|
|
WindsorTech Inc. (WSRT) |
|
CEOCFO
Interview Index |
This is a printer friendly page! WindsorTech is turning liabilities into assets for companies by completely
erasing their computer hard drives while recovering 50% of their assets through resale  Technology Computer Services (WSRT-OTC: BB) WindsorTech Inc. 70 Lake Drive Hightstown, NJ 08520 Phone: 609-426-4666  Marc Sherman Chairman, President and CEO Interview conducted by: Lynn Fosse Senior Editor CEOCFOinterviews.com September 2004 BIO: Mr. Sherman: “My past took me through different processes within the technology ‘end of life’ management business. After September 11th, I realized that companies don’t pay enough attention to the information that resides on their ‘end of life’ IT assets. At that time, a number of important environmental compliance laws were coming into effect, prohibiting monitor tubes, CPUs and electronics, and Hazmat from being ditched in landfills. I spent the next few months building out the foundation of our company. First, I brought in people that worked with me in the past in the end-of-life remarketing business. I brought on an IT person named Dave Harris who developed our technology asset-management system, allowing us to bring IT assets into our facilities; we can now process 35,000 assets a month, completely identify them and their condition, and erase all the sensitive data from their hard drives. Today, that is probably the most important aspect of our business. Data security and environmental security have become some of the biggest business activities in our country. Big and small businesses have to be aware that the information that resides on their technology belongs to their customers, not to them. The information has to be treated respectfully and sensitively. A series of regulations requires that. They include Sarbanes-Oxley, Graham-Leach-Bliley and other security laws, as well as the Health Insurance Portability and Insurance Act, or HIPAA, as it is known, which safeguards patient information. Today, companies are basically required to have computer equipment free of information before it can be remarketed." CEOCFOinterviews: How are you able to completely remove it? Mr. Sherman: “What we do on our equipment is called a “DoD (Department of Defense) Certified wipe.” We overwrite the drive so many times that the information that was originally there is completely erased, putting the machine back into the condition it was when the hard drive was new. You cannot recover data from equipment that we have sanitized.” CEOCFOinterviews: How does this work? Mr. Sherman: “It is a process. Just as companies don’t audit their own books they should not audit their own IT evaluation of computer hard drives. A company will tell us that they have an IT department that has gone through their computer equipment and has erased the drives and recorded the information. We find that that is usually untrue. In fact what actually happens is the IT people are so tied up with other things they often fail to get the job of erasure done correctly, and there are no sure ways of guaranteeing that they actually got the job done. I know that from the hard drives that go through our facility. And without 100 percent erasure, companies are exposed to potential liabilities and lawsuits. Before we remarket a product, we check to make sure that our clients have actually sanitized the hard drives of the machines we accept. Most companies are sitting with hard drives with sensitive data on them, and they need our assistance to help them comply with all the regulations that govern their computers. It is a dangerous world we live in-- medical records, personal data, and customer lists are written into the heart of our computers. The data could be damaging to companies and individuals.” CEOCFOinterviews: You have mentioned what the government has done to regulate this; will you give us more detail? Mr. Sherman: “The EPA has mandated penalties of $10 thousand per breach of its regulations for ditching computers. A computer monitor, for example, contains led, chromium, arsenic, etc. One monitor can have $100,000 of potential violations. EPA fines can range in the millions of dollars. HIPPA, which I mentioned earlier, regulates the privacy of health-related information. This is another law which businesses have to cope with. These proscribed fines there have not been tested yet because the rules do not go into effect until 2005. The regulators are still trying to prepare the country for these laws and the fines. We recently met with Hutton Williams, a New York law firm that is working with insurance companies to help prepare them for when these laws go into effect. I asked them how big the fines were going to be and they said that once the government starts levying penalties they expect to see law suits come down for non-compliance, and the fines are going to be huge. Right now, you haven’t heard much about this because generally if an information breach gets out, the matter is settled quickly. We are heading into a world where information and privacy will be key. Personal identity and identity theft is becoming a corporate and individual hot button.” While corporations are a major part of our business, we also have an important focus on the individual. WindsorTech has developed a product called EraseYourHardDrive.com, which offers individuals a handy but highly effective way to erase their hard drives by simply downloading our program from the Internet for only $23.95. Our mantra is “before you sell, donate or give your computer away, make sure you use eraseYourHardDrive.com to protect your personal identity, as well as your social security number, credit cards, and bank account information. All of this sensitive data generally resides on a home PC. Our business is the securing of information whether it is personal or corporate." CEOCFOinterviews: How do you get the right people to understand? Mr. Sherman: “The challenge in our business is to reach top management; ours is a service that you sell from the top down. Lower down the corporate ladder managers think about budgets, not data security. But when you reach the legal counsel of a company or the board of directors or the security officer, they understand the value that we bring to their operations. We test, audit and erase hard-drives and then report the results back to the client, providing him with a neat little package that can be relied upon. We give companies a certificate of destruction, a certificate of DoD erase, a spreadsheet of how the equipment was handled, so that the accounting department, the security department, the legal department, and everyone else that needs to know is fully informed that WindsorTech has completed the required process and they need not worry about liability.” CEOCFOinterviews: Who is presently using your service? Mr. Sherman: “Among our hallmark clients are Lockheed Martin Corporation (NYSE: LMT) and Halliburton (NYSE: HAL). As the nature of our business is unique and involves security, many of our clients prefer that we don’t use their name.” CEOCFOinterviews: Are
all these computers shipped to your facility? CEOCFOinterviews: How do you get rid of the computers? Mr. Sherman: “The beauty of our business is turning a liability into an asset. When we are through processing equipment, we have an international and domestic network of buyers for their parts. Since I have been in the remarketing business for roughly twenty years, I have developed a long proprietary list of buyers for our product, ranging from Poland to India and other technologically emerging nations. Our two-year-old technology is fantastic for these countries. It helps them begin to build an infrastructure of their own, and at a discounted price.” CEOCFOinterviews: You are not throwing anything away then! Mr. Sherman: “We do not throw anything away. We are in the business of turning liabilities into assets for companies and converting their potential nightmare of a liability into a product that helps others.” CEOCFOinterviews: When you receive the equipment, do you then own it or does the company own it? Mr. Sherman: “The
company owns it; we charge them a fee for our services and when these are completed we
share the remarketing revenues with them. For example, if we receive equipment for
auditing, we charge about eight dollars for the job; to erase the hard-drive costs between
ten and thirty dollars, depending on the size. The machine itself is worth about a hundred
dollars. So, our client would recoup about seventy percent of that value, minus our fees.
