The Story of Labwire and CEO George Dexter Morris
(most parts taken from previous posts by c. Bighorns)
Intro
Labwire has so many things going for it, I can't even hardly wait to start rolling them out. I want to talk to the CEO Dexter Morris one more time and get some exact numbers, and then I'm going to start telling his story. It's one right out of Hollywood, and in my very humble opinion, is going to have the fairy tale ending. Dexter's experience is second to none, Labwire's platform is second to none, and the companies customer service is second to none. Dexter's philosophy seems to parallel the genius of the character played by Tom Cruise as Jerry McGuire. Remember when, in the movie of the same title, Jerry wrote his mission statement inspired by The Catcher in the Rye? The main premise being that the secret to great customer service was less customers, and therefore less money? Well, actually, in this case, less customers would actually yield more money...How? Well, that depends upon the customers for which you aim. Far better it is, to give supreme service to the 500 largest companies in the world, then to give poor service "to over 3,000 clients, internationally" Dexter and company is running and gunning for the big dogs, and are already knocking them down. Dexter has built the better mouse trap...and it's called Labwire (LBWR). How did he know how to do that? Because he was founder and CEO of the competition.
Dexter already built the competition DISA inc ( http://www.drugtest.com ) and worked there for 17 years before strange circumstance caused him to lose control of his business. Providence has intervened in the mean time however, because now he has the best platform, service, and staff in the industry. He's gunning for his old companies top clients and are going to (God willing) win them over one by one (after all, he signed them for DISA to begin with!). Furthermore, Dexter does not have to wait for contracts to expire before he can go after the business. Why? Because service contracts are not binding by law (I mean, how could they be? If a lawncare company isn't killing your weeds them you can fire them, right? Same thing here.) And Dexter and company have to do is go to any given Fortune 500 company (national and international), and show them their platform. After they see how much better their product is then all they have to do is ask for a RSQ(request service quote). Dexter KNOWS how much the competitions bottom dollar is....and he will come in just beneath it....every time. Labwire is built, and already has enough business to be in the black.
Labwire Factoid
Greyhound was the first corporation signed by Dexter's old company DISA in 1989. Guess who has the Greyhound contract now?
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~> Labwire (LBWR)
Part I
December 21, 1989
That's the day that Ronald Reagan enacted a mandate called the Federal Drug Test Standard. This new law meant that all employees that work in transportation, or that work in a field that could have an impact on the environment must be drug tested upon hire, and also through random selection. So now, the airlines, the truckers, the bus lines, the train lines, the nuclear reactors, the oil companies, and many others suddenly had the responsibility to see to it that these tests were done...no way around it. But how did it come to be?
Well, what once was a manageable problem, alcohol in the workplace, was starting to become more of an epidemic, because new high powered narcotics were also coming into play. Many of our large corporations were in some ways "functional alcoholics", but trying to make the leap to "functional crackheads"....well, you see the problem. Alcohol and drugs in the workplace were beginning to cost American economy millions and billions of dollars annually. Nancy and Ron had just really begun the war on drugs, and they weren't doing too hot. The majority of the war was first fought at the supply line. They were attacking the drug dealers and drug lords on every level they could find....but not really making a dent in the problem. Then, they tried more of a balanced approach. Just like the Samuelson equation for our stocks, there are two components that can be attacked....the supply....and the demand. Ohhhhh, now Nancy's "Just Say No!" campaign makes more sense! They were trying to dry up the demand, and so, that's one of the big reasons Reagan fast tracked the law to the Supreme Court that allows for random drug testing....no law, and we have no Labwire...thank goodness for Ronald and Nancy.
To be continued...
Labwire Factoid
The Labwire operating platform, which provides modular delivery systems, procedures compliant with HIPAA protocols (unique within the industry), and live user-friendly access to all clients, all while adhering to ISO 9000:2000 certification standards (also unique within the industry).
Part II
So it was, that on December 21, 1989, a new industry was born as a result of the Federal Drug Testing Standard....the drug testing industry. It's also at that moment in time, that a huge proverbial piece slid into Dexter Morris' puzzle called DISA Inc (Drug Intervention Services of America).
(I tell you what.....let's step back just a little bit further.)
