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Those four films were chosen by the L.A. Times article and so I went with that, my curiosity having been aroused as to how these recent, very good documentaries had done.
I’m surprised to hear from Gittes (# 27502) that they were boring. Maybe that comment, coming from an experienced movie-goer, is revealing. Maybe a documentary, no matter how well-done, will appeal mostly to those who already have an interest in the subject.
Documentaries also seem to often cover difficult and disturbing subjects. I’m glad they make those films, but I personally don’t have the strength to see them. Food Inc. for example (which made rylawi’s list from earlier today # 27387) is about the state of the U.S. food industry and must be very disturbing and depressing. It was on Frontline last week and I thought I should watch, but couldn’t make myself. Yet that film grossed $4,417,574.
I had briefly looked into some of the 2009 top grossing documentaries (including Food Inc.) – those that were either not by Michael Moore, not a nature subject or an IMAX/3D film, and not something special like a Michael Jackson film. Good Hair (also on rylawi’s list) about the African-American hair care industry, could be interesting for those affected, but doesn’t sound real compelling, yet that also did over $4 million
I thought that The September Issue (not on rylawi’s list) about the Editor of Vogue could do really well. They say the September issue of Vogue sells, as I recall, over 20 [or 12?] million copies and there seems to be a tremendous interest in fashion by many people. Yet this film grossed only $3.8 million.
So, Food Inc. and Good Hair were encouraging in the sense that Racing Dreams sounds much more compelling than either of them. The September Issue results surprised me – especially after The Devil Wears Prada introduced the main character. Maybe there was a negative slant – also prevalent in documentaries – that kept people away.
Anyway, if RD is not only good, but positive and has some excitement from the races, it should do at least as well as Food, Inc. and Good Hair, and probably much better.
I sure hope they are able to do the advertising that Gittes suggests is necessary to start the ball rolling.
Depressing Numbers for These Oscar Documentaries
“The strongest films to emerge from the seven Tribeca Film Festivals that preceded this year's have been documentaries. They have included Oscar nominee "Street Fight" (2005), Oscar nominee "Jesus Camp" (2006), Oscar winner "Taxi to the Dark Side" (2007) and Oscar winner "Man on Wire" (2008).”
I became curious about how these Oscar nominees/winners did at the box office. It probably would be interesting to check out other Oscar documentaries.
Highest # Theatres First Week-end
- - - - - - - - - - - - - - - - - - - -
Dist. US Gross # Thtrs/Week PerThtr Gross # Thtrs PerThtr Opened
Street Fight Frontier $4,779 2 1st $1,944 $3,888 2 $1,944 02/22/06
Jesus Camp Magnolia $902,544 52 5th $1,915 $17,659 13 $1,358 09/15/06
Taxi to the Dark Side ThinkFilm $274,661 20 10th $810 $10,930 2 $5,465 01/18/08
Man on Wire Magnolia $2,962,242 93 8th $1,696 $51,392 2 $25,696 07/25/08
A Few Racing Dreams Notes
http://racingdreamsfilm.com/theaters
It is now opening on May 21st in 33 theatres, up from 31. They added a couple in Florida.
COMMENTS FROM FACEBOOK, TWITTER, AND KARTING.4CYCLE.COM
http://www.facebook.com/RacingDreams
Just read the article in June 2010 NASCAR Illustrated magazine. Look forward to seeing the film when it comes to Dallas TX.
10 hours ago
http://twitter.com/NASCARIllustr8d
@Best_Buy_Racing Exciting stuff. We are covering "Racing Dreams" in our June issue! Great movie. 1:29 PM Apr 21st
@jrharvickfan005 Glad you like it. We're happy with the cover too. Be sure to let us know what you think about it on our facebook page. 10:54 AM May 13th
http://karting.4cycle.com/showthread.php?t=318251
05-05-10,, 08:54 AM
abracing
RACING DREAMS movie in theaters MAY 21
Come out i know u'll enjoy the movie .....Annabeth Barnes
for more info ...www.racingdreamsthefilm.com or www.annabethbarnes.com
Charlotte
Regal Stonecrest At Piper Glen 22 & IMAX Regal 7824 Rea Road Charlotte NC
Ayrsley Grand Cinemas 14 9110 Kings Parade Blvd. Charlotte NC
EpiCenter Theater 5 Epicenter Theater 210 E. Trade Street Charlotte NC
Southeast Cinemas - Carolina Mall Regal 120 Country Club Drive Concord NC
Our Town Cinemas - Davidson 227 Griffith Street Davidson NC
05-13-10,, 03:52 PM
JCarpenter
Re: RACING DREAMS movie in theaters MAY 21
For all of you in the Mooresville/Huntersville/Statesville/Hickory areas of North Carolina... RACING DREAMS is opening exclusively in the area at Our Town Cinemas in Davidson, NC on May 21st with a SPECIAL SNEAK PREVIEW SHOWING Thursday May 20th at 7:30 pm. Visit ourtowncinemas.com for more details.
And you can visit this link for a FREE popcorn coupon as well!!
http://www.ourtowncinemas.com/wp-co...Dream-Flyer.jpg
05-14-10,, 03:01 PM
RacingDreamsMovie
Join Date: 07 09
Posts: 19
Re: RACING DREAMS movie in theaters MAY 21
Thanks for all of the interest. We're putting up theater locations as they get booked at www.RacingDreamsFilm.com Click on "Theaters". We're hoping to add more in the next few weeks, so stay tuned...
05-14-10,, 03:43 PM
jhl1963
Re: RACING DREAMS movie in theaters MAY 21
Great flick! Saw it in NYC last night. Even aside from karting/racing, a well done movie worth seeing.
Theatres or Screens?
The more I think about it, I realize that the fact that the "theatres" column adds up to 37K doesn't tell us whether the movies are reported by number of theatres or number of screens because theatres with multiple screens would be counted more than once. This is too much thinking for a Friday night. The chart says theatres, so maybe that is what they mean.
So we know Iron Man 2 is taking up 11 to 12% of the screens. And it may be in about 79% of the theatres as Engineerbl said.
Thanks, Engineerbl. If you add up the "theatre" column for the whole chart on the-numbers, you get 37,179. So when they say theatres they must mean screens. Iron Man 2 is on at least two screens at each of my local theatres, so I think your theatre count is probably incorrect, but it is taking up about 12% of the screens. In fact, the top ten movies are taking up 71% of the screens, and the top 15 about 84%.
This is helpful for getting handle on the whole picture.
Number of movie screens in the U.S.
I stumbled on this the other day.
[edit: Some of the rows don't add up quite correctly. Looks like 2008 should be 39,567, for example.]
http://www.natoonline.org/statisticsscreens.htm
NUMBER OF U.S. MOVIE SCREENS
Year Indoor Drive-In Total
2009* 38,605 628 39,233*
2008** 38,934 633 38,834
2007** 38,159 635 38,794
2006** 37,776 650 38,415
2005** 37,092 648 37,688
2004** 36,012 640 36,435
2003** 35,361 634 35,650
2002** 35,170 666 35,688
2001** 34,490 683 35,506
2000** 35,597 683 36,379
1999 36,448 683 37,131
1998 33,418 750 34,168
1997 31,050 815 31,865
1996 28,905 826 29,731
1995 26,995 848 27,843
1994 25,830 859 26,689
1993 24,789 837 25,626
1992 24,344 870 25,214
1991 23,740 899 24,639
1990 22,904 910 23,814
1989 21,907 1,014 22,921
1988 21,632 1,497 23,129
1987 20,595 2,084 22,679
Origin Oil (OOIL) got a customer
They have a customer for the Fracturing System and the Extraction System: “OriginOil’s Quantum Fracturing System breaks down nutrients such as CO2 into micro-particles that stay suspended in water longer, allowing algae to feed more efficiently. The Single-Step Extraction system is the first commercial “wet” extraction system, able to separate algae oil from its biomass without costly and energy-intensive dewatering operations.”
http://www.originoil.com/company-news/originoil-announces-its-first-customer.html
OriginOil Announces Its First Customer
Industry leader MBD Energy intends to purchase algae feeding and extraction systems
Los Angeles, CA May 10, 2010 – OriginOil, Inc. (OOIL), the developer of a breakthrough technology to transform algae, the most promising source of renewable oil, into a true competitor to petroleum, today announced that industry leader MBD Energy Limited has become the company’s first algae-producing customer. Anglo American, one of the world’s largest mining companies, is a cornerstone investor in MBD Energy.
The parties recently signed a Memorandum of Understanding on a multi-phase commercialization program under which OriginOil will supply MBD Energy, an Australia-based company, with its Quantum Fracturing™ and Single-Step Extraction™ systems. Andrew Lawson, Managing Director of MBD Energy, said: “We are delighted to become OriginOil’s first major customer and we look forward to working with the OriginOil team to forge a comprehensive commercial relationship with game-changing potential in the exciting third-generation biofuels space.”
