. Q. Can you comment on departure of Leemon Baird and Mance Harmon?
A. Leemon and Mance recognized their part was done and VP of Engineering was all that was required moving forward. The functionality was there, now just a matter of refining new inventions. PB also mentioned he's known and worked with them many years now.......left on very good terms and they are good friends and always a possibility of a return for future inventions. Ortsbo in good hands with their VP Engineering Mehernosh Mody and we will be hearing a lot more from him soon.
PB reiterated the gaming satisfaction survey rated the Ortsbo experience slightly better than the native speaker experience and at 1/10th the cost ! It's a trade secret that 20-25 languages are the major economics and the rest of the languages offered are window dressing basically.
10. Q. Any consumer promo for Yappn?
A. No.....not a promotional product ( not sure if I got this right? ) They have been in touch with approx 100 Universities in North America ....specifically Journalism students and are looking at organic growth. Also looking at partner programs.
Ortsbo FanTalk led to Yappn ........realized translation not always req'd for Fan Talk so Ortsbo deployment not always needed. Yappn will have both single and cross language. Yappn is an Ortsbo customer.
11. Q. INT listing update?
A. Ortsbo is first priority. Will look at senior listing for INT ( sp dependant ) Ortsbo needs strong capitalization funding. Underwriter thinking bigger number than initially thought.
12. Q. Has INT considered an IR person/dept?
A. Longterm goal to have someone.
13. Q. Recognizing you cannot disclose names nor $$.....can INT disclose how many signed contracts they do have.....how many in pipeline? and what constitutes a full pipeline?
A. Can't disclose......do not want competition to know what they are up to."