This story really begins in the early eighties. Dexter Morris looking for his purpose, moves with wife and kids to Houston, Texas. Soon after arriving in Houston, young Dexter was on the quest to find his niche. Recognizing the escalating alcohol and drug problem in Houston, Dexter was granted a glimpse of the future. In his vision, he could see that American's substance abuse problem was going to create a lot of opportunity for service. Dexter grabbed a Yellow Pages and seemingly at random, found one of the few labs in existence at the time, and called them, and began to ask questions....lots of questions. He met with the owner of the lab, and Dexter formed a bond with this man immediately (they are still friends, 23 years later). Dexter intuitively knew that this was his path, so he thrust himself into the environment. He became an apprentice, so to speak, and began to soak up the business like a sponge.
Years passed, and after the foundation was hardened, Dexter's entrepreneurial spirit broke out, in the form of DISA Inc in Houston, TX in the year of 1987 ( http://drugtest.com/company.htm ). At first, DISA was formed to work in conjunction with rehabilitation centers to bring those into the fold that failed drug tests (how they made money doing this I have no idea...perhaps a finders fee...perhaps some other time I will think to ask. lol). Needless to say, with no Federal or Corporate Mandate, drug testing was almost unheard of, and so DISA didn't have many prospects for the rehab centers. lol
And then it happened....the sex, drugs, and rock&roll climate of 70's was about to reach point break. Here's some key reasons:
1. MADD was founded in 1980 in response to one woman's loss of her daughter to a drunk driver in California. MADD soon grew into a nationwide organization with almost two million members and supporters and with more than 600 affiliates in the U.S., Canada, Australia, New Zealand, and Great Britain. Since MADD was founded, traffic deaths have dropped by more than 40%, according to the U.S. Department of Transportation.
2. The crack epidemic dramatically increased the numbers of Americans addicted to cocaine. In 1985, the number of people who admitted using cocaine on a routine basis increased from 4.2 million to 5.8 million, according to the Department of Health and Human Service's National Household Survey. Likewise, cocaine-related hospital emergencies continued to increase nationwide during 1985 and 1986. According to DAWN statistics, in 1985, cocaine-related hospital emergencies rose by 12 percent, from 23,500 to 26,300; and in 1986, they increased 110 percent, from 26,300 to 55,200. Between 1984 and 1987, cocaine incidents increased fourfold.
Source: DEA Museum, "DEA History: 1985-1990: The Crack Epidemic"
3. On March 24, 1989, shortly after midnight, the oil tanker Exxon Valdez struck Bligh Reef in Prince William Sound, Alaska, spilling more than 11 million gallons of crude oil. The spill was the largest in U.S. history and tested the abilities of local, national, and industrial organizations to prepare for, and respond to, a disaster of such magnitude. Many factors complicated the cleanup efforts following the spill. The size of the spill and its remote location, accessible only by helicopter and boat, made government and industry efforts difficult and tested existing plans for dealing with such an event.
Man, after that, even the tree huggers were angry....and they were all out for blood. When it came to alcohol and drugs, tolerance was over. It was costing us revenue, lives, and now the environment...I'm sure the pressure on the Reagans was enormous...they responded as soon as they could...they gave us the Federal Drug Test Standard (The FDTS is the gold standard for drug testing. It's a six step process that must be met to insure that a sample is accurately processed. Dexter named off the six steps, and also told me the story of his involvement with their inception. I lack the details to do this part justice, but perhaps when I write his full biography, it will be included. lol)
On December 21, 1989, Dexter had another moment of clarity. The Reagans had just given DISA Inc. a purpose. Dexter could see that the Federal Mandate would affect all business, not just the ones required to act. He could see that most of corporate America would have to follow suit, or face the wrath of the tree huggers. Further more, he could see that the collective leaders of the large corporations would see that those companies who passed Corporate Mandates on random drug testing would have a better bottom line. (So, if you are working for a corporation that has nothing to do with transportation or the environment, and you still have random drug tests, then actually it's a corporate mandate, and not Federal. So I guess hate the company, and not Uncle Sam in that case. lol)
Seizing this new vision, Dexter steered DISA Inc. on a new course into open waters....into a business opportunity that have never been done before.