Three of Australia’s largest coal fired power generators have committed to building test facilities adjacent to their power stations using MBD’s proprietary growth system, the Algae Synthesizer, where smoke-stack CO2 emissions are captured and used to grow oil-rich algae in solar bioreactors. This process effectively achieves BIO-CCS (Carbon Capture and Storage). In the full production systems, OriginOil’s technology will be integrated into the MBD system to enhance algae growth and perform oil extraction.
In the initial phase, OriginOil will equip MBD Energy’s research and development facility at James Cook University in Queensland, Australia, where testing will take place. The two companies agreed that, subject to the success of the initial test phase, MBD will purchase significantly larger feeding and OriginOil extraction units to serve facilities planned for its three Algal Synthesizer power station projects in Australia: Tarong Energy (Queensland), Loy Yang A (Victoria) and Eraring Energy (New South Wales).
Riggs Eckelberry, OriginOil CEO said: “We have been looking for a partner with the resources and scaling capabilities to rapidly industrialize algae production with a focus on the long-term development of our industry. We are delighted to have found this partner in MBD Energy.” Eckelberry added, “Many thanks go to MBD’s Larry Sirmans and Enrico Bombardieri, and our own Dr. Pattarkine, for their vision and persistence in making this partnership possible.”
Queensland Premier Anna Bligh officially opened MBD’s expanded R&D facility in November 2009. Premier Bligh said: “The revolutionary algal carbon capture and storage (BIO-CCS) technology is already proving successful in trials and will soon be rolled out at three coal fired power stations, including Tarong Power Station near Kingaroy. This technology has the potential to revolutionize carbon capture in Queensland and around the world.” She added: “As our state continues to grow and coal remains a key export, it is essential that we devise new ways to manage the impact of that growth on our environment.”
The Queensland Premier also announced that MBD would shortly commence construction of a one-hectare pilot plant at South Eastern Queensland’s Tarong Power Station. The trial aims to capture 700 tonnes of carbon dioxide annually and, if successful, could expand over the next 5 to 10 years to consume more than half of Tarong’s problem flue-gas emissions.
MBD’s Andrew Lawson said that each of the three current MBD power station projects has the potential to then grow to 80-hectare commercial plants, each capable of producing 11 million liters of oil for plastics and transport fuel, and 25,000 tonnes of drought-proof animal feed annually. He said that the projects will eventually consume more than half of each of the power station’s problem flue-gas emissions.
OriginOil’s Quantum Fracturing System breaks down nutrients such as CO2 into micro-particles that stay suspended in water longer, allowing algae to feed more efficiently. The Single-Step Extraction system is the first commercial “wet” extraction system, able to separate algae oil from its biomass without costly and energy-intensive dewatering operations.
About OriginOil, Inc. (web address: www.originoil.com)
OriginOil, Inc. is developing a breakthrough technology that will transform algae, the most promising source of renewable oil, into a true competitor to petroleum. Much of the world's oil and gas is made up of ancient algae deposits. Today, our technology will produce "new oil" from algae, through a cost-effective, high-speed manufacturing process. This endless supply of new oil can be used for many products, such as diesel, gasoline, jet fuel, plastics and solvents, without the global warming effects of petroleum. Other oil-producing feedstock, such as corn and sugarcane, often destroy vital farmlands and rainforests, disrupt global food supplies and create new environmental problems. Our unique technology, based on algae, is targeted at fundamentally changing our source of oil without disrupting the environment or food supplies.
About MBD Energy Limited (web address: www.mbdenergy.com)
MBD is an Australian based public, unlisted technology company. One of the world's largest mining companies, Anglo American, became a cornerstone investor in MBD in 2009 and Anglo Coal's Global CEO, Seamus French, has recently joined as a non-executive director of MBD Energy. The MBD Energy Board is chaired by former BHP Chairman, Jerry Ellis. MBD has a joint research and development facility located at James Cook University (JCU), Townsville, Queensland. MBD Energy and its JCU team are regarded as international leaders in the use of captured flue-gases as feedstock to produce algal biomass for Bio-CCS. In addition to the project at Tarong Power Station, MBD Energy currently has two similar projects underway with Loy Yang Power in Victoria and Eraring Energy in New South Wales. MBD Energy is a founding member of the Bio CCS program. The program is made up of a number of regional projects with each targeting 50 million tonnes of greenhouse gas sequestration per year by 2020.
The Wild Hunt Interview
Don’t know if this video has been posted. It is an interview with The Wild Hunt’s director and the actor/writer who’s idea it was. From April 8.
Honing in on The Wild Hunt
April 8, 2010 20:12
Inside Jam's Tim Bolen talks to Montreal filmmaker Alexandre Franchi about his first feature, The Wild Hunt, and gets a wild taste of the movie's medieval mastery.
http://video.vancouver.24hrs.ca/archive/honing-in-on-the-wild-hunt/76816662001
Has anyone found the Canadian box receipts for the movie? (That’s what I was looking for.)
PR, Presumably Ancira
Quepasa Awarded $3.5 Million Revenue Generating Contract
Quepasa to Develop a Series of Environmental Campaigns Over the Next 12 Months
Press Release Source: Quepasa Corporation On Wednesday May 5, 2010, 11:50 am
WEST PALM BEACH, FL--(Marketwire - 05/05/10) - Quepasa Corporation (OTC.BB:QPSA - News), owner of Quepasa.com, one of the world's fastest-growing Latino social networks, today announced it was awarded a $3.5 million online marketing and web development contract as a part of a series of social media initiatives to promote ecological sustainability. The contract is subject to renewal on the same terms at the end of its current term in April 2011.
This global eco-conscious campaign, sponsored by a leading industrial group headquartered in Mexico whose Chairman is a director of Quepasa, is focused on creating awareness of and implementing the best ideas for environmentally-oriented innovation in the Industrials vertical. It will leverage such tools as social gaming applications and Quepasa's DSM contest platform to both solicit ideas from millions of social networking users and promote awareness through broad interaction and sharing among participants in these initiatives.
"We are excited to be the selected developer and distributor for this unprecedented initiative. Social networks have already proven to be an effective platform for promoting environmental causes and we believe that our DSM product will serve as an outstanding tool through which the campaign's message will be shared by millions of Internet users," said John Abbott, Chief Executive Officer of Quepasa.
OOIL. Layered outdoor system might be interesting.
Overall, it will be interesting to see if OOIL’s vision of this industry being carried by small entrepreneurs works out. They are trying to develop and sell the apparatus rather than grow the algae themselves.
PR
OriginOil Announces Breakthrough Layered-Growth Invention
http://www.originoil.com/company-news/originoil-announces-breakthrough-layered-growth-invention.html
PRESENTATION
http://www.originoil.com/pdf/OriginOil_The_Growth_Challenge_NAA_20100429_V2a.pdf
As far as I know, up to this point OOIL has been focused on an indoor bioreactor system with lights. And of course they developed their method for separating the oil from the algae without having to harvest the algae, which presumably could be used with this multi-layer outdoor system. One slide in the presentation points out that the system also has optional lights for 24-hour operation. The final slide in the presentation under “What’s Next?” says “Integration with all other OriginOil processes, for a complete production system.”
Below is a post containing the latest research report from John Chu. The Yahoo board isn’t very active either, but there are a few people hanging around.
As you probably know, in the past when the stock price has gone steadily downward like it has over the past couple of weeks it usually means something dreadful has happened that small shareholders know nothing about, like the disaster with GCM. Yet John Chu’s report from April 7th was mildly positive, implying that Q1 2010 was better than Q4 (let’s hope so). That was a week or so before the stock price started tanking.
I re-bought a small position a few months ago just to keep it on the radar and also on the off chance that some big company would snap it up and get the best utility poles in the world. But I really don’t know at this point whether they will make it.
Q4 at $3.2 million in revenue would have been excellent a couple of years ago, but I’m beginning to doubt that cells 1 and 2 can get anywhere near the $12 million per quarter output we have been promised for so long. I don’t’ know what to expect if they can’t reach break-even without the planned four new production cells, which would cost something like $40 million. If the new cells are a real design improvement, then maybe some investors will step up once again.
Chu’s comment about raw material sourcing improvements is interesting, as I think the raw materials may be the main cost component of the poles. I remember Paul G once saying that labor was only about 10% of the cost.
The rollers could be a big help, but where are they?
Anyway, as to whether it is a sinking ship, I don’t know. [edit: But the Q3 and Q4 results were the first time that I really began to seriously question whether they will make it.]
YAHOO POST:
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_R/threadview?m=te&bn=74477&tid=287&mid=287&tof=3&frt=1#287
John Chu's Latest Report 27-Apr-10 03:55 pm
Below is the most recent report from John Chu at Mackie Research (from April 7th).
http://www.mackieresearch.com/index.php
My Comments:
-- I’m not sure that “tweak” is the right word to use concerning getting the Tilbury plant up to speed.
