UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): December 14, 2004
VIDEOLOCITY INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
Nevada 33-2310-D 87-0429154
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1762-A Prospector Avenue, Park City, Utah 84060
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (435) 615-8338
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 9. Regulation FD Disclosure.
On December 14, 2004, Videolocity International, Inc. caused to be mailed
to its shareholders a letter containing the following information:
* * * * * * * * *
VIDEOLOCITY INTERNATIONAL, INC.
Dear Shareholder,
I'd like to offer a special holiday greeting to all of the Shareholders,
employees, friends and families of Videolocity International, Inc. As this year
comes to a close, I would like to take this opportunity to outline our strategy
in pursuit of becoming the new leader in the global arena of interactive digital
technologies. Along with you, we look forward to tremendous growth and a very
bright future as we implement our refined business plan in the upcoming year.
As a brief history, the operating entity of Videolocity International, Inc. was
formed in May of 2000 to develop and market systems, products and solutions for
the interactive delivery of video and other digital content to end users on
demand. Even though pay-per-view in the hospitality market is well defined and
has been available for almost 15 years, pay-per-view technology has remained
largely unchanged. However, through innovative development of technologies,
applications of advanced encoding/compression processes and seemingly unrelated
principles of using Internet Protocol (IP), Videolocity has broadened the range
of content and the ability of a variety of markets to effectively implement a
revolutionary new method of providing interactive services. These new
technologies and applications were integrated into an end-to-end delivery
platform for interactive services and digital content, called the Digital
Entertainment System (DES(TM)). The DES(TM) has been validated in several rounds
of testing and a recent commercial deployment into a prominent 700 room Las
Vegas hotel. The DES(TM) enables the property to provide in-room entertainment,
guest education, increased staff productivity and competitive offerings while
reducing the risk of obsolescence. This leads to increased revenue and cost
savings for each property.
We recently introduced the DES(TM) at the Telco TV 2004 show in Orlando, Florida
and have subsequently been recognized for the significance of our technologies.
Our approach was to attend the show with the intent to interest a few Internet
Service Providers (ISP's), cable companies, telephone companies and independent
content service providers in testing our DES(TM) for residential applications.
During the few weeks following the show, our Company has entered into agreements
for testing the DES(TM) and applicable technologies with numerous customers
including major wireless infrastructure manufacturers, ISP's and telephone
companies. As the terms of the agreements progress and others are finalized we
will provide access via the Videolocity website and press releases including the
terms and conditions to the public.
In this letter, I will briefly describe Videolocity's technologies,
applications, share an overview of our marketing and licensing strategy, and
report on the current opportunities and potential customers. Readers are invited
to review our most recent 10-QSB filed with the SEC, which is available at
www.sec.gov. To access the Company's filings click on "search for company
filings", then under "general-purpose searches click on "companies and other
filers" and finally, type in Videolocity International and click enter. A
significant highlight of our financial reports was the successful conversion of
debt over the last 12 months. The latest annual report 10-KSB will be due in
late January 2005. The only remaining requirement for us to execute our business
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plan is the finalization of funding which we hope to accomplish with the
completion of the installation of the commercial DES(TM), subsequent revenues,
and the testing of the Videolocity technologies with several key partners. The
standby equity line of credit between Videolocity and Cornell Capital Partners
L.L.C., remains in effect although we have mutually agreed to suspend any
attempts to draw from the equity line until the stock price is at an adequate
valuation and there is significant trading volume to support any such draws
without hurting the long term objectives of the Company. This equity line
remains available to serve as collateral for other forms of funding and the
remaining stock we registered for use under the standby equity line of credit
remains un-issued until such time it is needed.
DES(TM) Technology - and its Applications
The DES(TM) is an end-to-end packaged solution that was developed primarily for
use in the hospitality market, yet the far reaching capabilities offers a
platform for the future of IP networks while providing a solid innovative
solution that exceeds current demands in the hospitality market. The target
applications for the DES(TM) are video-on-demand, television and computer based
Internet, server and Internet gaming, music-on-demand, marketing, branding,
advertising, administrative and remote maintenance capabilities. In the very
near future our technology evolution will provide video conferencing, Voice over
Internet Protocol (VoIP), X-10 home automation, ad insertion and mobile security
which includes real-time and mobile access to cameras and secure databases.
Target markets include:
Hospitality Industries
o Hotels
o Timeshares
o Casinos
o Motels
o Extended Stay
o Cruise Ships
o Aircraft
Healthcare Industries
o Hospitals
o Extended Care
o Assisted Living
o Imaging Centers
o Remote education and training
Residential Applications
o Multiple dwelling units
o Intelligent Communities
o Fiber to the home
o Campus housing
o Colleges
o Rural and urban broadband customers
The DES(TM) is flexible, scalable and customizable! A major advantage of the
DES(TM) is the ability to operate over most wired and wireless networks
including CATV, DSL, fiber, cable modem and wireless.
