Repost (One of many with email responses from Paul)
Here are Paul's answers to investor questions. Thanks everyone for submitting your questions this week and last. And thanks Paul for taking the time to respond to them . allie
I apologize if I missed any questions. If so, please resend them for this week, thanks.
Allie,
My answers appear in red below.
Thanks again to our shareholders for asking the right questions and providing me with a venue to respond in an efficient manner.
All the Best,
Paul
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From: Allie
Sent: Saturday, November 03, 2007 3:43 PM
To: Paul Strickland
Subject: Ihub questions....
Hi Paul,
There are a fair number of questions here and I appreciate your time in answering any of them that you are able to.
All the best, Allie
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Traderfan
1. Can you please comment on the relationship with Ameritrade and whether we still have a deal with them or WILL have a deal with them in the near future? Afterall this name was dropped a couple of months ago already.
We do have a marketing agreement in place with TDAmeritrade.
2. The same question about Interactive Brokers. A couple of weeks ago we learned that Interactive Brokers would be (is) very interested in ST2 because they have a lot of Professionals trading there.
We do have an affiliate agreement in place with IB and are in the process of negotiating a marketing agreement with them, together with several other large electronic execution providers. There are seven large targeted brokers for us that represent, what we project, represents 80% of our domestic market.
3. Is the issue "Fractalz" now obsolete because Dr.Peng He left the company?
Dr. Peng has absolutely nothing to do with Fractalz3.
4. Can you please tell us whether it's correct that SPZI forecasts a 50% net income margin on ST2 as you pointed out in one of the slides at the EXPO? If not how big will it be?
The projected gross margin for SpoozToolz is in excess of 80%.
5. Will SPZI ever do something against the huge number of outstanding shares once it makes money from operations? I mean clearly no company with o/s at 1.5 billion and trading under a penny a share will get taken seriously in the international market place. I guess if you really want to make "waves" in the "trading systems business world" out there I guess listing on the pink sheets is not looking very serious to others.
I can not comment on this at this time. We are concentrating on products and profitability at this time. After profitability is achieved, the solution to this problem will become much more clear.
6. Can you give us a rough estimate on how much the burn rate is for the company right now per quarter?
Less than $500,000. The successful sale of the SWARM license to 141 Capital could mean that Spooz will achieve a profitable Q4 2007.
7. Are you in any way concerned about possible competitors who might want to follow up with a similar product than ST2 is, especially given your recent delays of the launch? What I mean is shouldn't have Spooz launched the software as early as possible to have a "time advantage" against other companies maybe trying to come up with something similar or is everything totally secured because of the patents?
We are always concerned about competition. The level of competition will be commensurate with our financial success. This is the reason we are so focused upon rapid market penetration as opposed to time to market.
8. Did any serious interest come up from the EXPO?
We have seen considerable interest at an international level.
9. What advantage does it have to launch the 141 stock also in germany?
Access to additional working and trading capital together with marketing and distribution.
10. Is there any serious money lined up to invest into SWARM once this trading model generates a decent official track record? I guess it will not run with only 3 million very long in case it is successful, will it?
Trading capital for 141 will be subject to reportable trading track records. These questions should be submitted to Errol Stone.
11. I have always asked myself why Spooz is only going to get 7% of the net income numbers from 141/SWARM when in fact SWARM is owned 100% by Spooz. I mean I understand that the guys who arrange and provide the money get a decent piece of the pie but could you help us understand why that is 93% of the net income? I realize that many investors didn't understand this in the first place and were disappointed by it.
I believe I have answered this question many time before. We believe that, overall, the Spooz/141 deal is very generous to Spooz shareholders especially since SWARM is one of many potential proprietary trading systems that will be employed by 141 Capital.
12. Is there anything still to become official out of the "quiet period" or was the 141 license deal in regards to futures for SWARM the only thing that got developed during the quiet period? I guess I'm asking because a couple of weeks ago you said that this is just "the tip of the iceberg" and so we hoped that somethin else is coming out of this quiet period soon....
More of the “iceberg” will become visible in the next few weeks. There are a great many things to be revealed to our shareholders, but timing is everything.
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Imperial Whazoo
QUESTION AREA #1
Paul, in your presentation at the ValueRich Expo, your slide #9 contained a release schedule for the Spooz product line. It was as follows:
PRODUCT LAUNCH DATE
SpoozToolz January 2008
Custom Pricing Module January 2008
SpoozChartz January 2008
API for 3rdParty Developers March 2008
Fractalz3 April 2008
Advanced Auto-Spreader May 2008
Two matters are the subject of my concerns as regards the release schedule:
(A) Recently, it has been disclosed that Jame Groves & Dr. Peng He are no longer employeed by Spooz.
(B) It has also been disclosed that regulatory filings as regards the sale of shares have been filed by Spooz.
Given these two matters, please address the following questions:
1. Has there been, is there, and/or will there be any negative impact on the ownership status of any and/or all of the products in the above schedule because of either of these two referenced matters or both of them?
There will be no negative impact with the result of the departure of Dr. Peng and Jame’ Groves. I can not comment further on this matter at this time, however, more information will be forthcoming soon.