-- Chu also says, “…YTD production utilization has improved over Q4/09.” I assume that means during Q1 2010, which sounds positive. I hope it improved a lot.
-- Also, “Management indicated to us that it is comfortable it will meet its shipment schedule [of $100 million to HD Supply] of mid-2012.” I’m afraid I just don’t believe Paul any more, but let's hope it's true.
++++++++++++++++++++
APRIL 7TH REPORT
EVENT – Q4 Results
The company reported Q4 results recently.
OPINION – Positive. Operations Continue to Improve. On Target to Complete HD Supply Shipments by Mid-2012
Q4 results summary: EPS for the quarter was a loss of $(0.04) driven by sales of $3.2 million. Year-over-year comparisons are not applicable in this case given the resumption of direct manufacturing by the company for 2009 (as opposed to the company outsourcing in 2008 and the subsequent issues with its manufacturing outsourcer). Gross margins were negative for the quarter as the manufacturing plant was operating below optimal production levels. An inventory write-down of $1 million was incurred and future write-downs should decline and eventually be eliminated once optimal production levels are achieved. Lastly, the company had $3 million of cash on the balance sheet at the end of Q4/09 and recently announced (March 22) the initial completion of its equity offering for the amount of $7.4 million at $0.33/share. The company also announced an extension to a $7 million credit facility originally set to expire March 31, 2010, which has been now pushed back to October 31, 2010.
Operational update: The Tilbury plant continues to ramp up production and the process is still being tweaked. More importantly, YTD production utilization has improved over Q4/09. As previously stated by the company, it expects to complete shipments of $100 million in product to HD Supply by mid-2012. With the Tilbury plant having production capacity of upwards to ~$50 million (two production lines with capacity of ~$20-$25 million each), the plant will need to ramp up to full production over the next several months to reach this goal. Management indicated to us that it is comfortable it will meet its shipment schedule of mid-2012.
Cost-cutting: As the production lines ramp up, the company expects margins to improve. In addition, the company is looking to source raw materials (e.g. resin components) to help reduce costs. The company has already been able to source a resin component, which should reduce costs for that component by 15%. The company hopes to source more cheap raw material components going forward
cautionupahead, thanks very much for that helpful bit of history. That must be what the article referred to as “that crazy festival atmosphere.”
I’m no expert but I agree that VOD will not kill the box office, but I was surprised by the strength of this comment: “Even Sony Classics' Bernard, an ardent defender of preserving the theatrical window, says digital delivery systems ‘are the future,’ from iTunes to PlayStation to Xbox.” Of course, who knows exactly what he meant by “are the future.”
If the box office revives nicely (assuming the article is correct in its assessment of the current box office weakness) it sounds like this certainly is an excellent time to get established as a distributor of indepedent films.
The article was very informative, but one heck of a rollercoaster ride.
-- So there are less distributors and films are cheaper to acquire, but the audience is very weak (“box office figures once considered minor are now the new standard”) and hard to get (“expensive”).
-- Seem to be plenty of films (films take years from concept to execution, I assume), but people are spending a lot of time wondering if the theatrical audience for independent films is still there.
-- And I was not real delighted with Eric’s final comment.
For what they're worth, my comments are in brackets.
+++++++++++++++
Cannes offers caution
Indie distribs recalibrate expections on eve of mart
It's all about the bottom line now, say indie film execs.
Two years after the crash of the sector and the studios' abandonment of the niche biz, domestic distribs have recalibrated to adapt to changing times and expectations. As they approach the upcoming Cannes market with level heads, there's a new mean: Acquisitions prices have dropped [good], and box office figures once considered minor are now the new standard [very bad].
While Sundance showed a thaw in the frigid marketplace [good], the indie biz is still cautious, careful of the costs in what remains a cool specialty landscape [bad], and yet eager to find films to fill their pipelines. And despite few blockbuster-size indies and frequent cries that new media platforms are changing the industry, execs refute the notion that theatrical is dead [Who’s notion is this?! Are they referring to independent films only?]. Rather, they say everything is just a lot mellower.
I think people are now able to make smarter decisions and take time making those decisions, looking more long-term, rather than try to grab every-thing in that crazy festival atmosphere," says acquisitions exec Peter Lawson at the Weinstein Co.
After just a year in business with Apparition, veteran exec Bob Berney concurs, sounding a lot more cautious than he did 12 months ago when he pre-bought Jane Campion's "Bright Star" on the eve of Cannes.
I'd be very leery of doing that this year," he says. "There's enough completed films for resonable prices, which makes pre-buys look too risky."
While Berney says high-end art films will still find buyers in Cannes, he admits, "I think those films will find deals, but not deals that will make the producers happy."
Such is the outcome of a market in which there's a large supply [good], fewer distributors [good] and more finicky audiences [bad].
But Sony Pictures Classics' Tom Bernard maintains the arthouse market is healthy -- SPC's Cannes acquisitions such as "A Prophet" ($1.6 million in B.O.) and "The White Ribbon" ($2 million in B.O.) performed well theatrically [$1.6 million and $2 million is performing well? I hope/assume this is referring to “art” films and not Eric’s “mid-level” films].
Oscilloscope's David Fenkel also says the moviegoing audience still exists [Here it is again. i didn’t know this was in question], and the theatrical release remains paramount -- "the first impression," he calls it -- but he acknowledges that the ticket-buying audience "is becoming more expensive to get."[expensive = bad] For that reason, Oscilloscope is embracing new digital release platforms, and will be releasing their first VOD day-and-date title, "Kisses," this summer.
But the new digital distribution models are not such a huge factor at the markets.
It's just a piece," argues Fenkel. "It's not a big piece, just a piece."
Although Fenkel and others see that piece getting bigger and bigger in the next two to five years, those at Cannes, he contends, will be focusing on but the immediate nine months, not the future.
Even Sony Classics' Bernard, an ardent defender of preserving the theatrical window, says digital delivery systems "are the future," from iTunes to PlayStation to Xbox. [Here they go again. Sounds like they really think people are going to stop going to theatres to see independent films. I’ve also been wondering if Eric’s Sony meeting had to do with VOD.] But for now, both theatrical and digital release models "can play in the same playground," according to Lawson, who says TWC is also developing a VOD strategy.
For niche pics looking for U.S. buyers, hybrid distribs Magnolia Pictures and IFC Films have certainly shown themselves to be the most aggressive shoppers. While Magnolia bought only three titles last year -- "Mother," "Red Cliff" and "District 13: Ultimatum" -- they acquired 15 the year before.
Magnolia senior vice president Tom Quinn says sellers are finally embracing new models. [What does this mean? Producers are now willing to have their movies distributed through VOD with no theatrical release?] "People are coming to us who I couldn't get on the phone five years ago," [good] he says. "And I'm not going to attribute that just to a shrinking buyer's market, but it's also our reputation: Our company has grown enormously and our DVD label is doing incredibly well in a down market." [Good. Confirms that what Eric is trying to do is very doable.]
For IFC Films' senior VP of acquisitions Arianna Bocco, who helped acquire 14 films for the company out of Cannes 2009, all the bits and pieces of digital delivery and theatrical exposure are adding up.
I'm very optimistic," she says. "I think the marketplace is recovering [good]. And whenever companies go away, you have new companies that fill the void and a new influx of capital that comes in."
Witness the sudden arrival of Hannover House, the book publisher and homevid distribber that was an active buyer at Sundance, picking up buzz title "Happythankyou-moreplease" [buzz title = very good] and "Twelve." It has also picked up Canadian pic "The Wild Hunt," which had screened at Sundance.
We would love to get some mid-level films at Cannes, "[excellent] says Hannover CEO Erik Parkinson, who isn't daunted by the droves who left the indie sector. "We think there's sales growth in favor of mid-level films [good]. If we're acquiring for the right price and controlling our P&A expenditures, we can run a profitable business." [Right price sounds very possible now, but if audiences are more expensive to get then being successful while controlling P&A seems less possible. Sounds like HH will have to be very skillful in their advertising and in their movie picks – hopefully just what they are doing.]
In a sign that the times aren't changing that much, Parkinson isn't sold on digital delivery systems. "Thus far, it's only 5% of what we've done on traditional DVD," he says.
And if the theatrical business turns out not to be all its cracked up to be, says Parkinson, "we'll just go back to our core business." [I wasn’t real delighted with this comment, and I doubt if his off-balance sheet financiers would be either. With this attitude it’s good the off-balance sheet financing has no recourse beyond a film’s receipts. I assume he was speaking off-the-cuff and just had a careless moment with a reporter.]
norweger1979, thanks for responding.
I probably shouldn’t have mentioned the current weakness since I really posted the Chanos info to get it on our radar for the future.
I did think, though, that since this information had filtered all the way down to me – someone who isn’t interested in commodity prices or China – that it could be filtering into the market rather widely.
