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ISACSOFT Inc. (ISF) |
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CEOCFO
Interview Index |
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experienced management with significant contacts throughout Canada and the United States
gives ISACSOFT an edge in the marketplace BIO: Mr. Salvati: “Isasoft had been a company that did business under the name of ZAQ Inc. We assumed management responsibility back in the middle of 2003 for that company and changed the name and business to become a company that is focused on software solutions for its customers, with a concentration in e-knowledge solutions; solutions that are in corporate training and educational space. To that end, we have been successful in private placement and in April of this year, we raised 7million dollars based on our new strategy for the company to move it forward. We have also acquired four companies and are in the process of acquiring another company, BiblioMondo Inc., which will add to the scope and the scale of ISACSOFT. All of this is consistent with our revived business strategy and focusing in on e-knowledge solutions and software.” CEOCFOinterviews: What is it about the e-knowledge solutions area that appeals to you? Mr. Salvati: “There
is a significant marketing opportunity here. If you look in the corporate education and
training space, most major corporations spend a significant amount of their budgets on
training and educating employees, new product introductions and this types if activities.
There have been a number of false starts in the e-learning market, where someone says that
they have some neat e-learning tools for you and it consists of a power point
presentation. Our solution is much more comprehensive; it deals with an artificial
intelligence based product, which provides real time feedback and is adjustable to the
pace of the individual learner. This can be delivered on-site or over the net. The
advantage is that anytime an administrator of training with needs or wants, real time on
the level of comprehension for the people being trained, this product is a real good fit
for that. CEOCFOinterviews: What kind of content are you talking about in terms of e-learning? Mr. Salvati: “If you look at a math book and you look at tenth or eleventh grade math, depending on the state or province, you will see a section on quadratic equations; that is standard information in the printed textbook. Our technology takes the equation and puts in into a learning object interactive format, which allows the student to interact with the equation and produce different graphic solutions of the solutions. It also pushes for additional exercises to make sure of the level of comprehension. Our technology platform allows us to separate the text from the learning object, which allows us to translate this learning object into a number of different languages while reusing the same learning object. In fact, one of or line of business we have here is a translation division, so there is synergy between those two businesses. If you look on the commercial front; for example one of the things we are looking at is with pharmaceutical companies in terms of new product introduction. They go through extensive training of their marketing distributors and sales forces and representatives. One of the key things for them is to know that the people who are going to market this product are aware of all of its attributes and side effects. Our technology allows the administrator of that training to know essentially the level of comprehension of anyone who goes through this type of exercise. There is content, and that content is the training material that we can turn into additional format.” CEOCFOinterviews: Are you looking for more acquisitions? Mr. Salvati: “The old ZAQ was a very small company. We succeeded in increasing the size significantly since we took over management of the company and financed it through the private placement of equity securities in the spring. With acquisitions, we now have the company up to around twenty million dollars annualized run-rate of revenues. We are approaching profitability at this point. When we complete the acquisition of BiblioMondo, we will have established an international network as BiblioMondo as a relatively sizeable operation throughout most of Europe. We will have additional distribution outlets to push our learning software. We have a small acquisition; a school we acquired here in Quebec. There are two reasons for that; one is that the certification agent can actually give credit for the courses because the courseware has been approved by the Ministry of Education up here. It also owns content in three or four different courses including some high level programming. We are looking to extend these courses on pay-per-views over the web. We are comfortable right now with our technology. The technology we have is robust and relatively new. If we do additional acquisitions on a technology front, they will tend to be more odds and ends we might need to complete the offer. We are in the process of completing the gaps that we currently have in becoming a full service provider to any of our customers. What I mean by that is, we want to be able to have the capability to serve customers that want a very small one-shot, take-my-training program, convert it to your digital format, and give it back to me. I will administer it and provide it all the way up to where a customer would outsource their training needs to us and we would provide everything including the administration of their training program, registration etc.” CEOCFOinterviews: Will you explain your revenue model? Mr. Salvati: “We have three basic models for revenue. One is where a customer will come to us with print, a book of training materials, and request us to take that and put it into our technology, and covert it into our e-learning solution. The second source is, where we look at the content and we think the content is reusable and has a long-term life, then our normal type of agreement with customers would be a revenue sharing model going out to a ten-year period, whereby we would split additional revenues that we are able to generate from use of that technology or content. Because of the way our technology works, we can mix and match content relatively easily. It is all indexed. For example, there are approximately 400,000 math-learning objects, which would cover all high school math courses. We have close to 100,000 of these in our libraries. Let’s say we go to New York and we meet with the Department of Education, and we agree to take the high school math of the City