To be continued...
Labwire Factoid
The industry average is approximately $175,000 in revenue per employee, while Labwire’s approximately $million per employee.
Part III
All of a sudden, Dexter found his niche, and DISA inc. was the vehicle.
DISA Inc. became the worlds first TPA (Third Party Administrator) for drug testing. Wonder what the heck that is? Here's the legal definition:
According to the According to the Third Party Administrator Act, MCL 550.902(2)(k), , a Third Party Administrator (TPA) is defined as:
a person who processes claims pursuant to a service contract
and who may also provide 1 or more administrative services
pursuant to a service contract, other than under a worker’s
compensation self-insurance program pursuant to Section 611
of the worker’s disability compensation act of 1969,
Act. No. 317 of the Public Acts of 1969, being Section 418.611
of the Michigan Compiled Laws. Third party administrator does
not include a carrier or employer sponsoring a plan.
TPA's are commonly used to replace the human resources department. Often a company will elect to use a payroll TPA instead of doing the work internally. Why? Because often it's a far easier, and more economical approach. Here's an example of services rendered by a typical payroll TPA.
Businesses of all types and sizes turn to us for payroll and tax filing services as well as commercial insurance coverage such as workers' compensation, general liability and health insurance. Absolute Pay Trust even offers the convenience of pay as you go billing for many types of insurance. All of our products can be utilized together or separately. That means you choose only the services that your business needs.
Payroll service features:
Payroll checks and FREE direct deposit
Delivery of checks and reports
Quarterly and annual tax filings (941, UTC-6 and 940 forms)
Federal tax deposits
Vacation and sick leave tracking
Child support payments
Workers' Compensation audit reports
Other customizable payroll and tax reports
Easy to understand invoicing
How does your business currently process payroll?
In-House
Time is money. Absolute Pay Trust can help give you more of both. Calculating and processing payroll checks, making tax deposits, filing quarterly and annual tax reports, generating W-2's, etc...are all non revenue producing tasks. Time spent on these duties is time that could have been spent on activities that bring money back into your business. Absolute Pay Trust can handle all of your payroll responsibilities for less than it costs you to do it yourself.
So, having a service that allows you not to have to deal with payroll, taxes, banking, and insurance sounds like a good idea. Sounds like much less man power, time, and frustration - not to mention one less department - the human resources department.
And what exactly is the point in digging all that this up now? Well, besides the fact that Labwire uses a payroll TPA, their business model is just the same as a TPA. The genius about Dexter's change of course with DISA inc. is in that he recognized that the Federal Drug Testing Standard just created a nightmare for American Corporations.
Can't you just see it? You have a huge company that's in the transportation industry like say....... Greyhound, and you have 8,700 employees and they need to be tested NOW, and then randomly forever thereafter. If you were the CEO of Greyhound, what would you have done? Created a drug testing department, with staff with absolutely ZERO experience? At this time, no one knew squat about drug testing. The Standard was brand new, and so was the concept. These CEO's knew that they were going to be putting their neck on the line big time if they went into the drug testing field. How much would it cost? How many employees to hire? That's where DISA inc. stepped in...under Dexter's guidance...and right at the nick of time.
DISA Inc. was the solution so desperately needed. Dexter's years of experience meant that he knew what needed to be done in order to comply with the new Standard...but best of all, Dexter could give the leaders a fixed cost, and take the responsibility off their backs. They could go to their boards on the front end and say that DISA Inc. was going to handle it, and here's how much it's going to cost. Needless to say, finding business was not hard to do.
So, once again, why be the drug testing TPA? Bottom line....because DISA Inc. could be the first to define the industry....they set the rules, and the pay scale....and most importantly, it's a business with high margins....well, at least DISA started that way. You see, what a drug testing TPA really does, is fill gaps. The gap that is between the drug testing labs, and the corporation (or government). So really, they provide a business to help businesses. They take care of all the things that are tied into drug testing....sounds pretty simple, huh? Well, so does the human resource department.
Here's a quick idea how many things a drug tesing TPA does. This is a diagram from Labwire's website http://labwire.com/labwire_workflow.asp (BTW - the way that platform works, is patented, and one of a kind....it's one of the key things that makes LBWR so much better than DISA...but more on that later). So, in 1989, the CEO's of America said thank goodness for drug testing TPA's....and they still are!