2. Will the products listed in the above schedule be released on schedule or will either of these matters or both of them cause Spooz to change the release schedule in any way?
No. Dr. Peng and Jame’ Groves were managed in such a way as that they would not affect these matters in any way.
QUESTION AREA #2
Paul, in the 6 month financial filing dated 06/08/07, there is a table showing that both Jame Groves & Dr. Peng He were granted substantial options positions in connection with their employment.
On page 4 of that document, under the heading of "Incentive Stock Options - Jurisdiction in Illinois", the following is the relevant data:
DATE NAME # OF OPTIONS
1-May-07 Jame Groves 25,000,000
18-May-07 Peng He 20,000,000
Given this disclosure, please address the following:
1. Were either of these individuals employed long enough to have had their considerable options positions vested?
No options granted to Dr. Peng or Jame’ Groves ever vested. They are forfeit.
2. Regarding options granted by Spooz in general, including but not limited to those granted to these two individuals, is there some time frame requirement that pertains? For example, does federal and/or state law and/or regulation specify a one year time frame?
Not that I am aware of. This is contractual via the terms of the Spooz Incentive Stock Options Plan (“ISOP”).
QUESTION AREA #3
1. Were the two departures related to each other or were each of them unrelated?
They were independent of one another.
2. Whether related or not, did the departures occur on the same date?
No, they were approximately one month apart.
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stocrates
In your reply to Allies' email of 8-17 you replied that
" a reverse split or continued dilution of the companies stock was out of the question."
Do you continue to maintain this position.
Yes, at this time, no reverse splits are planned or contemplated.
jdre
Please do. I'd like to know if this news which he thought would have a "monumental" impact on the PPS has been released. Was it something from the expo (ie. 100 million over 4 years, uplisting?) If not, WHEN does he expect to release this news (prior to 08)? I sent him an e-mail prior to the expo and he said soon, however, considering the expo and current PPS I'd like some clarification. I think SPZI is still primed to do well however at the end of the day I think shareholders have a legit concern when the PPS drops so significantly.
Due to recent events being reviewed by our counsel, I can not comment at this time.
peeved
1. Is there still a deal with Ameritrade regarding the API?
See above.
2. Have you considered giving SPZI warrants to buy 141 shares as a way to raise further capital for 141.
No.
3. What is an estimation of how much you value SWARM as far as leasing to outside companies?
This is totally a matter of historical track record. We do not have enough data to answer this question.
4. Of the 4000 projected customers in 2008, what percentage do you believe will be purchasing the whole shebang ($600/ month worth)?
We project 50% will purchase the Z-Pro package.
5. Is there a pending programming with using SPOOZTOOLZ for creating an exchange to trade other commodities (the "ebay for the rich" idea)?
An answer to this question would provide sensitive and highly proprietary strategic information to the market. I can not provide any information regarding this question at this time.
vanbookie
Just to throw a little discussion out here about Jame Groves and Dr. Peng He.
Big Daddy reports that Daryl told him they were not "Key Employees"???
I think Daryl is spinning that one just a little.
This is an errant assumption.
Jame Groves was awarded 25 million stock options on May 1, 2007; Dr. Peng He was awarded 20 mil. stock options on May 18, 2007....in both instances millions more than any other employee.
Paul Strickland spoke in absolutely glowing terms about the work of Groves and Dr. Peng He in tweaking SWARM during June and the demo trading during July.
The On-line Demo. Someone asked "Whose voice is that on the demo? Someone voiced the opinion that "only 4 people understand SWARM well enough to describe it, Jame Groves, Dr. Peng He, Paul and Daryl.
I would like to ask several questions about the dismissal of these 2 Non-Key ???? Employees from Spooz, only a couple months about from public availability of SWARM.
1. How does their dismissal effect the development of the other software products ie Fractal-Toolz, and others?
Not in the least.
2. How many millions of options were they allowed to keep?
Zero, the options have been cancelled.
3. Did they have to sign a "Non-disclosure of trade secrets agreement" or any other NDA of propriatary knowledge as a term of their employment by Spooz.
Both Dr. Peng and Jame’ Groves entered into, what we believe, very tight Non-Disclosure/ Non- Compete Agreements.
Frankly, the dismissal of Groves and Dr. Peng He IS a big deal IMO.
In a positive or negative way? My point is that you lack the information important to draw such a conclusion or form this opinion.
Mountaincabin
Allie,
Will you please add this question to this week's list for Paul?
What is Spooz doing to accomodate the needs of the traders and other who participated in the testing of Spooz products earier this year until the official launch? Thanks in advance.
I do not understand this question. If you want to know, are we providing product give-aways to traders, the answer is no. That’s not to say that we will not consider such situations if we feel that it is in the best interests of the Spooz shareholders.
gbathat
Allie, if not too late, please add the following to the list of Q's for Paul...
Who will be taking over Errol's duties at spooz? Are they looking to hire someone else?
Errol will remain as the Secretary of Spooz and will remain on its board of directors. We believe Errol to be a valuable asset to the company and our agreement ensures that he will perform certain duties for Spooz during the transition.
I think this PR is a good one... things are definitely moving.
This would be a correct and insightful assumption.
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