IA Global, Inc. (IAO)
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Global management teams experience in world markets is proving to be beneficial in
making acquisitions and developing the Japan and Australian markets for their
entertainment, media and technology businesses
Mr. Margerion: IAO Global had a very interesting history; it started as a company that was working more in the media field and was on the Internet. We are still very focused on the entertainment media area but we are much more focused on the Japan market and away from just the dot.com areas and on to more core technologies. We have seen a great growth in our asset space since we have taken over the management and we have also seen more M&A (mergers and acquisition) activity as opposed to just trying to bring the company more up with the internal resources.
CEOCFOinterviews: Why Japan?
Mr. Margerion: I think the reason we picked Japan as an area which we thought would grow, is because we have a lot of experience here. The reason we have gained our experience here is that we feel Japan is still a good market. When we look at IAO Global, what we are looking at is a public holding company that has an active M&A program; we are looking to acquire other companies. In doing that, Japan at this time has the best opportunity that we see; big companies that may be willing to go to the next phase. If you looked at Japan ten years ago, you would have seen many companies at their peak; now we are seeing some starting to struggle a bit; the whole industry fell down and is now rebuilding itself. We are trying to tie companies that are already in that rebuilding process, and have made good process toward recovery and are positioned perfectly at this stage to take advantage of the Japanese recovery and then access global markets.
CEOCFOinterviews: Will you tell us about your most recent acquisitions?
Mr. Margerion: One of the ones I think is most interesting ins a company called Rex Tokyo Ltd.; we took a look at this company because they had some very good revenues, and we found the business area in which they were involved to be very interesting. They are a supplier, and a maintainer of equipment with the gaming industry. In Japan there is a huge gaming industry called Pachinko. Pachinko slot machines, since the end of the war in Japan, have very much come to being a huge industry with multi-billion-dollar revenues. Rex Tokyo, being the supplier and maintainer of equipment, is able to work with many firms that have a foothold in the industry and provide services for installing new equipment, and maintain that equipment on an ongoing basis. Prior to our acquiring Rex Tokyo, Rex Tokyo did about 28 million dollars of revenue. We looked at the business and found that they had good assets and an extremely good client list. It was something we also felt might appeal to American shareholders, and perhaps that the companies that are on the AMEX and other companies in American today, might not have access to this type of industry and by bringing this global, we give the American and the global investor an opportunity to invest in Japan.
CEOCFOinterviews: Will you tell us about the other phases of your business?
Mr. Margerion: The areas are media and entertainment technologies; Rex Tokyo not only goes across the entertainment field, but it also fits into the technology field. It is not a dot.com field but a core technology field. Another company that we acquired was called Fan Club Entertainment Ltd., which has the rights from Marvel Entertainment Inc, which is an American company, to run a fan club for Japan. Marvel has many world-class characters they have developed such as Spider Man and Hulk, amongst many others. Fan Club Entertainment Ltd. has the rights to use those characters within the sphere of the fan club to promote the activities of Marvel. The starting point for Fan Club Entertainment Ltd. is the data mining company and they realized that they could utilize the resources of companies such as Marvel in order to bring up a fan club based upon the state of mining technology, which they have.
CEOCFOinterviews: Are there any other areas?
Mr. Margerion: Sure! We have picked up a joint venture in Australia with a company called QuikCAT Australia; and more recently, we acquired the core technology behind this company from a U.S. higher based company. We believe QuikCAT technology is unique; there are a number of algorithms, which are based on the Internet, to be squeezed down to incredibly small FIVES and then passed over the Internet lines. People that may have not been able to get broadband between country areas, are now able, through our technology, have their Internet provided at a faster rate by compressing the data before it actually reaches their computer. The technology can be used in a number of different ways; one that has been focused on is passing the data on the Internet and that is called Internet Acceleration Service.
CEOCFOinterviews: Is Australia the only place that can be used?
Mr. Margerion: No, the joint venture we established in Australia was to service the major regions of Australia and New Zealand. The reason we acquired the core technology from QuikCAT, was so that we could get more access to the larger American market and also the technology could then be deployed worldwide. We have only just completed the acquisition of the core technology so we are still developing our network and we are working with some partners on a worldwide basis to expand the reach of the QuikCAT technology. We do not want it to be just in one area of the world.
CEOCFOinterviews: Are partnerships the way you are going to handle a variety of activities?
Mr. Margerion: We are looking to be a public holding company and we need to manage the assets of the companies we acquire. The companies must have their own management teams and we may at some point, acquire technology and try to assist it in its growth phase; we would then obviously be looking to get a management team in specifically for that technology and then allow them to grow the business. We take a hands-on approach to Rex Tokyo, so they have their own management team, finance people and sales offices, and they go out on a day-to-day basis and create revenue. We oversee the operation and meet regularly with their management and directors. Fan Club Entertainment Ltd. works the same and QuikCAT is of the same model but we are working closely with them at this stage because we have just completed our acquisition. As we make further acquisitions, we will do the same; we would look at the acquisition and work our what resources it would need, and how management team could come in and properly manage that. We are above the management team, providing corporate governance to the whole operation.