So now Dexter had a captive industry, and now he needed a way to best bridge the proverbial gap. The first order of business would be to build a computer "platform" to help securely organize all the data that would be coming, and going. But, since it had never been done, how could a platform be built that provide everything that is needed? How could needs even be anticipated when this service had never been done before? Well, they couldn't really. All they could do is build a basic database, and then make it work. And they did. And it worked just fine...for a time.
The 90's were a very busy time for DISA inc. They were the first and the best drug testing TPA in the world. They were beginning to get more and more clients. Their approach to new clients was quite indifferent...they took em all...no matter how big or small. Matter of fact, they even took on the behemoth Walmart. Of course, it didn't last. Walmart just wanted to learn the business, and then they actually did opt to open their own drug testing department - more power to Walmart.
So DISA's client base grew and grew. And how did DISA respond to all these new clients? Well, hired a whole bunch of staff, of course. And what about that computer platform? Could it be all things for all clients big and small? Well....they tried to make it that way. Every time a client asked for a new task to be done, they just called the programmer, and added another module to the platform. And they just kept adding, and adding. The platform was getting more and more complex, and also slower and slower. The platform was becoming more difficult to operate or understand - which, of course, meant more personnel were needed....so they just kept on hiring.
By 2001, DISA's had accumulated quite a staff, and also some debt. At that point, Dexter made the decision to take out a loan in order to pay-off the debt, and make some vital improvements on the platform. You see, Dexter knew the platform was the real heart of the business, and it was one complex mess. He wasn't sure what needed to be done with the platform -just that something had to give. So, he secured $15 million in venture capital funding from the Texas Growth Fund in Austin and Soros Private Equity Partners in New York. In this deal, there was a "ratchet clause" that would enable Soros Private Equity Partners to take over DISA Inc. if the performance of the company dropped below a certain revenue amount. The amount seemed extremely low, and Dexter signed the contract with the ratchet clause in place. He had no doubts that he could make the revenue allotment. Matter of fact, seemed almost impossible that the revenues could drop that far.... I mean, what could go that wrong?
To be continued...
Labwire Factoid
The Labwire management team is made up of experienced personnel along with two senior client service directors. The core management team managed the sale of over $110 million in drug testing, backgrounds, and related services before forming Labwire, Inc. and taking advantage of their experience and expertise, including their in depth knowledge of the required Department of Transportation (“DOT”) testing regulations (49 CFR, Part 40).
Part IV
Funny how when he looked back, he could clearly see where pride stepped in before the fall. You see, Dexter was warned by a friend of his to not sign the Soros contract with the ratchet clause in place. And Dexter's friend should have known - he was an attorney. Dexter went against good council, because his pride told him that there was nothing that could happen that could cause his numbers to drop that low. After all, he had built the business from nothing, and had more years experience than anyone in the business. He signed the contract with full knowledge of the ratchet. He signed the contract, with no idea of the terror that was about to occur......
September 11, 2001
THE PRESIDENT: Good evening. Today, our fellow citizens, our way of life, our very freedom came under attack in a series of deliberate and deadly terrorist acts. The victims were in airplanes, or in their offices; secretaries, businessmen and women, military and federal workers; moms and dads, friends and neighbors. Thousands of lives were suddenly ended by evil, despicable acts of terror.
The pictures of airplanes flying into buildings, fires burning, huge structures collapsing, have filled us with disbelief, terrible sadness, and a quiet, unyielding anger. These acts of mass murder were intended to frighten our nation into chaos and retreat. But they have failed; our country is strong.
A great people has been moved to defend a great nation. Terrorist attacks can shake the foundations of our biggest buildings, but they cannot touch the foundation of America. These acts shattered steel, but they cannot dent the steel of American resolve.
America was targeted for attack because we're the brightest beacon for freedom and opportunity in the world. And no one will keep that light from shining.
Today, our nation saw evil, the very worst of human nature. And we responded with the best of America -- with the daring of our rescue workers, with the caring for strangers and neighbors who came to give blood and help in any way they could.