It is quite true that profit-taking could explain AYSI’s current weakness. Also general nervousness before earnings, or nervousness about FINRA, or concern that now Gene isn’t going to tell anybody anything.
Something to be Aware of - Chanos
I don’t pay much attention to China and the commodity price aspect of this investment, but I was up late a few nights ago and tuned in to Charlie Rose and heard well-know short hedge fund manager James Chanos (Kynikos Associates) speaking about a property bubble in China. I gather he has been speaking about this publicly for months. I also gather that many people do not agree with him.
Possibly this has something to do with AYSI’s weakness. Possibly not.
At any rate, it does seem like something we should be aware of.
http://www.charlierose.com/view/interview/10960#frame_top
EXCERPTS:
CHARLIE ROSE: It’s going to be that bad for China?
JAMES CHANOS: I think it’s going to be that bad for the property market in China. Let’s be clear. What we’re talking about is a world-class if not the world-class property bubble. And by property bubble I mean primarily high-rise buildings, offices and condos going on in China. It really is somewhat remarkable as to just how focused the investment in China is right now in property.
CHARLIE ROSE: What makes it a bubble? And why aren’t more people believing that it’s a bubble?
JAMES CHANOS: We consider -- what we define as a bubble is any kind of debt-fueled asset inflation where people are borrowing money to buy the asset, where the cash flow generation from the asset itself, a rental property, office building, does not cover the debt service and the debt incurred to buy the asset. So you depend on a greater fool, if you will….
………………………………….
CHARLIE ROSE: And what can the Chinese government do if they buy into the idea their real estate prices are approaching a bubble?
JAMES CHANOS: Well, they’ve already begun to take some steps. We’re seeing what we call jawboning, some attempts to talk the market down. That’s not having much of an effect according to the prices we’ve seen in February and March. They’ve also begun to take some steps as requiring higher down payments for second homes. And so we’re seeing some things on the margin.
But the fact of the matter is the game has to keep going. They’re on this treadmill to hell, as I call it, because so much of their GDP growth is construction -- 50 percent to 60 percent of this country’s GDP is construction. We’ve not seen that in terms of a major country I think for a long time if not at all.
And so for them to get off of stopping construction, you’ll see GDP growth go negative very quickly. That’s not going to happen, because in China it’s all about making the number. People are rewarded at almost every level of government of making their economic growth numbers. The easiest way to do that is put up another building.
So they’re really hooked on this sort of heroine of real estate development to keep the numbers going. It’s not infrastructure. It’s not airports, high-speed rail. There’s some of that. And it’s not exports. Exports have been stagnant now for a while. And it’s not the consumer in China, either, despite what people believe. It is construction, real estate construction.
………………………………….
JAMES CHANOS: But it’s similar because Enron was symbolic. That’s as far as I go, that Enron was symbolic of a new type of company, a virtual company that was not really an energy company. It was in energy trading. And so a lot of people hooked their reputations and their money on this new vision.
China is much more tangible. I mean, we’re going to be able to tell whether we’re right or wrong on China literally by watching it. The thing about property bubbles is when the cranes stop going higher, when the buildings stop being built, and when they stop putting foundations in the holes in the ground, you know that the bubble is over. It happened in Miami, it happened in Dubai, it will happen here.
CHARLIE ROSE: OK, then give me the timeline that you see.
JAMES CHANOS: Ah, that’s the trouble, the timeline.
(LAUGHTER)
If I knew that, I’d be a rich guy. The timeline -- I think that it’s getting to the point now -- we’re starting to see some of the signs of silly excess. The new Broadway development, the malls -- giant malls empty, whole cities empty. My guess is this is probably at some point it begins to run its course in late 2010, 2011.
CHARLIE ROSE: And then what happens?
JAMES CHANOS: I don’t know. That’s a good question. It depends how the -- the government clearly -- everyone’s looking to the government. And I think the most cogent argument against our case is not that there isn’t a property bubble or bull market going on, it’s that the government will handle it.
………………………………….
CHARLIE ROSE: So what will you do? Where will you short? Construction companies? Other people that are building things in China?
JAMES CHANOS: By and large those are Chinese companies. But there are some Chinese land development companies that trade in Hong Kong. Increasingly there are ways to play Chinese companies outside of the China market in either Hong Kong or New York.
But probably more importantly from an investment point of view those this has implications for the people selling stuff to China, commodity, people -- anything that are selling things to people who put up high-rise buildings, cement, glass, copper. That’s where you’re going to see probably a step function down in demand -- steel, because right now it’s all going into China.
CHARLIE ROSE: Those are the companies you will short and are shortening now I assume?
JAMES CHANOS: Yes, sure.
rylawi, thanks for the response.
My concern is based on the large amount of the difference between the library valuation and last year's revenue. There may be some formula that I am not aware of, but it’s hard to believe that a valuation over 20 times the annual income (income that could be expected to go down year by year) would be appropriate.
Do you think even the Bond library is valued at such a rate? And if you include the value of the franchise rights to make new Bond movies, that would be a large part of the value, I would think.
In fact, aren’t the bids around $1.5 billion for the entire MGM library? Yes, this is a quote from March.
http://www.reuters.com/article/idUSTRE62M03Y20100323
(Reuters) - Time Warner Inc, Lions Gate Entertainment Corp and billionaire Len Blavatnik's Access Industries put up rival bids of $1.2 billion to $1.5 billion for studio Metro-Goldwyn-Mayer, sources familiar with the matter, told Reuters on Monday. Time Warner put in the highest bid of the three, the sources said. The company has been seen as most likely to walk away with MGM and its library of mostly classics, such as the James Bond franchise. The offers were far less than MGM first expected. MGM, which is struggling with $3.7 billion in debt, had initially hoped for bids of at least $2 billion.
pson27, thanks for your efforts and clear explanation.
I have been remiss in establishing my position without looking at the Financials in any detail.
CASH FLOW
I see that there was no depreciation in the break-out of G&A expenses, which would explain why it was not in the Cash Flow Statement. But we would still need to know why it was not part of G&A expenses. [edit: Or could it have been netted in the $8,736 of Equipment expense?]
BALANCE SHEET
I’m glad that they were able to raise cash from the 2 million shares issued at the time of the reverse merger now that I see the current assets vs. liabilities.
LIBRARY VALUATION
A major question I have at this point is whether it is proper to value the Film and Television Program Library at $22 million dollars when it brought it less than $1 million in revenues in 2009. Perhaps there is something I am not understanding here or some explanation elsewhere that I have missed. Also, the value on the library is not crucial to their success going forward and I don't think it would really matter if it were written down. But if by any chance you think it is appropriate to add this question to your message to management, it would be interesting to hear their response.
Thanks again for your work. It is always helpful when someone looks at both the positives and the negatives of an investment.
Article on Multicultural Advertising
This is a link to an article from the Advertising Research Foundation on March 22 reporting on a workshop titled “how to use the Web and social media to better understand how the multicultural consumer connects with brands.”
It’s a bit muddled, but interesting.
It’s the last article on the page:
http://www.warc.com/ConferenceBlogs/ARF-032010.asp
It leaves Quepasa off its list of Hispanic-focused sites (mentions HI5, Sonico, and Orkut), but it mentions it in the last paragraph: “The power of social networking would seem to be a powerful marketing force to counteract negative messages of more traditional media. Drug-related crimes in Mexico have been steady page-one fodder in American newspapers for the last few years. But a QuePasa social-media community set out to rebuild the reputation of Acapulco with a contest that offered a chance to ‘discover the hidden treasures of the resort’ and ‘win a trip for two to paradise.’” [A bit incorrect, but at least it's there.]
A couple of interesting points:
IN SPITE OF MINORITIES JOINING FACEBOOK ET AL, CULTURALLY-FOCUSED SITES ARE STRONG
“And, even beneath the broad stroke of Pettigrew's urban mindset are a number of Web sites aimed at specific audience pockets. For Afro-Americans, there is BlackPlanet, BlackVoices, BET, and Ning Communities. QQ, Xaonei, Jaixin01, Cyworld, and Wretch have strong appeal among young Asian-American people. And, for Hispanics, Hi5, Sonico, and Orkut all have strong ethnic appeal. According to Johnson, the founders of BlackPlanet were concerned that the popularity of less targeted social-media gathering spots such as Facebook and Twitter might erode a market they started building in the late 1990s. Not so, according to Maria Weaver Watson, vp/brand marketing and strategic communications at BlackPlanet parent Interactive One: 'We thought we'd significantly lose members to Facebook and Twitter, but we haven't. Our members live and breathe in a very racialized way.'" And they now number more than 16 million."