CEOCFOinterviews: With all the opportunities out there how do you distinguish between them?
Mr. Margerion: We get many people that approach us with various companies that they feel are good, and we actually go out and look for companies that initially we might feel are good. We have to go through a number of criteria to determine whether it is a good fit for IAO Global or not. IAO Global is looking at the Japan and the U.S. market to see what synergy there may be for a Japanese company to break into America or an American company into Japan, or maybe just use the resources of an American company or vice versa. We would then look at whether there was an application for the global market outside of Japan and the U.S. We tend to look through each acquisition prospect and determine whether it would fit into our current M&A strategy, and what may be a good application for us might not be for another company. We go through a process. We have three companies here and established one joint venture; we have also looked at a number of others, but these three are the best.
CEOCFOinterviews: Will you tell us about your background and the management team?
Mr. Margerion: I think we have an interesting management team. I have been here for fifteen years and worked on a management consultancy basis in the financial area. I speak and read Japanese. I was born in the U.K. and lived in Australia and come from a western background. We have two coaches here; and the other people on our team and all of their directors are familiar with Japanese and U.S. culture. We specifically pick people that can manage these two areas because we dont want to come across a possible acquisition and for the lack of information on the culture, not be able to make a decision. We pick directors that understand both cultures, finance people that understand both financial markets and all of our directors understand the language of both countries.
CEOCFOinterviews: Does the economic shift have much effect on you?
Mr. Margerion: Yes, it is fair to say that with any type of investment, in good markets, companies will always be more expensive to buy. In markets that are a little bit low, it is possible to find better opportunities. With an M&A strategy, we would want to try and buy as cheaply as possible, very good companies and then show the market what value they have, help to increase their revenues, bring out more profit margin and grow those companies to a stage where people would say wow, I wish we had heard of that company before, how did IAO Global get in there first.
CEOCFOinterviews: Will you tell us about the financial condition of IAO Global?
Mr. Margerion: This is one of the areas, which I think we can take credit for having turned around quite a bit. The majority of our shareholders has supported us and has provided us with capital over the last one-and-a-half years. Our balance sheet is looking a lot better now that it was when we took over the company. We have also increased revenues and we have seen a large increase in the last quarter including the Rex Tokyo revenues, took us around two million dollars. The quarter previously was around five thousand dollars, so we have seen a large increase in that area. I think rather than looking at one quarter, I think it is fair to say that the overall health of the company from a financial point of view, is a much better now than it has been in the past.
CEOCFOinterviews: Are there areas where the QuikCAT technology is most applicable?
Mr. Margerion: QuikCAT technology works in many different areas; the founder of QuikCAT has an amazing brain. It works well for pictures, so when you have a picture on the Internet, it can bring the size of the picture down without losing much quality. It can also work for some video applications, general data such as a Power Point file, Word file and a PDF file. One application, in which we have currently peaked, is people who want to get access to the Internet and ISP type of relationships, which we are looking at. To name some of the people that are competitors; there is a company called Propel Software Corporation, they have a website and are in the market of Internet data acceleration. There is a company called SPEED WIRES, which is also in the Internet data acceleration market. There are a number of other companies around and they supply the same end-results and they are marketing the same end-results as the customer. How they get to that point is through different technologies; we believe our technology is unique and we can actually provide a good solution for these other competitors; they may find something that they feel they want to use at the moment and dont want to use somebody elses technology, but at some point in the future, they may want to. Today you may have a competitor and tomorrow you may have a partner. I wouldnt want to label anybody one or the other at this stage. I think the market for QuikCAT products is very young at the moment but it is growing more and more.
should investors be looking at IAO Global?
CEOCFOinterviews: What should people know about IAO Global that they may not see when they look at the company?
Mr. Margerion: I think people look at the old material, and the Internet gathers a lot of material over time and doesnt seem to get refreshed. People should be looking at our balance sheet that has changed dramatically and the fact that we have made an acquisition recently and Rex Tokyo is a great example of a large business in Japan; last year they did an enormous amount of revenue, which is something that is totally different to the previous business model of IAO Global.
CEOCFOinterviews: In closing, is there an area that you havent focused on in the past the people can look for in the future?
Mr. Margerion: One area which IAO Global hasnt focused on until now is talking to people like yourself; we havent done any PR or IR. Sometimes shareholders call us up and we get the impression that we havent done a good job of IR up until this point in time. We are trying to improve on our IR job and we will be presenting to the Wall Street analyst forum in August. We hope to get the message out that we are an active company and we have what we believe is a good strategy and we would like people to look at us.
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