Immediately following the first attack, I implemented our government's emergency response plans. Our military is powerful, and it's prepared. Our emergency teams are working in New York City and Washington, D.C. to help with local rescue efforts.
Our first priority is to get help to those who have been injured, and to take every precaution to protect our citizens at home and around the world from further attacks.
The functions of our government continue without interruption. Federal agencies in Washington which had to be evacuated today are reopening for essential personnel tonight, and will be open for business tomorrow. Our financial institutions remain strong, and the American economy will be open for business, as well.
The search is underway for those who are behind these evil acts. I've directed the full resources of our intelligence and law enforcement communities to find those responsible and to bring them to justice. We will make no distinction between the terrorists who committed these acts and those who harbor them.
I appreciate so very much the members of Congress who have joined me in strongly condemning these attacks. And on behalf of the American people, I thank the many world leaders who have called to offer their condolences and assistance.
America and our friends and allies join with all those who want peace and security in the world, and we stand together to win the war against terrorism. Tonight, I ask for your prayers for all those who grieve, for the children whose worlds have been shattered, for all whose sense of safety and security has been threatened. And I pray they will be comforted by a power greater than any of us, spoken through the ages in Psalm 23: "Even though I walk through the valley of the shadow of death, I fear no evil, for You are with me."
This is a day when all Americans from every walk of life unite in our resolve for justice and peace. America has stood down enemies before, and we will do so this time. None of us will ever forget this day. Yet, we go forward to defend freedom and all that is good and just in our world.
Thank you. Good night, and God bless America.
END 8:35 P.M. EDT
The events of 911 led to Dexter's removal from the company that he had built over a decade earlier. The attacks were the cause of a devastating blow to DISA's bottom line. DISA's clients still had to perform random drug tests, so that part of the revenue stream remained intact, the new hire screening, however, ground to a halt. No one in the nation was hiring under the circumstances. The total lack of revenue from new hire testing caused DISA's numbers to dip below the minimum in the clause. The ratchet was invoked, and Dexter was ousted as the CEO, after all, business is business. In an instant, a nation was brought to it's knees....and Dexter with it.
So what next? Well, the Soros group put their guy in charge, and Dexter was left on the board as a consultant. He felt powerless, and humiliated, but what other choice did he have? Part of the ratchet clause included a non-compete. He couldn't work for another company right now even if he wanted to. So, he did the best he could do to help his company to right the ship.
The first thing that DISA did was hire a whole team of programmers to write a new platform. Each programmer took on a different module and set out to create a platform better than the first. Months were spent on the development of the new platform. In all, DISA spent somewhere in the area of 7 million dollars to build a platform that is arguably worse and not better than what they had to begin with. I guess sometimes just throwing money at a problem doesn't work.
In the fall of 2003, Providence again knocked on Dexter's door. Dexter was speaking at a SAPAA convention (Dexter was one of the 5 founders of SAPPA). After one of lectures, he was approached by a programming genius that said that he had written the best platform for drug testing TPA's in the world. He said that he had done extreme amounts of research, and had conducted interviews with management at 35 different TPA's in order to make a platform that was comprehensive, yet simple. Dexter challenged the programmer with a series of questions designed to reveal the limitations of the platform. Dexter's questions where taylored around the limitations of the DISA platform. He was sure the new platform would not be able to do what the 7 million dollar platform could not. Dexter's curiosity was peaked, and he wanted to see the platform in action. He met with the programmer early the next morning, and to his amazement...it passed with flying colors. It was clearly far superior to anything in the industry. He knew that it would solve DISA's problems, and he could not wait to show them the best platform in the industry. But first, he had to determine who this programmer worked for, and what was the name of the platform. The programmer worked for Workplace Help (a small TPA), and the name of the platform was -~> Labwire.
So, Dexter began the mission to sell DISA on Labwire. He went immediately to his bosses (sounds funny, huh?), and tried to convince them of their need for Labwire. His pleas fell on deaf ears. They pointed out that they had just spent many millions on a new platform, and another one was the last thing they needed. After seeing that they were not going to budge he went to a board meeting, and formally offered Labwire to them again. They emphatically turned him down in that meeting, not once, but twice....he requested that their denial be placed in the minutes....both times. Soon after, Dexter's non-compete time was spent, and he resigned from the board of the company that he created.
