Krazestock's Interview with Luiz Valdetaro
Notes from an interview by a shareholder and reader of RB last year with Luiz Valdetaro, CFO, VCSY. Rapid Robert wrote, "the interview by krazestock certainly was 'positive' and gave everyone an inside look at what management thinks and is doing to build shareholder value. It is outdated now as far as the development of the business but shows the inside at VCSY HQ."
Krazestock's post and interview is as follows:
As I said in my prior message, on the 25th, I met with Luis Valdetaro at VCSY hdqtrs and asked the following suggested questions and others. I took some notes, and will relay those comments in my next message, BUT I ask that you draw your own conclusions and see this as a grain of salt in the your overall investment decisions. To me, this is no more than one more tool that I use to make my own investment decisions, and I hope you will too.
By: krazestock
27 Jul 2006, 07:55 PM EDT
Msg. 166084 of 167164
VCSY is located at 201 Main Street in downtown Fort Worth in one of if not the most prime high-rise office building in FW. They are listed under Now Solutions. Yes, I did see people occupying offices and all that I saw appeared busy at work. I arrived, told them that I was an investor, lived and worked in the area and had some questions, asking to speak with either Richard Wade or Luis Valdetaro. Luis’ office was close by and he must have overheard me, as he came out introduced himself and stated that he would be glad to meet with me. We went to a conference room, and he began by stating the obvious that there are things he could not comment on but would gladly comment when he could. I found him to be very personable, and was impressed that he’d stop to take the time to speak with a total stranger merely because I am a shareholder.
1.When does VCSY leadership expect the company to show earnings? (This quarter, next quarter?) Response: As you’d expect Luis could not comment as to the period to expect earnings. He did say that the company philosophy is working to build a profitable and substantial company, utilizing NOW Solutions, which has existed for about 30-years with over 100-plus clients, combined with the efforts of the VCSY. He also stated that about 95% of current revenue comes from NOW; the company sells software and it as a service; sales of software are very profitable generating about .89 to the dollar; their sales force is 3x what it was in ’05; they now have 9 sales reps with 7 in the US and 2 in Canada. I asked about Brazil, but he did not answer about reps there, but stated that they hope to see sales there too.
2.How much do they expect these earnings to be? (A: see 1 above.)
3.Are they considering a stock buy-back plan or reverse split, or simply an increase in the authorized limit) Response: no direct answer; however, he stated that b/b’s come with costs, that r/s’s are in most all cases not a good idea for a company, and no comment on anything else.. He added that the Brazil office and having a distributor there should provide cost savings for the company.
4.What makes VCSY's products and services unique? (What nitch-market are they creating for themselves? What are the core values that they are marketing themselves?) Response: NOW makes a very good product for companies with extremely complicated and complex payrolls, with the ability to provide precise FLSA computations, etc. Governmental (Federal, State, County and Local) agencies, those in the healthcare field, credit unions, are some of the companies that could use and benefit from this product. He added that they sell software and the services. Also, mentioned a response flash product. Lastly, he commented in a positive manner that the Response Flash product is good for first responders.
5.What is their view of technology in general? (How is the world technology changing and how is VCSY adapting itself to meet or beat those changes?) Response: As CTO he knows that the company must keep up at the forefront of technology changes. He reads constantly to see and learn what is out there. Through VCSY they have and are always looking for new proprietary technology. VCSY has three unique patents, many others and are constantly looking to develop and acquire others. Also, they are willing to protect against infringement upon their patents and products and enforce their rights as evidenced by their hiring counsel to address such matters.
6.What do they feel is their greatest challenge? Their greatest strengths? Response: Challenges are sales and marketing and the integration of VCSY & Now. Strengths are its technology.
(note by RR: Knowing where the weakness is as Luiz says it is sales and marketing, can only make the company stronger in those fields in the future)
7.Is it their ambition to grow into a large company - like Microsoft - or remain about the size that they are? (If their ambition is to grow very large, how do they intend to accomplish this, what resources and how much time do they think it will take?) Response: Of course a company has to set highest goals for itself. He and Richard are both committed to long term grow this company and do it successfully. He mentioned Richard’s background of success having run Duty Free Shoppers, and conveyed that he believed in Richard’s leadership and direction for the company.