IN GENERAL, AMERICAN MINORITIES MAINTAIN CULTURAL DIVERSITY AND ALSO WANT TO SEE IT IN ADVERTISING
“The overriding trend, she added, is that, 'As diverse Americans increasingly retain elements of their cultures, they insist that they see themselves and their experiences reflected in marketing communications.' Whereas past generations saw seamless assimilation as the primary U.S. cultural concern, new multi-cultural groups insist on maintaining their family heritage as they become engaged in their own American experience.”
THE IMPORTANCE OF MOBILE
“Added Lai, ‘Black and Hispanic mobile users were more likely than Whites to participate in every mobile activity, including sending and receiving text messages, taking pictures, playing games and accessing e-mail.’”
the-numbers: Good Box Office Receipts Site
I have been looking for a good site for box office receipts, and this seems to fill the bill. (Others probably already know about this. I see that speckulator, for one, has referenced this site in previous posts.)
It has many ways to view the data: by movie, by distributor, by type of film, etc. and for various time periods.
This takes you to 2010 numbers.
http://www.the-numbers.com/market/2010.php
For example, to see the complete list for 2010 receipts for individual movies, click on “see complete chart” under “Top Grossing Movies of 2010.” At the top of the complete list are links to previous years. The chart shows the U.S. gross. If you click on a movie name, you can see the international figure as well.
Moblyng Strategy
Here’s where the information about Moblyng’s strategy re underserved platforms came from. This article also mentions Playdom using the same strategy. Quepasa is right there for anyone pursing this approach, and these companies might be quite happy to share the micropayment revenues in order to get access to millions of potential players.
http://www.virtualgoodsnews.com/2009/07/moblyng-announces-mpoker-for-five-different-mobile-platforms-.html
July 23, 2009
Moblyng Announces m:Poker For Five Different Mobile Platforms
Today Moblyng announced its latest microtransaction title, m:Poker, for the Android, iPhone, Palm Pre, Nokia N97, and Nokia 5800 platforms. The game is currently available to play on Facebook and Android platforms. The game is based on the "Texas Hold 'Em" variant of poker that has become very popular in the last decade, with players purchasing chip with real money to use in games (but unable to cash them out). m:Poker is the fifth game in Moblyng's catalog for Android and is a Top 30 Android title upon launch. Moblying has three other titles charting in the Android Top 30, as well.
Don't be surprised if the description of Moblyng's m:Poker sounds familiar. One of social gaming company Zynga's top apps is Texas Hold 'Em, a poker title that operates much the same way Moblyng's does. Zynga's Texas Hold 'Em dominates primarily on Facebook and is only available in mobile form for the iPhone, leaving an obvious niche for Moblyng to fill on Android. Playdom successfully pursued a similar strategy on the often under-served MySpace platform when developing its own social games. Judging from the frequency of Moblyng's new Android game announcements lately, it seems that company may be finding success on an under-served platform, too.
Here’s the link to the CBNC Zynga interview.
http://www.cnbc.com/id/36691614
Re social gaming in the March 17th QPSA presentation:
“The second piece of our marketing strategy involves social games. Most of you have heard of titles such as Farmville, which is probably the most successful one recently. It’s owned by Zynga, which is a company that’s gone from zero to 400 million in revenues in two years, so this part of the business is very exciting. It’s highly scalable. We have somewhat of a mixed approach to it. The first part of it is we’re developing some of our own titles that are 100% owned by Quepasa. The first one was released in October. That’s a flirting application called Papacito. It’s generated tremendous engagement on Quepasa. And we’re now in the process of adding the monetization hooks to it so that people can buy virtual gifts and micro transactions around that game.”
[Monetization hooks added this month per presentation mentioned in post #207.]
“And then _____ working with partners or outside developers and in exchange for our marketing their apps to our 10 milliion+ members, they are cutting us in to 50% of the revenues. So we have one such deal with Moblyng and they’re going to be porting between eight and nine apps to Quepasa during the second quarter. So we’ve got, the first one we’re lining up, I think, is Poker. Then there is an adaptation of the very popular Mob Wars, but it’s going to be Portuguese and Spanish at war. It will be re-titled Cartel Wars.”
[So I gather that Moblyng is “copying” some of front-runner Zynga’s most popular games and looking for underserved platforms in which to offer them. So Quepasa makes a lot of sense for them. I wonder if/when Zynga will be coming over.]
Link to a QPSA presentation through ian cassels’s site.
http://iancassel.com/wp-content/uploads/2010/04/041110QuepasCorDeckV2.pdf
Below is slide 13, which gives a brief overview of the competition.
Also, according to slide 10 the pay version of Papacito has been released this month. (“Released paid version of Papacito (dating) app: April, 2010”
24.5 billion refers to scratch off tickets.
Here is confirmation that the 24.5 billion figure refers to scratch off tickets. I hope this is convincing enough so that no more time needs to be spent on this.
http://www.forbes.com/forbes/2007/0312/058.html
“Scientific Games produced 24.5 billion scratch-off tickets last year.”
The book “Legal Gambling: Winner Or Loser?” by Richard Worth states, “Scientific Games manufactures 24.5 billion scratch-off tickets annually, over half of those sold in the United States each year.”
cddilo, it’s a lot of work even for a fairly short presentation. And in this case, much of the information was presented on March 17th. I would like to listen again and record any new information, but I have been swamped.
cddilo, I did the previous one myself. eom
Re DRE: Phase 3 in Abbott Timeline
"The PCA3 test requires massaging the prostate. Does the HDVY urine test require the same?"
The answer (as far as I know) is, we don't know yet. Below is Phase 3 in the Abbott Timeline. (We're still on Phase 2 as far as we know.)
V. Phase 3 (expected duration 1 month): Determine if DRE performed prior to collection of urine specimens will increase the sensitivity of prostate cancer detection.
The effect of the digital rectal examination to enhance the detection rate will be assessed using urine samples collected from * prostate cancer patients and * non-cancer patients. This data will determine if a random urine collection will give a 4-gene test result that is equivalent to a post-DRE sample.
Phase 3 Results Completion Standard:
Demonstrate a preferred method of urine specimen collection with a success rate (% informative) of greater than or equal to the success rate reported for competitor’s assays (PCA3, *%)
Two Good Articles
The first article is from January and is on Resin’s site.
http://www.grouprsi.com/documents/GlobeandMail_14Jan2010_EntrepreneurTriesToReinventUtilityPole.pdf
-- It contains the first comments I’ve seen from the wood pole competitor, Stella-Jones. The company’s president apparently doesn’t feel threatened, but did acknowledge that the RS poles make sense for rough terrain areas.
-- I didn’t like this bravado from Paul G re the Hydro One deal, “With this deal, ‘we're going to shoot the lights out,’ says Mr. Giannelia…” Lets see the company even make (let alone sell) a full complement of poles from the two production cells before we start crowing.
The second article is from March 1 in Transmission & Distribution World and was found by a Yahoo poster.
http://tdworld.com/overhead_distribution/kentucky-coop-fiberglass-poles-20100301/index1.html
-- It is written by two employees of Western Kentucky Rural Electric Cooperative, who should join RS as salesmen.
-- I’m still a bit uncomfortable with that lifetime replacement guarantee, but it only covers “modules that fail as a result of the physical loads imposed by ice, snow, wind or lightning strikes” and so far the poles sure seem to be able to handle those.
Member Growth per 10K
This info is from the 2009 10K. I added the three columns on the right and the top row.
http://www.sec.gov/Archives/edgar/data/1078099/000111650210000199/qpsa_10k.htm
ciciagt, thanks for the response.
I bought first at $3.86 on March 8 after stumbling on the stock at iancassel.com. I was surprised to see the volume disappear. Maybe the relatively few people who know about the stock think it is now fairly valued until we see a couple more DSM ad customers.
I am wondering a bit about the small DSM pipeline ($800,000). To me, “pipeline” means “potential customers that have expressed interest.” Hopefully the CEO means something closer to “contests ready to go soon.”
March 17th Presentation Transcription
I thought it might be worthwhile to get a full transcription of the March 17th presentation, in particular for newbies. I'm a newbie, and it was useful to me to get the detail down in black and white. I left out a few pleasantries.
To iHub: This was a webcast, and the transcribing was done by me personally.
http://www.livescribe.com/cgi-bin/WebObjects/LDApp.woa/wa/MLSOverviewPage?sid=w6W8mqwCWPS5
LANDEN BARETTO [?]
Quepasa Corporation owns Quepasa.com, one of the world’s largest trilingual Latino social networks. Quepasa.com is an authentic Latino community that provides interactive and easy-to-use social tools and multi-media content in English, Spanish, and Portuguese to enable members to connect on-line, compete in contests and games, and share their interests, ideas, and activities.
We have with us today John Abbott, Quepasa CEO and Mike Matte, CFO. John and Mike are going to spend a few minutes familiarizing all of you with the company and then we’ll open the call to questions.