In December of 2003, Dexter Morris, purchased Workplace Help along with the most dynamic, efficient, and cost-effective platform in the industry.
To be continued...
Labwire Factoid:
Labwire™ is a proprietary, web-based application that streamlines the complex regulatory and record management activities associated with employee screening, delivering accurate timely results while eliminating service calls and paper trails. This comprehensive solution to managing employee screening services is the most efficient and cost-effective platform in the industry.
Part V
Did you ever do something in your life, and then look back and see what you could have done differently? In retrospect, the better choices are oh so apparent. I guess that's why Henry Ford said that "experience is the thing of supreme value". Well, I guess that's true if you have the opportunity to use it. Dexter recognized that the separation from his old company could be a blessing or a curse - depending upon which direction he choose to walk. Dexter, being a man of great faith, knew that "in all things God works for the good of those who love him, who have been called according to his purpose" (Romans 8:28). Now, Dexter doesn't think himself to be a saint, but he does know who is large and in charge. Therefore, he knew the pain would be transformed by humility to good purpose. He began the rebuilding process knowing that Labwire was going to be much better than it's predecessor - no doubt.
So, the first order of business was to consider exactly what markets Labwire would target. You see, DISA's main focus was almost exclusively on the Drug Testing Market. The Employee Screening market was not really penetrated by DISA. Why? Because of the legacy software being used by the TPA's. Legacy software in any industry is the software that is written as the industry is first conceived. It's always overly complex, slow, and redundant. You can see why. It's patched together as needed along the timeline. But with Labwire, not so. Labwire's platform is proprietary software (this is the correct term...not patented) that was written for the express purpose to be simple, fast, and concise. All the needs of the client are on the main platform, and just one click away. That's why the door for the Employee Background Screening market has just been flung wide open. The service is right on the platform, and one click away. Why wouldn't a client use it? It beats the heck out of closing one platform and then opening another. Using one service also simplifies billing....but more on that topic later.
Alright, here's the point we need to do two things. First, we need to put DISA Inc. in the past. Dexter recently pointed out to me that he holds no ill will towards DISA, and quite frankly, they aren't even considered the major competition anymore. Why? Because when Dexter envisioned Labwire, he didn't want to build another DISA, he wanted something much better. Also, since Dexter choose to go public with the company, then that's another big difference....DISA is private. So then, what does out competition more closely resemble?
To be continued...
Labwire Factoid:
Not just another database, Labwire™ was developed by our team of industry leaders to deliver comprehensive and secure employer information management services over the Internet. Labwire’s Network Administrator previously worked alongside with the federal government in writing the HIPPA law. At the same time we provide the most comprehensive time-saving workflow automation system on the market.
Part VI
Sizing Up the Competition
So, the second order of business is to start naming our competitors. Here's the two that Dexter gave me (I know what you guys are thinking....finally some numbers, thank goodness!).
Choicepoint (CPS) http://finance.yahoo.com/q/ks?s=CPS
First Advantage Corp. (FADV) http://finance.yahoo.com/q/ks?s=FADV
Now, we are not going to do all the things that these two do, and they aren't going to do all the things that Labwire does (more on that later). What is important, is that we want their drug testing and background screening business....period (and DISA's as well, but we aren't focusing on them anymore...lol).
So, how large is the Drug Testing and Background screening industry, and how much can the TPA's get? Well, the answer is pretty much the same for both markets. Here's the breakdown:
Drug Testing Industry Annual Revenues: ~ 4 Billion
TPA revenues from Drug Testing : ~ 900 Million
Employee Background Screening Annual : ~ 4 Billion
TPA revenues from screening : ~ 900 Million
Combined Markets Total = 1.8 Billion
Alright, both industries are pretty much the same, and now we see the pie that Labwire™ is after. But how do we get a nice slice of that 1.8 billion dollar pie? Well, We have the best platform which will certainly help, but what's really the key to success for the company and the shareholder?
(Here's a glimpse of the genius behind the business model, and here's where experience really counts....for the client....and especially for the investor.)
Here's a clue. Have you seen this in all the PR's?