8.What is/are the company's goal(s)? (Have they changed from four or five years ago?) Response: Yes, they have changed as has technology. (He reiterated some of the same info about growth, technology, sales, marketing, etc. from previous questions.)
9. Does the company have a working prototype of the 'Fiber Optic' patent and if not, when does it appear they will progress to that stage with the patent and are there other companies looking into joining VCSY on the development of the patent and associated applications. Also, do they have specific applications in mind for the 'fiber optic' patent and what are they. Response: There is no current prototype. They are looking for funding and funding options. He mentioned government grants as one possible source, and said that there are others. Working jointly with another company could mean having to give up a tremendous amount (of $.) To the question of a joint effort, he added that he estimated the cost of a prototype at $2 million and said weigh that against something that could be worth billions. As to specific applications, he stated that it has a million potential applications.
10. Is the company planning on making any major announcements in the next month about contracts/license agreements which will bring in new revenue? If not, when do they expect to make announcements of this type on increased revenue? Response: I cannot comment.
11. When will 'emily' patent be finished and published by the patent office. Response: there are two Emily patents; whenever the government processes it and the government moves slowly.
12. How is the intellectual patent law firm, Niro, Scavone, Haller & Niro, doing for the company? Are they finalizing license agreements or getting ready to file any lawsuits? If so, how many lawsuits does it appear they might file for patent infringement? Response: Cannot comment; however, we believe that there are a lot out there using our patent for site-flash. (He touched again on the comments he made to question #5, and left the impression that they will not just sit back and do nothing.)
13. Is the office in Brazil having success at new business? If it is, when will shareholders be informed of the new business and revenue created? Response: The office was created to control development, reduce costs and to expand our business. (He again touched on their goal of successfully growing the company.) He said that an announcement would come when they get their first client. He also stated that they provide announcements when they have material facts, and do not use puffing.)
14. Is Vertical/NOW Solutions working with IBM on DIFFERENT projects? Is IBM working on a 'confidential' project with 'emPath' called 'TPMD' Response: He cannot comment specifically, except to say that we are a business partner and work with them and those who partner with them. EmPath is a database product, and he did not know and had never heard of TMPD.
15. Will the company try to file the quarterly report with the SEC by August 10th and not take it to the last minute like they have in the recent past. Response: Their goal is to always file on time. They would rather a report be done right than to meet a deadline and do it wrong. They certainly do not want to be de-listed as they once were in ’03.
Krazestock's post and interview is as follows:
As I said in my prior message, on the 25th, I met with Luis Valdetaro at VCSY hdqtrs and asked the following suggested questions and others. I took some notes, and will relay those comments in my next message, BUT I ask that you draw your own conclusions and see this as a grain of salt in the your overall investment decisions. To me, this is no more than one more tool that I use to make my own investment decisions, and I hope you will too.
By: krazestock
27 Jul 2006, 07:55 PM EDT
Msg. 166084 of 167164
VCSY is located at 201 Main Street in downtown Fort Worth in one of if not the most prime high-rise office building in FW. They are listed under Now Solutions. Yes, I did see people occupying offices and all that I saw appeared busy at work. I arrived, told them that I was an investor, lived and worked in the area and had some questions, asking to speak with either Richard Wade or Luis Valdetaro. Luis’ office was close by and he must have overheard me, as he came out introduced himself and stated that he would be glad to meet with me. We went to a conference room, and he began by stating the obvious that there are things he could not comment on but would gladly comment when he could. I found him to be very personable, and was impressed that he’d stop to take the time to speak with a total stranger merely because I am a shareholder.
1.When does VCSY leadership expect the company to show earnings? (This quarter, next quarter?) Response: As you’d expect Luis could not comment as to the period to expect earnings. He did say that the company philosophy is working to build a profitable and substantial company, utilizing NOW Solutions, which has existed for about 30-years with over 100-plus clients, combined with the efforts of the VCSY. He also stated that about 95% of current revenue comes from NOW; the company sells software and it as a service; sales of software are very profitable generating about .89 to the dollar; their sales force is 3x what it was in ’05; they now have 9 sales reps with 7 in the US and 2 in Canada. I asked about Brazil, but he did not answer about reps there, but stated that they hope to see sales there too.
2.How much do they expect these earnings to be? (A: see 1 above.)