of New York and present it using our technology. We would go through our inventory of learning objects and select the ones that are required for New York. There are some differences in math between provinces in Canada, states in the U.S. and cities in the U.S. We would have the ability to pick out the ones that we have the rights to and then supplement them with whatever New York needs in terms of its individual needs. When we use a learning object that we have the rights to based on our royalty arrangements, we receive somewhere between fifty to ninety-five percent of whatever the customer pays for the use of that object. The remainder we share with people that have provided us the content of the contract. The third piece of our revenue model as we are able to become more of a full-service provider to customers, would be the outsourcing of any of these training or educational types of environments for customers.” CEOCFOinterviews: How do you decide whom to target and how do you reach your potential customer? Mr. Salvati: “That hasn’t been a problem for us yet. If you look at our management team, you can almost refer to us as a start-up company, but we have significant business experience and contacts based on where we were before. Ronald Brisebois, our President and CEO, has over twenty years as a successful entrepreneur founder of Cognicase, and significant contacts within the province of Quebec and throughout Canada. I have over thirty years of business experience both in the U.S. and Canada. There are a number of our other senior managers who have similar types of profiles. We have ready access to a number of large potential customers, who know us or of us so it has not been a problem getting in to see the CEO or CFO or the CIO if that is the decision maker. Given where we are in our state of development, we have yet to make a cold call. All of our calls are referrals from our prior business contacts or through existing business we have in a related company called ISAC Technologies, which is being merged into ISACSOFT, and from the existing customer base that we have acquired from Cogniscience Inc. In fact, the lead for the Quebec business came from Alberta, through a referral from the Department of Education in Alberta. They set up a meeting with us in Quebec. For now, we have more opportunities than we can effectively cover. We are in the process of building the brand. We will, especially with the acquisition of BiblioMondo, acquire a significant distribution network. BiblioMondo has over 1000 libraries under contract. They provide a natural outlet and additional e-learning we will market through their sales force once we have completed that transaction.” CEOCFOinterviews: What is the competitive landscape and why should people be choosing ISACSOFT? Mr. Salvati: “What we see on the competitive landscape is a number of large print publishers who are engaged in varying degrees of conversion for offering of digitized types of alternatives to print. In most cases we have found is an addition to the print, there has been a number of companies who are experiencing with technology somewhat akin to what we have, but not identical, which have been acquired by large print publishers and we see that as positive for us. The reason is if you take my contract with the Province of Quebec for example, the province probably pays the book publisher somewhere between $20.00 to $25.00 per print book. The ministry charges the student a fee and then passes through between $20.00 to $25.00 dollars in textbooks. Our contract with them says that we will charge them for each book. We will convert it if they pay us the fee to convert it and we will charge them 50% of what the print publisher would charge for each book. When you have that kind of revenue model, it is tough for the print publisher, because it is significant cannibalization immediately, off their existing revenue base with no cost reduction. On the educational front, we are confident that we will make significant inroads. On the commercial side, the biggest challenge we had there, because of the number of false starts in e-learning commercial space, we are going to need to establish ourselves as being different, which is why refer to our product as e-knowledge as opposed to e-learning. The e-learning creates stereotypes in peoples minds of not having the interactivity or the benefit of what the salesman told them they would get. We need to begin operating that space and begin to show potential customers that this product is really different than some of their prior experiences.” CEOCFOinterviews: In closing, why should investors be interested and what should they know that they might not realize at a glance? Mr. Salvati: “One of the problems that we have now is that there is no research reports published on the company as yet. There should be a research report out within the next few months so investors would have at least one source to go to find an independent view of the company. I think for investors now, it is a tough investment choice unless you are very familiar with the management team here and what we accomplished before. You can’t look at the company and see how the company has performed over the past five years and try to project it out forward. We will start to deliver consistent growth. The other factor is that we are publicly traded but we are on the venture exchange up here, which I guess in U.S. equivalent is probably like NASDAQ OTC market. We appeal to investors that will accept a relatively high level of risk for a potentially large return. One of the objectives we have is to meet the listing requirements for the senior exchange up here, which is TSX and is regarded by investors almost like the NASDAQ would be in the U.S. For now, this would appeal to investors that are placing a bet on the strategy as we have laid it out publicly and the management team here and the fact that the CEO is one of the leading entrepreneurs in Canada.” disclaimers |
“There have been a number of false starts in the e-learning market, where someone says that they have some neat e-learning tools for you and it consists of a power point presentation. Our solution is much more comprehensive; it deals with an artificial intelligence based product, which provides real time feedback and is adjustable to the pace of the individual learner. This can be delivered on-site or over the net. The advantage is that anytime an administrator of training with needs or wants, real time on the level of comprehension for the people being trained, this product is a real good fit for that.” - Vincent Salvati |
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