Labwire Inc., Headquartered in Houston, TX, provides secure and compliant employee drug screening and background checking services to Fortune 500 corporations via the Labwire(tm) Platform. Labwire(tm) is a proprietary, web-based application that streamlines the complex regulatory and record management activities associated with employee screening, delivering accurate timely results while eliminating service calls and paper trails. This comprehensive solution to managing employee screening services is the most efficient and cost-effective platform in the industry.
To be continued...
Labwire Factoid:
Labwire also has the ability to provide its clients with background check services. Up until recently this service has been outsourced with Labwire making a commission on the fee charged by the contracted company. Labwire has recently acquired access to national data bases and has started to perform its own background checks. This service generates reports about a prospective employee’s criminal record, motor vehicle violations, credit standing and involvement in civil litigation. Labwire’s margins on this service can be increased by approximately 20%, if done in house.
Part VII
Hummm, doesn't it seem odd that Labwire would target "Fortune 500 corporations"? Have you ever seen a pinksheet stock set such high ambitions right out of the box? Why would he do that? Well, did you know in the united states, wealth in the richest 1% is greater than the wealth of the lowest 95% combined (United States Federal Reserve, 1995)? That's a pretty shocking bit of trivia...but I bet it's no surprise to Dexter. He knows through experience that the vast majority of the revenue is generated from the top percentage of the clients. He also knows that it is far easier to take special care of one large $500,000 client than twenty $25,000 clients. In the past he saw how the "little fish" can wear you out. All those little clients require much more time, energy, staples, and staffing. And that's how trouble begins. Too much extra leads to too much overhead, which leads to low profit margins.....makes perfect sense, huh?
So, Labwire's first order of business is to keep margins as high as possible (not that's what we want to hear!). The new company, just like the new platform, is streamlined by design. When asked if Labwire would expand to take on more big business, his reply was emphatically "yes", that he several people with very impressive resumes waiting to come on board, but not until the current staff is at full capacity.
Did you guys happen to catch the last PR? Here's the top of it and the link:
http://biz.yahoo.com/pz/060215/94226.html
CORRECTING and REPLACING -- Labwire Announces Record Revenues for 2005; Becomes Profitable Ahead of Schedule
Wednesday February 15, 11:28 am ET
Company Anticipates 'Continuing' Revenue Increase in 2006
HOUSTON, Feb. 15, 2006 (PRIMEZONE) -- In the first paragraph of a release dated Feb. 14, 2006, under the same headline, the years for operations and final financial results were stated incorrectly. The corrected version follows.
Labwire Inc. (Other OTC:LBWR.PK - News), a leading Employee Screening Solutions Provider, today announced revenues of $2.6 million dollars for its 2005 fiscal year. The company said the 2005 revenues are record figures in sales volume and revenues. Labwire's total income for 2005(this is the correction...the old PR said 2006) is over eight times greater than the total revenue created the previous year and is its highest revenue level to date according to Dexter Morris, President of Labwire, Inc. In addition, Labwire announced that 2005 operations were profitable to the amount of $173,000, or 6.81% and were reached 6 months ahead of the company's original expectations. Final financial results for 2005 will be released later this week and will be made available at http://www.pinksheets.com under the company ticker symbol, Morris said.
Could it be that Labwire became "Profitable Ahead of Schedule" because of low overhead, and large clients?
Labwire's second order of business, is to take very special care of the clients that are brought on board. The staff is expected to do the little things like remembering the CEO's birthdays. Labwire wants to form personally relationships with it's clients that will ensure that the clients stay with Labwire.
Alright, so now we can see that Labwire's course to capturing the majority of the 1.8 billion dollar Employee Screening Solutions Provider market is through bagging the best clients. So, how are we to determine a large contract from a small contract? This is the question I posed to Dexter recently. His answer surprised me. I though he would give a dollar value answer...but, of course, it went deeper.