3.Are they considering a stock buy-back plan or reverse split, or simply an increase in the authorized limit) Response: no direct answer; however, he stated that b/b’s come with costs, that r/s’s are in most all cases not a good idea for a company, and no comment on anything else.. He added that the Brazil office and having a distributor there should provide cost savings for the company.
4.What makes VCSY's products and services unique? (What nitch-market are they creating for themselves? What are the core values that they are marketing themselves?) Response: NOW makes a very good product for companies with extremely complicated and complex payrolls, with the ability to provide precise FLSA computations, etc. Governmental (Federal, State, County and Local) agencies, those in the healthcare field, credit unions, are some of the companies that could use and benefit from this product. He added that they sell software and the services. Also, mentioned a response flash product. Lastly, he commented in a positive manner that the Response Flash product is good for first responders.
5.What is their view of technology in general? (How is the world technology changing and how is VCSY adapting itself to meet or beat those changes?) Response: As CTO he knows that the company must keep up at the forefront of technology changes. He reads constantly to see and learn what is out there. Through VCSY they have and are always looking for new proprietary technology. VCSY has three unique patents, many others and are constantly looking to develop and acquire others. Also, they are willing to protect against infringement upon their patents and products and enforce their rights as evidenced by their hiring counsel to address such matters.
6.What do they feel is their greatest challenge? Their greatest strengths? Response: Challenges are sales and marketing and the integration of VCSY & Now. Strengths are its technology.
(note by RR: Knowing where the weakness is as Luiz says it is sales and marketing, can only make the company stronger in those fields in the future)
7.Is it their ambition to grow into a large company - like Microsoft - or remain about the size that they are? (If their ambition is to grow very large, how do they intend to accomplish this, what resources and how much time do they think it will take?) Response: Of course a company has to set highest goals for itself. He and Richard are both committed to long term grow this company and do it successfully. He mentioned Richard’s background of success having run Duty Free Shoppers, and conveyed that he believed in Richard’s leadership and direction for the company.
8.What is/are the company's goal(s)? (Have they changed from four or five years ago?) Response: Yes, they have changed as has technology. (He reiterated some of the same info about growth, technology, sales, marketing, etc. from previous questions.)
9. Does the company have a working prototype of the 'Fiber Optic' patent and if not, when does it appear they will progress to that stage with the patent and are there other companies looking into joining VCSY on the development of the patent and associated applications. Also, do they have specific applications in mind for the 'fiber optic' patent and what are they. Response: There is no current prototype. They are looking for funding and funding options. He mentioned government grants as one possible source, and said that there are others. Working jointly with another company could mean having to give up a tremendous amount (of $.) To the question of a joint effort, he added that he estimated the cost of a prototype at $2 million and said weigh that against something that could be worth billions. As to specific applications, he stated that it has a million potential applications.
10. Is the company planning on making any major announcements in the next month about contracts/license agreements which will bring in new revenue? If not, when do they expect to make announcements of this type on increased revenue? Response: I cannot comment.
11. When will 'emily' patent be finished and published by the patent office. Response: there are two Emily patents; whenever the government processes it and the government moves slowly.
12. How is the intellectual patent law firm, Niro, Scavone, Haller & Niro, doing for the company? Are they finalizing license agreements or getting ready to file any lawsuits? If so, how many lawsuits does it appear they might file for patent infringement? Response: Cannot comment; however, we believe that there are a lot out there using our patent for site-flash. (He touched again on the comments he made to question #5, and left the impression that they will not just sit back and do nothing.)
13. Is the office in Brazil having success at new business? If it is, when will shareholders be informed of the new business and revenue created? Response: The office was created to control development, reduce costs and to expand our business. (He again touched on their goal of successfully growing the company.) He said that an announcement would come when they get their first client. He also stated that they provide announcements when they have material facts, and do not use puffing.)
14. Is Vertical/NOW Solutions working with IBM on DIFFERENT projects? Is IBM working on a 'confidential' project with 'emPath' called 'TPMD' Response: He cannot comment specifically, except to say that we are a business partner and work with them and those who partner with them. EmPath is a database product, and he did not know and had never heard of TMPD.
15. Will the company try to file the quarterly report with the SEC by August 10th and not take it to the last minute like they have in the recent past. Response: Their goal is to always file on time. They would rather a report be done right than to meet a deadline and do it wrong. They certainly do not want to be de-listed as they once were in ’03.
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