The DES(TM) can provide this array of features at a fraction of the cost of
comparable systems because of the intellectual properties and trade secrets that
address the technical limitations that directly effect costs and revenues. To
learn more about the key technologies please visit our Company's website.
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Licensing and Strategy
Videolocity has tremendous short and long term opportunities to earn significant
revenues from the licensing of its technologies and applications without the
burden of capital-intensive direct deployments. To this end, we have developed a
strategy for licensing our technologies and the DES(TM) on multiple levels to
capture both long term market share and to accelerate the adoption of our
technologies into several key opportunities. Both long and short term strategies
are essential, to earn the Company and it's Shareholders the maximum return and
to move this Company rapidly to profitability.
Our short term strategy included the manufacturing of the DES(TM) and subsequent
deployment into the Las Vegas property. We have generated our initial revenues
from the commercial deployment of the DES(TM) and will experience growth in the
revenue of the system as we continue to add content and new features, provided
that funding is available for these enhancements.
We are well along the path to making our long term strategy a reality as we are
in the process of negotiating key Original Equipment Manufacturer (OEM)
Agreements. These OEM Agreements will provide revenues via a technology transfer
fee and a minimum 5-year residual income stream from the usage of the DES(TM).
In the coming weeks we will announce the various Letters of Intent (LOI)
outlining the OEM Agreements, customers and applications. The technology
transfer fees will provide anticipated working capital and are structured to
recover the expenses related to developing the DES(TM) and applications over the
last several years. The residual payments will provide strong revenues for the
future and will allow the Company to continue to develop new technologies,
enhancements and applications.
Additionally, the Company will review the possibility of making several key
acquisitions that will not only enhance our current talented team, but provide
new revenue streams and reduce the developmental costs of continued research and
development efforts. The need to grow via acquisition led to the recent request
and majority Shareholder approval to increase the amount of authorized shares of
the Company's common voting stock.
Marketing and Customers
During the last 6 months, we have been pleased with broad and diverse initial
market interest in the DES(TM) and other applicable uses for the technologies.
To help identify and prioritize industries and markets, along with key customers
and partners, the Company has engaged Dan Driscoll and Nick Gilliland. Dan
Driscoll has been a member of our Board of Directors for over two years and is
well known in the wireless and telephony industries for his ability to close
deals, which has been limited due to the Company's inability to close funding
and begin generating revenue. Nick is a respected member of the Salt Lake City
community and brings many years of successful sales in the wireless, telephony
and IP industries. In an effort I call "Unleashing the Titans", Dan and Nick are
putting on a full court press to identify synergistic partners for the Company
while keeping a close eye on the competition. Consistent with our strategy,
during the last year, Mike York our VP has worked with Shareholders, primarily
in Las Vegas, that have provided much needed working capital and a guarantee on
an equipment lease in order for the Company to deploy the initial commercial
DES(TM). Customers, both domestically and internationally have traveled to Las
Vegas, to discuss the advancement of the DES(TM) and the incorporation of the
technologies for their specific applications. These discussions have resulted in
our ability to aggressively use channel marketing and branding to pursue the
many business opportunities without staffing a large sales force. We have
specific end goals in mind and by using our channel partners we will take an
integral step on the path leading towards the establishment of our technologies
within the vast international markets via licensing agreements and continued
engineering and design.
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Projects, Partners and TEAM!
Because the majority of our future business is based on the licensing of our
intellectual property, the key to our marketing strategy is the demonstration of
our DES(TM) and its benefit to the customer. We are in the process of
establishing a demonstration program, which will allow us to answer the requests
for licenses based on market potential, immediacy of revenues and long-term
market objectives. In addition to the demonstration program, we are introducing
new marketing collateral that our potential partners may use to gain traction
with their respective clients. We have been asked for the last several years "if
the DES(TM) and technologies are so revolutionary, why haven't you been able to
close funding or deploy the system?" There are many contributing factors and we
must all understand the steps required to evaluate, adapt, test and apply a
technology solution to any market. The main factor is that we have been a public
Company since May of 2000 and the reverse merger that made us public has only
served as a stumbling block based on the down-turn in the market and the various
injustices committed by public Company executives in recent years. We were
blessed by the fact that Cortney Taylor believed in the future of Videolocity
enough to leave a very rewarding career as a Senior Manager at one of the
largest and most respected accounting firms in the world. Cortney has led the
efforts to successfully audit the Company since its inception, maintain the SEC
reporting, and budget what little funding we have had so that we might
accomplish our goals. Through all of the difficulties of running a public
company and his ultimate responsibility based on the Public Company Accounting
Reform provided under the Sarbanes-Oxley Act of 2002, Cortney remains an
integral part of the team.