JOHN ABBOTT, CEO
Quepasa is a rapidly-growing Latino social network. We re-launched the site a little less than two years ago, and since then we’ve built up our membership to over10 million users. As a social network, what we really specialize on is growing that user base organically, so it’s really word of mouth, one registered user inviting his or her friends and they in turn inviting their own friends. And we get what we call this viral effect, and so we can build massive user bases without investing any money whatsoever in marketing and promotion. That’s what we’ve done. It’s been 100% viral. Our current growth rate is about 1.3 to 1.5 million new users per month, and on a current trajectory that would put us somewhere between 23 and 25 million members by year-end, which we consider to be really critical mass in this space.
As a Latino social network we focus on a very high-growth demographic. In fact, it is the highest-growth demographic in the U.S. And we also focus on the Latins in Latin America. So it’s a very young, rapidly-growing group of users with proven to really to over-index in their use, their appreciation, for social networks.
Latinos, as many of you can appreciate, are very social. And in a lot of surveys – we’ve seen for example that in Brazil, I think it leads or is number 2 in the world in its use of social networks. And there really hasn’t been a social network up until this point that has really focused on this demographic and done it by combining world-class technology with a feature-set and a focus on content that’s really authentically Latino. So we’re excited to be the only ones out there doing this.
To better illustrate this point is how we believe we are doing this successfully, we announced, for example, a partnership with Ultimate Fighting Championship, the UFC, two weeks ago. They originally approached us, they saw our growing user base, and they had a big problem in terms of marketing to the Latino demographic in the U.S. and Latin America, were sitting on a large library of Spanish-language UFC content and really wanted an outlet, a distribution outlet for that. So we now have a UFC community on the site. We will be launching a pretty exciting contest in a few weeks, which is titled “Why I Watch.” So why you watch the UFC, and users will be prompted to pull their favorite videos of either knock-outs or submissions and really build up a very large user base on Quepasa which you would then offer premium features or subscriptions for, either watching live streaming of fights or for getting access to their premium, which is a paid library of content.
4:30
______ partnership with Playboy Mexico. In fact last week you may have seen our announcement where we announced that one of our Quepasa users, a woman in Brazil, won last year’s Quepasa Playboy Cyber Girl contest on our site and will now be featured on the cover of Playboy Mexico. This is an annual really contest that we run. We’re now running the 2010 contest and we are in the process of adding new functionality _____ to that community and also a number of monetization initiatives. So users will be incented to buy paid virtual gifts to the contestants. In exchange, they will earn the right to get digital magazines and enter the raffle to win tickets to the Halloween party at the Playboy mansion.
So we think that gives a pretty good sense for some of our content partnerships and how we really differentiate ourselves from other social networks in offering real authentically Latino, very dynamic type of social networking experience.
5:40
So, I think that the question that comes up in many of the conversations of social networks is how you monetize it. There are a lot of emerging technologies around monetization of social networks. And we really focus on two specific strategies. The first one is an ad product which is called Quepasa Distributed Social Media or Quepasa DSM. And that’s a viral contest platform that we market to brand agencies and we use it to really power brand messages across the web. What does that mean? As an example, we just concluded a campaign for the municipality of Acapulco. They wanted to improve their image with tourists both in Mexico and outside of Mexico in the U.S. specifically. And we created a contest for them where users went, pulled pictures, beautiful pictures of Acapulco, their favorite ones, create a slide show, and wrote a brief statement as to why they want to win a trip to Acapulco. And the winners aren’t [?] currently determined, but it’s based on those contestants who have most effectively shared that content across the social web.
So not only on Quepasa but on Facebook, or High Five, or on Twitter, or My Space. All of that gets tracked real time through our DSM tool. And so those people who have most effectively established themselves as a we call it an Acapulco brand ambassador because they’ve spread this positive message about Acapulco. On average every user or contestant has shared their respective contest with 50 different people, so you get a feel for the viral nature of this. And as a result of this viral nature, the effective cost of this is very, very low. So we charge on a cost per engagement. An engagement is essentially any sort of interaction around that contest, be it a comment provoked or a share or what-not. If we translate that cost per engagement, which it usually runs about 50 cents. On the Acapulco campaign, based on all the engagements we generated, translated to the terminology most familiar to ad agencies, which is CPM or Cost Per thousand Impressions, typically _________ a lot of branded campaigns on the web, banners, go for $4, $8, $10 per CPM. Our Acapulco campaign delivered a CPM of under 20 cents. So it’s performance-based, it’s viral, it allows you to really take advantage of the social web, and the cost is extremely low and extremely effective in really running a branding campaign. So that’s the Quepasa DSM.
The second piece of our marketing strategy involves social games. Most of you have heard of titles such as Farmville, which is probably the most successful one recently. It’s owned by Zynga, which is a company that’s gone from zero to 400 million in revenues in two years, so this part of the business is very exciting. It’s highly scalable. We have somewhat of a mixed approach to it. The first part of it is we’re developing some of our own titles that are 100% owned by Quepasa. The first one was released in October. That’s a flirting application called Papacito. It’s generated tremendous engagement on Quepasa. And we’re now in the process of adding the monetization hooks to it so that people can buy virtual gifts and micro transactions around that game.
9:00
And then _________ working with partners or outside developers and in exchange for our marketing their apps to our 10 milliion+ members, they are cutting us in to 50% of the revenues. So we have one such deal with Moblyng and they’re going to be porting between eight and nine apps to Quepasa during the second quarter. So we’ve got, the first one we’re lining up, I think, is Poker. Then there is an adaptation of the very popular Mob Wars, but it’s going to be Portuguese and Spanish at war. It will be re-titled Cartel Wars.
10:00
So, again, this is – we’ll be marketing eight to nine apps initially. Hopefully about twenty by year-end where we either own the entire game or we own around 50% of the revenues associated with it. One additional component of value is that the games that are ours such as Papcito, to the extent that they generate good engagement and get monetization to our site. Second step is to bring in, port them to other social networks, could be My Space, could be Facebook, and also port them to ________ mobile. So we don’t need people to engage on them on our site. We want them to engage on them across all platforms and thereby generate more revenues.
So more specifically in terms of our financials, our gross expenditures average about $350,000 a month. That’s our cost, that’s not our burn. And in terms of the top line, in terms of revenues, the DSM generated initial revenues of $300,000 in December. That’s really going from negligible revenues. A couple of weeks ago we announced that we have a pipeline with DSM of $800,000. We believe that based on what we’re seeing now that the DSM revenues for 2010 will be sufficient to cover our operating expenses for 2010.
11:20
So that summarizes where we are. Just perhaps in closing just some remarks that may be useful for you to consider. The first one is that we’re run by a relatively new management team. We were put in place a couple of years ago. The new management team includes individuals with really deep, I’d say world-class, internet experience. Our compensation is largely stock-based. As an example, I personally I’ve received my compensation in 100% cash – I mean 100% stock, I’m sorry. No cash compensation since joining over two years ago. And I’ve gone out in the open market and purchased an additional 172,000 shares.
In terms of how we achieve world-class tech execution, our CTO, his name is Louis Bardov, he previously ran technology at Match.com, was one of the individuals who really started that business really from scratch back in 2000. He spent about seven and a half years there, and then joined us in early 2008. He runs a very, very talented team of young engineers based in Mexico, very nimble. We release new functionality and features every single week. So, for example, tomorrow, very exciting, we’re launching a new micro-blogging feature which is similar to the functionality you would see on Twitter. so those of you have accounts on Quepasa, you’ll see that tomorrow. And we run this operation in Mexico for a total cost of $100,000 per month. A total of 58 individuals there which includes customer support, design, engineering, etc. So very nimble, very talented, and low cost.
In terms of shareholders, one particular shareholder worth pointing out is Alonso Ancira who controls Mexico’s largest integrated steel company. I’ve been associated with him in one way or another since back when I was at JP Morgan starting 17 years ago, and he is extremely committed to our success. His investment in Quepasa doesn’t really have significant monetary value relative to all his other holdings, but he is incredibly committed and he is the one who has really been driving, or helping me drive, the DSM marketing in Mexico. And it’s really on this basis, really his confidence in this and his commitment that we feel confident in stating that we will – we believe that we will cover our 2010 expenditures through these ad products.
14:00
We hope to update you in the near future on our progress to secure additional business. And to address a question a lot of people ask us, to the extent we make progress on this side, or once we feel we’ve made sufficient progress on this side, then that would lead us to start exploring listing on either Amex or Nasdaq.
In terms of our valuation, our stock price, we really operated under the radar until last fall, which is ___ the time that we had launched our virtual economy and had really developed the strategy for DSM, and at that point we felt that we had a really strong investment thesis _______start IR, so we were still relatively unknown and that might be a reason why we believe that we are undervalued.