First of all, he said any contract that Labwire bids on has been predetermined to be of high value to the company and the shareholders. Some of the contracts that are announced from Labwire will be very obvious why they were taken on.....because they are high dollar! Other contracts will be taken on not because of the numbers, but because of the "wow factor" (this is good shareholder news as well. These contracts would be companies that are household names. For example, if NASCAR called Labwire and wanted all of it drivers tested, then Labwire would bid the contact just for the positive press (Dislaimer: Just in case this comes true, I just made this up! lol). Finally, some contracts may be taken on as a "purpose pitch". This means that the contract was taken because of the belief that it most likely a larger contract in the future (Always bear in mind that Dexter has over 23 years of experience in the industry. His connections run very deep into the corporations and the governments.)
To be continued...
Labwire Factoid:
Labwire provides real-time, online federally mandated supervisor training and employee education that conforms to all DOT modality requirements in addition to DOD an DOE. The system operates 24/7, is accessible over the Internet, and provides audit tracking information and annual notification to the clients for ongoing re-training of supervisors as defined in federal rules. This program has high margin numbers as do all software driven products and should very favorably affect net margins.
Part VIII
So, for the most part, that's the story. Here's a few more bullet points.
~~> Labwire's platform is also the most cost effective on the market.
~~> Simplified billing for client ease. This also decreases time for accounts payable.
~~> K-9 revenue stream (Tim has covered this nicely already, my main point is that it's another area industry that Dexter is defining.).
~~> Revenue through licensing platform for smaller TPA's. This is in order to still be able to make money off of the "little fish" that are referred to other TPA's. The licensing agreement would not allow these TPA's to use the platform on Fortune 500 corporations.
~~> Possibly entering the online background checking market. Something like intelius http://find.intelius.com/ ...this is an EASY step for the company to make, and goes with the business model(this was my idea. lol). They are discussing this now. This would increase investor awareness, and hopefully give us a much cheaper alternative to untelius. Not to mention another revenue stream that has high margins.
~~> Share structure - Dexter's close friends and family helped him finance Labwire. They hold restricted shares as well as shares purchased on the open market. I'm of the opinion that Dexter is very stingy with his shares, and will protect the share structure at all costs. One added note is that since we are now in the black, the need to dilute is greatly decreased. One more nice contract, and we will really looking good on that next report.
~~> Labwire's next move is to the OTC.
~~> Labwire eventually wants a home on the Amex or NASDAQ.
~~> Alliance partners with USIS **NEW**
~~> FACTA compliance revenue stream **NEW**
~~> 10-12g registration at EDGAR **NEW**
http://www.sec.gov/Archives/edgar/data/1426567/000137219808000021/form10sb.htm
~~> 8k at EDGAR http://www.sec.gov/Archives/edgar/data/1426567/000137219808000062/form8k.htm
So, for now...that's about it. If you have any questions, feel free to ask me, but really, the best thing to do, is call Dexter. I bet it would be worth your time...and ours.
I guess the only thing left now is to decide if you think that the contracts will come, and if the share structure will stay intact.....I have made my decision (as if you didn't already know!).
Labwire Factoids:
*Labwire is fully transparent through Holladay Stock Transfer. Holladay will even release restricted share numbers if you ask for Sharon.
Holladay Stock Transfer, Inc. 2939 N. 67th Street
Scottsdale, AZ 85251 (480) 481-3940.
*Labwire's share structure as of March 17, 2006.
A/S: 150 MM
O/S: 135,799,001
Rest: 123,049,003
Float: 12,749,998
*Labwire's shares structure as of May 16, 2008.
Share Structure as of May 16, 2008
A/S: 150 MM
O/S: 140,899,001 (120 MM held by management)
Rest: 122,749,003
Float: 18,149,998
*The Labwire management team is made up of experienced personnel along with two senior client service directors. The core management team managed the sale of over $110 million in drug testing, backgrounds, and related services before forming Labwire, Inc. and taking advantage of their experience and expertise, including their in depth knowledge of the required Department of Transportation (“DOT”) testing regulations (49 CFR, Part 40). As a result of these efforts, Labwire: (1) enables clients to effectively manage drug testing programs over the Internet; (2) provides clients with secure and centralized, collection and analysis of highly confidential data produced by drug testing; and (3) allows for Web-enabled access to individual test results and other detailed compliance reports. These revenues account for approximately 60% of Labwire’s revenues. Through the implementation of Labwire’s technology, the Company anticipates evolving from a traditional TPA service provider to a leading substance abuse program application service provider (“ASP”).
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