There are other services involved, so on average, our customer gets about fifty percent of
the actual value of the machine, after all of our services." Mr. Sherman: “It is
a great deal for WindsorTech and it is a great deal for our clients. Our biggest
competitive edge is the depth and breadth of our knowledge base. (DO YOU MEAN TO WHOM YOU
SELL?) We have been in this business for roughly twenty years, and know all the nuances. CEOCFOinterviews: How do you reach the right people? Mr. Sherman: “We speak at IT Asset Managers conferences. We are reach out to that community. We spent two years before we actually were opened for business was to build a significant infrastructure for our business. Now we are actually out there selling." CEOCFOinterviews: How can you be certain the information you clear on a hard drive cannot be found? Mr. Sherman: “We follow the procedures of the Department of Defense. We figure if our processes are good enough for a lead national security agency, it will serve our clients well. We keep to the level of DoD compliancy, so we are always at the level of the government’s standard. The way our system works is that the hard-drive either is completely DoD-erased, or, if there is a glitch in the system, we pull out the hard-drive and degouge it before it goes through the recycling process. Generally, though, all the drives can be erased and all of them can be reused.” CEOCFOinterviews: Will you tell us about the acquisition of QualTech and if you are looking at any future acquisitions? Mr. Sherman: “QualTech International and QualTech Services Group was a very strategic acquisition. QualTech is in the mainframe and mid-range size of what we do. When we looked at their business and we saw such clients as USSA Insurance and several other large companies; QualTech has 860,000 seats under their control with their client base. We figured if we could leverage our business model with their client base, we would have our 2005 budget already worked into our business model. We saw that QualTech’s business would broaden our business and the value of WindsorTech. Their clients have similar needs to our clients, because QualTech deals in mainframes and mainframes generally have large hard-drive configurations. Their clients have the same concerns as our PC-based clients: just one of their machines may have one hundred hard-drives in their system, so we are educating their clients to the potential liabilities of their machines. They have to take the same kind of care with their hard-drive as we take with PCs and laptops. It is a continual education process. Growth is in front of us and we see a bright future for our company. We are projecting roughly seventy million in sales next year with twelve million dollars in EBIDA, and growing from there. That is without QualTech bringing any government contracts to our business.” CEOCFOinterviews: Certainly your last quarter was a good one! Mr. Sherman: “That is 2004; we feel our protections for 2004 are solid. We are going into 2005 just as aggressively.” CEOCFOinterviews: Do you do this project-by-project with a company or is it an ongoing contract? Mr. Sherman: “Our business is ongoing and contractual. We have one-year contracts as well as three-year contracts. Generally, when a large corporation leases or buys equipment they do it in three stages You can figure it like this: a large client with a hundred thousand machines, will recycle 33,000 a year, never rolling the whole platform at one time because that would be too costly and time consuming, and his IT department couldn’t handle it. That is why once we have the clients we usually have them for multiple years ongoing, because when you have taken that first roll out, three years later, that next roll is ready to go. This is an ongoing business that continues to cycle.” CEOCFOinterviews: Do you have much competition? Mr. Sherman: “We have competitors, but right now we are the only publicly traded company in our market. Because we are public, we have the highest liability standards. Our name is on the line and our directors and officers names are on the line, in contrast to a private company. Answering to a higher authority gives us a competitive advantage. We also look at this business as being strategic in nature, so if there is an acquisition candidate out there that fits into the demographic locations in our strategy, then we’d be interested. As far a direct competitors, we have them but we haven’t felt them yet.” CEOCFOinterviews: In closing, why should potential investors be interested and what should they know that they might not realize when they first look at the company? Mr. Sherman: “It is
very rare to see a company that has been trading for just about a year and have all its
potential in front of them. We are at a sweet spot in this industry. Because of the
regulations governing hardware, we’re in a situation we’re the demand is growing
around us. That’s a rare situation for a small start-up company. We see a bright
future and enormous growth. This is a billion-dollar industry and we are just beginning to
tackle it. Between organic growth and potential consolidation, our company has a
tremendous future. *** disclaimers |
“Anyone out there that doesn’t think about identity theft, security and environmental compliance for their IT for their computer equipment is really just fooling themselves because these are growing responsibilities. Our mission is to continue to educate businesses, institutions and consumers on how to handle these assets appropriately.” - Marc Sherman |
|
|
To view Releases highlight & left click on the company name!
|
|