If you look at our 10 million users and equate that to our valuation, it comes out to under $5 per registered user. Unfortunately there are no public comps for this, but if you look at private company comps they show a range of $20 to $60 per user. We think it’s interesting that we are the only publicly traded social network, to the extent people want to invest in this type of business, not only the social networking side, but also we have the social gaming part and the Latino side, all really very high-growth markets, then we’re a great vehicle for that. And then finally, eventually, I’ don’t know if it’s going to happen this year, or when, no one really knows, but when you do get an IPO of a Facebook or Twitter, then I think that will open a lot of peoples’ eyes to how _______ businesses are really valued. And it will introduce some of those concepts that have been limited to the private market up until now and so clearly this would be a very positive catalyst for us.
So that concludes my initial comments.
Q&A
JASON _________
Q. Hi, gentlemen. I was just curious about your growth avenues for your user base just aside from the viral word of mouth, what other growth avenues do you have in place?
A. Right. That’s a good question. So we talked about a million three, a million five new users per month. We believe there is significant upside to that . In our DSM contest platform, we’re in the process of upgrading it. And in its next iteration contestants will automatically have a profile on Quepasa. It would also allow for existing users to participate without filling out a new registration and it will prompt them to share this with their friends. So we think that that should add to our user base.
Social gaming, as well. So as I said, Papcito or other social games that we have that we believe have sufficient traction, we will put on other sites. And if people want to interact more, they will be invited to do so on Quepasa. To make it easy and to minimize friction, we’re completing what is called OpenID, which is a feature of the open social standard. And that _______ so if we have Papcito running on MySpace, those users who want to come participate on Quepasa can do so without filling out a new profile page, and automatically become members of Quepasa. So I think both of those pieces could add good upside to our user numbers.
Q. Right. Definitely. How large is your sales force?
A. Right now we have a salesman in Brazil, we have one in Mexico City, and one in Miami. So those are the three main markets, and we would hope during the course of this year to add to that sales force. We – the salesman in Mexico was just recently hired February 1st.
Q. OK. In terms of Brazil and stuff [?] where do you see the largest user percentages coming out of? Probably North America, number one. Just curious what the breakdown of those percentages could be, demographics.
A. If you add U.S. Hispanic plus Mexico, that probably gets you to 35, or maybe 40%. And then after that I would say Brazil and depending on the month, other countries that will grow. Since this is viral it’s sometimes somewhat random. Saw very good growth in Spain last year, and recently we’ve seen a big surge in Argentina. Certainly I would say Mexico and Brazil are the largest potential markets.
20:00
Q. I was curious. I mean obviously Brazil is big. Do you have a percentage you could put on Brazil in terms of U.S. and Mexico?
A. I would say Brazil has been running after Mexico in the last couple of months. So it’s been Mexico one and then Brazil two.
Q. OK. Thanks, gentlemen.
A. Thank you.
JOHN PATRICK
Q, Just in reviewing the corporate history of the company, it’s had an interesting journey to get to this place, really establish itself as a more significant player in the social media arena. I’ve seen along the way it’s also had a variety of investors from music stars to Gateway Computers and others. I’m just wondering now as it stands currently, who is behind the scenes for Quepasa, who is supporting it?
A. Right. So most significantly is the gentleman I mentioned in my comments, who is Alonso Ancira, who controls Mexico AHMSA Steel Group and he is very actively involved in the extent that I meet with him to review our marketing plans really at least a couple of times a month if not more. And so he’s the most actively engaged. Another significant shareholder, who’s been one of our shareholders since early 2006, is Rick Scott who some of you might know as the co-founder of the HCA Columbia Hospital Group. And so he’s a long-term investor in Quepasa as well.
Q. Tell me a bit more about your Advisory Board right now.
A. So I should have probably mentioned this. In terms of how we developed this viral technology, it’s just not that easy. We were able to do that because at the time that Mike, who’s on the call with me now, and I joined in late 2007. Step one, what we saw is to build a successful social network, the precondition is _________ virally. So we brought on board a group of guys that I went to college with who all had participated in PayPal at its very, very early stages. One of them, name is Kevin Hartz, he was a seed investor at Pay Pal, then he founded xoom, which is a very successful on-line money transfer business, and now Eventbright, which he also founded, another very successful Sequoia-backed start-up. Keith Rabois, who was head of business development in the early years, product sales at Paypal, and he is now head of monetization at Slide. I think Slide is the number one number two developer of some of the ______ you see on Facebook and MySpace, Superbook. He also was one of the seed investors and backers of YouTube. The guys who started YouTube were his employees at PayPal, and he’s behind Yelp and a number of other successful sites. And then David Sachs, who was COO, ran the day-to-day of PayPal, and most recently founded ______.com and now founded and runs Yammer, a very successful micro-blogging site. So they all have deep experience in how to really build viral sites, which is what PayPal was. And so those guys have been invaluable not only in setting up the framework for what we do but also in helping us to recruit key members of our staff and really challenging us in our strategies and our thinking and helping us build as competitive a product as possible.
Q. How do you go about structuring some of your initiatives like, for example, the partnerships with companies like Tourism Mexico, or getting Dr. Rey, or partnering up with like the Ultimate Fighting Championships. Those _______. How is all of that created, structured, sold?
A. That sort of evolved into the current approach for anything we do, whether it’s a partnership, or an employee, or an advisor or whatever. It’s all performance-based. And we want to see performance before there’s any sorts of payment of stock or cash or anything. And to the extent it’s cash, it’s on a rev-chare basis. And to the extent it’s stock, we’re now really focused on making sure that we can demonstrate that it is accretive so that’s something that we’re starting to work on. But we’re a small company and we’re very conscientious about dilution, and so a lot of people come and say they can do a number of different things, but we don’t – we make it clear they won’t get compensated, whether it’s UFC or whether it’s _______ or whatever unless there is a performance that we can then measure up against whatever that compensation is.
Q. Just lastly, your technical team is based out of Mexico, correct, while headquarters are in Florida?
A Yeah, we do all our admin, finance, accounting, legal out of West Palm Beach. Our product and business development is L.A., and tech is in Mexico.
Q. OK. Thank you.
A. Thank you.
[Operator instructions.]
CLOSING REMARKS - JOHN ABBOTT
Just thanks very much for listening. And we look forward to updating you in the near future in regards to our progress on user growth, progress on both DSM ad product and social gaming. So thanks again.
tryn, you wrote, “Just in case some one is not paying attention. HDC put a time line on ABT completion of the urine test in the Feb. 09 filing!! WE DID NOT MEET THAT GOAL AND HAVE NOT RECIEVED ANY KIND OF UPDATE!!!!! If you look at the filing and put some dates toghether, you will see that according to them, it should have been done at the very end of DEC. or early Jan.”
Below is part of my post #2975 from January 22 reporting on a conversation I had with Scott Tobin.
At that time (late January) Phase 1 had been completed but not the critical Phase 2. As we know, Phase 1 was simply to develop the assay. Phase 2 consists of the initial tests of the assay on real people and real specimens (not spiked).
This indicates that before any announcement of a finished test, we should first see further payments to HDVY from both Abbott and Quest, indicating progress in development work.
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POST #2975, January 22, 2010
I had a nice talk with Scott Tobin today about the prostate urine test. He was very generous with his time.
ABBOTT
I specifically asked if I was correct in my assessment that Abbott had not yet accepted the results of Phases 1 and 2 (carried out by a third party). He said that Phase 1 results have been accepted, but Abbott is still working on assimilating the results of Phase 2 and they are currently awaiting some further testing.
As we know, when both Phases 1 and 2 are accepted by Abbott the next $250,000 from Abbott will be received. And then Abbott would commence Phases 3 and 4. (See my posts #2582 and #2631.)
I asked if there was a “roadblock” but he said that although it has certainly taken longer than they expected or hoped for initially, it is still looking “very optimistic” and the evaluation process continues to advance.
QUEST
I asked if Quest will use the same data that Abbott develops. He said that to some extent the findings from Abbott will be of benefit to both parties (Abbott and Quest) but they are going down independent tracks. I meant to clearly establish if Quest could develop results earlier than Abbott (aside from not needing FDA approval for a lab-developed test) but I lost my train of thought on that.
CLINICAL LABORATORY IMPROVEMENT AMENDMENTS
While we were discussing Quest, Mr. Tobin said that about a year and a half ago there was a modification in how CLIA regulations are interpreted. I gather these are regulations (administered at the state level?) that apply to the development of lab-developed tests. Because of that change in interpretation, labs are required to take a role earlier in the development process of tests such as ours.
“Take a role earlier” essentially means “contribute money to the process earlier” so that the lab can establish rights to the test. Because they need to pay for certain things to establish rights, a company such as Quest will want to pay a company such as HDVY earlier in the development process than in the past. Although Mr. Tobin was NOT saying that money will be coming soon from Quest, he was saying that it can be expected sooner in the development process than in the past (and should be received prior to final development of the test). He said we should “stay tuned” re receipt of money from Quest.
smurfdeej, Martie Martin draft
I don’t mean to butt in, and at first I wasn’t going to, but I couldn’t resist. So here is an edit of the draft from Martie Martin about the TPM and Wave for laymen. If you think it’s okay, and worth your effort, you might forward it to her.