We are in a highly competitive industry and even with proprietary technologies
we need good partners in order to succeed. The Company has entered into various
non-disclosure agreements that prevent us from making announcements at this time
however, with the completion of LOI's and OEM Agreements. We are looking forward
to making these announcements. Please keep your eye on our website for updates.
To meet the demands of a growing company, Videolocity has expanded the roles of
its key employees. Because the nature of our business is based on intellectual
properties we have adopted a staffing plan that only provides for high caliber
management. Daniel Osorio is our Chief Systems Architect and as the inventor of
many of the patents and trade secrets he maintains the daily responsibility of
allocating the engineering projects. Daniel has broad knowledge and experience
in developing encoding/compression technologies and for the digital rights
management of content. His counterpart is Bill Lee, the Chief Network Architect.
Bill has proven many times over that his vast knowledge of wireless and wired
networks, interconnectivity and propagation are unrivaled and he will remain the
leader of adapting our technologies for use over almost all network standards
both here and abroad. Videolocity is pleased to announce the addition of two key
members of the engineering team. Randy Moller and Louis Zirkel serve in roles
that the Company has desperately needed for the last two years. The programming
capability and the ability to integrate our DES(TM) into a variety of
interfaces, billing, reporting and management capability is the key to adapting
the technologies for the vast markets I previously outlined. These gentlemen
manage all efforts pertaining to their area of expertise and are responsible for
the outsourcing of all applicable engineering development. Shane McNeill has
been with the Company since its inception and has a wide range of
responsibilities as he performs almost all of the encoding of content at our
Park City office and at our facility in Los Angeles, California. Shane performs
most logistical functions and handles inventory control, which will be an
increasingly demanding task, as the OEM Agreements will dictate larger volume
shipments. We must attribute much of our recent success to the fact that our
technologies have been approved by the major movie studios and independent
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content providers based on our digital rights management and quality. Allow me
to highlight the sacrifices made by Erik St. Anthony as he has spent much of the
last two years using his vast contacts within the media industry to place
Videolocity on the doorstep of the decision makers, which is just short of a
miracle for a developmental stage company. Let me not forget to mention our
Board of Directors that include Larry McNeill, Bennie Williams and Dan Driscoll
that have braved the responsibility of supporting the Company during these
difficult and sometimes unrewarding times. Note that based on the financial
hardships of the Company and the pre-revenue status we have not initiated a
search for additional members that will compliment our current Board. However,
we will focus on a search for new members in the coming months.
Keeping our Shareholders and Public Informed
We are grateful for the ongoing patience, support and loyalty of all our
employees, Board Members, Shareholders and families during the difficult early
years of our developmental phase, and eagerly look forward to future successes
together. During the last three years we have achieved the impossible task of
taking a small public technology company forward from developmental stages to
commercial viability at a time when so many companies, large and small, have
ceased to exist for business or financial reasons. I will not revisit the many
challenges we face but will only point out that we have, in fact, survived a
remarkable downturn in the technology industry and the economy in general only
to come out with great potential, dedicated staff and marketable products and
solutions. We appreciate your support and interest in Videolocity. We have had
tremendous response since we announced our deployment of the DES(TM) and the
recent attendance at the Telco TV 2004 convention. We look forward to wonderful
and exciting opportunities as the Company moves into a new year and we continue
to work with current and future partners for licensing the DES(TM). We are in
the process of revitalizing our website, so keep a close watch as we announce
several exciting events over the next several months. It has been very difficult
to finance press releases and to make announcements in recent years but we will
strive to make it possible for you to monitor our growth. Keep in mind that we
have been predominantly a developmental stage company and have only recently
emerged into the commercial market space. We must maintain the integrity of the
technologies and applications until we are well established and sometimes this
means bringing a little less attention to ourselves.
Together, with you, we look forward to a prosperous future. We also look forward
to the reduced dependency on short-term capital by closing our funding
requirements. We believe Videolocity will play a big role in making the dream of
ON-DEMAND, a near term reality. After all, we have the technologies that the
future's been waiting for.
Thank you for your faith in us, and your faith in a better future. Together we
can make it come true but it will take our combined efforts and patience.
Sincerely,
/s/ Robert E. Holt
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Robert E Holt
CEO, Videolocity International, Inc.
This release contains statements that constitute "forward-looking statements"
within the meaning of Section 21E of the Securities Exchange Act and Section 27A
of the Securities Act. Readers are cautioned not to put undue reliance on such
forward-looking statements. Such forward-looking statements are not guarantees
of future performance and involve risks and uncertainties.
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Certain factors may cause actual results to differ materially from those
contained in the forward-looking statements, including but not limited to: the
development and/or acceptance of new products, the impact of competition on the
Company's products and/or pricing, and the success of the Company's systems
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: December 15, 2004 VIDEOLOCITY INTERNATIONAL, INC.
By: /S/ ROBERT E. HOLT
--------------------------------------
Robert E. Holt, President
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