These notes are dedicated to Retired&Playing & SMartBiz
who both taught me more about NEOM than most will know...
Well alrighty now.
Have you ever worked with a team and noticed that once you get the plays down pat, then pure synergy follows suit. As a matter of fact, if you get real good at team work and like who you’re involved with, then plans become somewhat obsolete.
Sensing what your team mate needs or will do before they do it is extremely difficult. Eye contact, facial looks, body language and intuition all make for a great team. Well, this is what was going on at the SM among NEOM’s management. They all carried each other and led with looks and que's. This is what I saw and experienced first and foremost and it told me they had it 'Going On' between them.
But before I start though, there have been numerous posts by the other attendees that are all good synopses of the events which they each experienced. And I wish to thank each of them for their time and efforts putting it out there. Good job guys. I will try to convey what I feel they may have not, so as to keep the redundancy to a minimum.
When I arrived, I saw a flurry of people interacting with management. WF grabbed me first and was his cordial diplomatic self. You can not recreate this generation. They exude a sense of grace and style which I find somewhat lacking in today’s young business executives. I next got to chat w/CF for a bit and then on into the meeting.
They opened the meeting by presenting 3 Power Point (PP) sections; General, PC and NMPR, all in this order.
They ran the PP’s past Special Counsel for approval prior to publishing them on 12/16. So you must read into these presentations and connect the dots. The information is there and it is all quite good to say the least. If not, then some will have to wait till the end of the QP to get a handle on what is happening. When will the QP officially end? Only the SEC knows for sure. But there has been talk of an accelerated filing process now in effect. I was informed that when the QP is over, we may not know that it is officially over other than the fact that they will be releasing ‘material’ news, and a lot of it.
Prior to the meeting I forwarded a list of 18 questions for their review. I wanted to keep it somewhat quite due to some of the sensitive issues that were brought up. I received a quick reply, but there are a few answers which are to remain private. In essence, they basically took these questions and formatted the PP’s around them using them as a general pulse of what we shareholders wanted to know. The vast majority of this information is contained in the PP's. However, they could only provide glimpses of what the company is actually performing due to the QP.
I will also say that a business plan should be made part of our future PR resources and that they are planning on beefing up this aspect of shareholder involvement.
Also another point was made regarding the effects of dilution being offset by future revenue growth. We all know the drill about needing to perform equity distribution for operating expenses and overhead. One thing which was pointed out was the question of "would we rather have revenue now, or profits in the future." This made me think that they indeed had offers in the past and are speaking with the MSFT’s and GOOG’s of the world today. But IMHO, I don’t believe they wish to sell out now for pennies for what they believe will be dollars in the future.
The question of how they are repaying the $10Mil. loan via $860k monthly payments is thru the $20mil. SEDA. Additionally, the $100Mil. SEDA has not been registered with the SEC, so this funding mechanism remains inactive at this time. However, I do believe this credit facility was specifically established for M&A., and rightly so.
The opening consisted of strong news on 27 current patents (15 US and 17 foreign) which define NEOM’s “rock solid” Infrastructure and OS Platform with an additional 37 being filed. CF really emphasized this point and repeated the worthiness of these patents. They span NEOM’s history. I believe the first was granted in 1994 but was filed in the early 90’s. CF also stated they could continue filing patents well into the foreseeable future spanning the next 10 to 20 years with the way this space is evolving. New applications are emerging all the time, and it is exciting to be the first company with a lock on the mobile marketing areas that they are playing in.
Loyalty Point’s “Search Comparison Shopping” patents were cited as being particularly valuable for the following reasons:
1. Location
2. Purchases
3. Voice
4. Search
Also keep in mind new applications called “Contextual E-commerce” involving interaction between a cell phone’s IR port and billboards, movie posters as well as TV. Think Bluepulse.
Regarding TV, keep your ears opened for TIVO. There could be strong synergies involving clicking on a logo or visual imaging or even receiving an IR message thru the cell phones IR port which would enable communicate between these devices. The 3 key area’s affecting NEOM’s technology and that of TIVO’s are as follows:
1. Maximize handset coverage
2. New critical emerging communications technology
3. M&A as a key development to promote technology
Options were discussed at length and I believe were picked up by the other attendees who posted.
And yes, NEOM did put themselves on the hook due to the fact that they mentioned the MoBot deal while in a QP with BSDS. Hence, the SEC did require the last 9 months and then 2 years worth of “audited” filing from MoBot to be filed in with NEOM’s S-4. I believe they were trying to provide the shareholders with as much info. As possible and over extended themselves as a result by 45 days. Not to worry though, I personally believe we are very close to finalizing BSDS and will achieve the SEC’s approval shortly.
CJ poke about Cornell and the 3.2% daily volume and how they thought the volume was excellent and that they have gone from 900 shareholders to over 13,500.