Some of it follows her draft closely and just cleans it up a bit. I did add a couple of things, which I think are accurate but may not be. She also may want to say more about digital certificates, since I don’t believe most lay people know what they are. I, for one, don’t really know what they are.
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Trusted Platform Module (TPM)
TPM is a silicon chip soldered on the mother board of every major business class PC or laptop that ships today. Wave makes the software (client and server) to manage it. Our Embassy Trust Suite (ETS) installed on an individual PC enables users to turn on, set up, and take ownership of the TPM on a client level. Our Embassy Remote Administration Server (ERAS) provides central remote management on an enterprise level.
TPM is based on a standard from the Trusted Computing Group (TCG), the 180-member open standards group which promotes hardware-based security. Wave is a member of the Board of the TCG, along with twelve [?] other companies including Microsoft and Intel.
-- TPM provides hardware-based protection for the identity of the PC through a unique identifying number.
-- It provides hardware-based protection for the identity of users by securely holding digital certificates.
-- It provides hardware-based protection to other critical information as well, such as encryption keys and VPN, wireless, and e-mail certificates.
If a PC can be securely identified, network administrations can limit access to their network to known PCs. If individual users’ identities can be securely transmitted, they can carry out confidential transactions online such as banking. If encryption keys are safe, private data cannot be accessed if a laptop is stolen.
Another example of hardware-based security is the self-encrypting hard drive (SED). Wave’s ERAS server manages these drives as well as the TPM.
Why do we need this hardware-based protection? Because if information is not protected by hardware, it is stored in software as part of the operating system’s ‘stack.’ There, it is vulnerable to attack.
Sovereign Game Card
I spoke to Tom Darwin. He talked to me openly and at length.
THE CARDS
First of all, he loves the cards: “Just an awesome little game card.”
PROMOTIONS VS. GAMBLING
As Kevin stated in the Q2 and Q3 conference calls, Sovereign is now focused on the promotional aspect rather than the gambling use of the cards: “Sovereign has been working diligently on several key initiatives in turnkey promotional orders within tribes in Southwest, Northwest, and Midwest regions of the U.S.”
Sovereign moved toward the promotions aspect, away from the gambling aspect, because the Class II designation on the cards is only for bingo, so a full-fledged casino cannot take the chance of having one of the cards found in, say, the slot machine area, a Class III area. Casino operators feel that that would be a violation of the rules they operate under. (I don’t know if there is any comparable difficulty in regular U.S. casinos.)
Mr. Darwin expected to be able to sell the cards as gambling devices, but having had to move toward the promotions aspect, it has been tough sledding. But Sovereign is “ambitiously” proceeding.
MINIMUM ROYALTY
Apparently the minimum payments from Sovereign are tied to retaining exclusivity in the Native American casinos. I am wondering if possibly there was some confusion at first, whether through miscommunication or because the cards were so compelling that it was thought that there would be no difficulty in having enough sales to cover the minimum. At any rate, at this point Sovereign has given up exclusivity in the Native American casinos by not paying the minimums.
So read carefully the language that Kevin used to describe the income from Sovereign in the Q2 and Q3 calls: “This quarter we recognized revenues from our two license deals with Sovereign Game Card, our native American casinos-focused licensed distribution partner, and Scientific Games. Sovereign has been working diligently on several key initiatives in turnkey promotional orders within tribes in Southwest, Northwest, and Midwest regions of the U.S.”
It seems incorrect to recognize these revenues – even assuming that the other side of the accounting entry is Accounts Receivable and even with the potential that, over time, Sovereign will pay royalties on actual sales.
One possible explanation is that EGMI is not in agreement with Mr. Darwin’s interpretation of the contract.
“She was VERY appreciative and interested and asked me if I would be so kind as to receive a TPM paper that she had just drawn up, to comment on. Also, she said that she would bring up this matter with Brian (Berger).”
This is very good to hear. Wave’s press releases, for example, have become really good recently IMO, where in the past I thought they were poorly-written, confused, and basically awful. So I think the company is interested in improving communication.
I had the same reaction to the interview as you did. Upon listening a second time it didn’t seem quite so bad, but I definitely had the impression that the interviewer was throwing questions out there that could have been springboards to clear explanations. Instead I felt like we were getting hints rather than clarity. I know that thinking on your feet and speaking clearly off-the-cuff is not easy, but if you're not good at it I guess you have to practice if you're going to be out there doing interviews.
Also, I’m not at all sure that the explanation that it is for a technical audience holds water. How many times have we heard in the past that IT people don’t understand what the TPM can do for them? So make it clear, give examples, practice.
“If I was a lawyer advising EGMI management I'd tell them to do just what they are, say NOTHING and get the statements redone.”
One of the things that has me confused is that they have not said nothing. As I’m sure you know, in the March 5 PR they spoke about asset values. I would have thought that was the one thing they could NOT talk about. Yet they have talked about that and nothing else.
Thanks, Ramsey, those are good points.
But even backing out the obvious mistakes, it's hard to get down to $7.1 million. And Steven did say or imply that Dell PC shipments, SEDS, and Acer were all up.
-- “The Dell volumes are continuing to grow.“
-- “We have gone from 1% of laptops with encrypted drives to now over 2.5% of encrypting drives shipping on laptops.”
-- “We continue to make good progress with Acer. Their volumes are up.“
One way to look at it, I suppose, is that if the automobile company had bought only a few thousand seats, and had not been pre-announced, ERAS would have been up slightly, too, though nothing like the 90% of previous quarters. Of course those 90% increases were from a very low base in Q109. (I guess CEOs are like politicians. It’s virtually impossible for them to publicly give a realistic assessment of strengths and weaknesses.)
Maybe everything was soft. This was certainly unexpected given that acceptance should be growing steadily and at some point here should take off. Plus we were specifically told that Q4 is generally a strong quarter.
Your point that Q1 should easily beat Q4 is good to remember.
invest2win, here are a few points.
-- The 3-year $5.7 million automotive order was an important milestone. It gives the company credibility that it did not have before in some quarters. (Wave has secured a number of other large customers in the past year due to the arrival of SED drives, but most companies don’t buy the ERAS software the way the automobile company did. They buy a few hundred or a few thousand seats as they refresh their PC’s, so are not easily visible.)
-- Wave’s relationship with Dell is more solid than ever according to the latest CC. Wave appears to be a real partner with Dell, with security software embedded in Dell machines. It becomes harder and harder for Dell to throw them over for some other company. And this OEM relationship gives Wave a huge leg up in winning SED management contracts. This was a real strategic coup for the CEO.
-- The new larger government contract for $1.6 million helps cement the assumption that when TPMs (which are surely going to be part of the government solution) are finally turned on, Wave software will be managing them.
-- One thing which seemed to push the stock price up was an excellent presentation at a Needham conference in February[?]. This was a higher-class conference than Wave has presented at in the past. When new, large investors hear the story at these higher-profile conferences, the stock price should be supported.
-- Wave has been killing shareholders with dilution at rock bottom prices for the last few years just to keep the lights on. New private placements (if any) should now be for expansion and at a halfway decent price.
Re your post #190706, the “free fall:” IMO it was due to the fact that when you back out the $1.9 million automotive order, Q4 results were essentially flat with Q3. I, for one, expected, at least $8 million in billings. The soft spot appears to be ERAS upgrades, which will be the company’s bread and butter when they take off. It was disappointing after growth from Q1 to Q2 and from Q2 to Q3 of over 90% in this area.
I think there’s a flaw in the reasoning of my post #190677.
It also should have included the fact that licensing revenue went up 400K and tkc’s note that what came in to Deferred equaled what went out. But I’m too tired to put it together.... Maybe tomorrow.
tkc, thanks for taking the lead.
I’m not sure that everyone realizes that if you back out the $1.9 million automotive order, then Net Billings were essentially flat from Q3 to Q4 ($5.194 in Q3 vs. $5.214 in Q4).
Since SKS said (or implied) that
-- Dell PC sales were up (“The Dell volumes are continuing to grow.“)
-- SED sales were up (“We have gone from 1% of laptops with encrypted drives to now over 2.5% of encrypting drives shipping on laptops. “) This change was not from Q3 to Q4, I assume, but certainly seems to imply continuing growth.
-- Acer sales were up (“We continue to make good progress with Acer. Their volumes are up.“)
Then something had to go down.
A small part is services (down about $50k) and it’s possible that some combination of other small things went down (eSign, NEC, for example). But the most likely explanation is that PC sales, Acer sales, and SED sales were up slightly and ERAS was down slightly. And if ERAS was not actually down, it must have been essentially flat.
(REM55, did you make clear to SKS that you were backing out the automotive order?)