The meeting shifted gears to cover the topic of Enablers verses Mobile Marketers. I believe they are seeking to acquire or do a M&A with 12Snap as denoted in the chart on page 8. If you study the chart, 12Snap, Sponge and MoBot all fall to one side of the chart. IPSH was specifically mentioned a number of times and are an Omni-Com holding. I believe they are using ‘color coding’ to tell the story of what they are planning on doing regarding integrating the Enabling side of the business with the Mobile Marketing side.
Also of particular interest is the fact that MoBot is both an Enabling Tech as well as a Mobile Marketing Tech. and are cash flow positive! I believe it is NEOM’s specific and clear intention to play in both spectrums, thereby dominating the entirety of both spaces under one roof. And they have the $100Mil. SEDA with no personal notes or business assets such as patents used for collateral to do just this! Additionally, it is NEOM’s intent to offer partnerships to Carriers for free. They seek to develop niche markets in areas such as banking, government, shopping, etc. and to proceed growing the business from there.
As I’ve stated numerous times before, CF is a true visionary. Well couple that with a guy by the name of Martin Copus, and NEOM will be unstoppable. Martin Copus is quite literally a walking mobile marketing encyclopedia. This guy is as sharp as a razor. He performed his portion of the PP with clear insight and unshakable faith in the direction he plans on taking NEOM.
By the way, MC is the head of PC Technologies. He has a personal interest as to why he chose to come on-board. He believes this will be the next Killer App and he wants to be involved when the wave happens. He discussed NEOM’s IP and production capabilities. He described NEOM’s IP as the Switch connecting the cyber world with the physical world. He described how the major carriers needed NEOM’s IP for search involving location based services and automatic location ID via such tags as zip codes. He mentioned Symbol as a licensee and a co-marketer of NEOM’s IP since 1999 and it includes RFID as well.
CF mentioned n analogy involving a ‘Sword & Shield.’ The Sword is NEOM’s patents and you use these to pierce the armor of your rival. He stated that he wanted to be careful using this because he would much rather partners or licensees than rivals in the court room.
They discussed Virgin and the fact that it was a significant win for them involving a 6 figure settlement and on-going store licensees even if it is only involved with the US stores at present. Virgin has 220 stores in operation an present and look to see where our patents are enforce in relation to where Virgin is conducting their Mega Music Store business.
MSFT was mentioned as actively pursuing the mobile marketing space that NEOM holds patents to. CJ mentioned that in FY05, the mobile marketing space grew by 400% and will reach $1bil. by FY07 in the US alone and $4bil. globally by FY07. The market is quite literally ‘untapped’ and at the beginning of its birth. NEOM is centered in this space with it’s multiple patents and patent extensions stemming back to the early 90’s. Also, NEOM is actively pursuing markets with its IP protocol with and without platform offering for all of the following:
1. Direct switch players
2. carriers
3. OEM’s
4. Search Engines
5. Comparison shopping portals
6. Location based enterprises
Quite simply, this is going to be huge!
The Japanese were mentioned as being ahead of the US in the mobile marketing arena. MoBot is presently working in Japan with a company by the name of Superstar who are performing sema code ads for NW Airlines. They have a foothold there and MoBot’s presence and visual recognition technology is increasing quickly.
12Snap is currently performing MacDonald’s bar code promotions in 5 European countries. Their add campaigns are currently underway and gaining traction fast.
MC spoke about the Early adapters of the mobile marketing space and compared this to an analogy of low hanging fruit. Early adapters are such entities as the following:
1. Search
2. Active Labeling
3. Banking
4. Homeland Security
MC discussed NEOM’s’3 in 1 Functionality’ involving download or pre-installation of PC and the 3rd Screen involving 4 primary function the following:
1. Picture
2. Sound
3. Color
4. Motion
And PC has then all. He went on to describe the cell phone device applications and handsets currently able to utilize PC. He discussed white brand labeling where another Enabler could deploy PaperClick without PC’s logo ever showing up on the screen, but NEOM would be receiving the licensing fees in the back room operations center.
The most prolific and all encompassing description of PC would have to be slide #35. PC is shown on a linear scale starting from the left as ease in adaptability and usage. It becomes more complex as you travel to the right of the equation. Visual recognition via PC is an easier app to deploy than would be 1-D bar codes. 1-D bar codes have been problematic as evidenced by ScanBuy’s inability to focus on the code the first try. Unfortunately, it takes many attempts to get the optical zoom with ‘corrective lens’ to focus under the restraints of glare, lighting, near sightedness and far sighted conditions. However, I believe that if NEOM did experience a similar problem with the 1-D Bar code algorithm recognition, then it does not have this problem currently. In other words, the entire equation outlined in slide #35 works and is ready for mass market.
Tomorrow or shortly thereafter, I’ll provide my notes on NMPR which is going to be an explosive and burgeoning cash cow for NEOM.
Once again, sorry for the delay. Thanks to NEOM management for the countless days and weeks they spent putting this all together for us. Thay really hit the long ball right out of the park. I’m proud to say that I am a NEOM shareholder.
All the Best, JP
