miw q1 2010 letter to shareholders
TRANSCRIPT
-
8/8/2019 MIW Q1 2010 Letter to Shareholders
1/18
Make It Work, Inc.Quarterly Shareholder Report
Q1 2010
Issued by Carson Feleay, VP Finance
June 2010
-
8/8/2019 MIW Q1 2010 Letter to Shareholders
2/18
Table of Contents
A) Introduction to the Quarter (pgs. 3-4)a. Operations Reviewb. Financial Overviewc. Marketing Directiond. Business Development
B) Operational Discussion and Metrics (pgs. 4-5)a. Sales/Revenues per NTCb. Number of Technicians, Challenges and Goalsc. Average Appointment Time Analysisd. % NSA Customers vs. Non-NSA customers comparisons
C) Financial Discussion of Objectives and Results (pgs. 6-8)a. Revenues/Sales Analysisb. Targeted Spending Cutsc. Cash Preservation Focusd. EBITDA Success
D) Marketing Results and Expansion Plans for 2010 (pgs. 8-10)a. KSFO Make It Work Radio Show Syndicationb. SEO Focusc. Social Media and New Media Venturesd. Expansion Foundation via Radio Syndicatione. Future Marketing Direction and Objectives
E) Conclusion Summary and 2010 Expectations and Forecasts (pgs. 11-12)a. Summary of Q1b. 2010 Forecasting and Goalsc. Summary of Operational, Financial, and Marketing Resultsd. Focus on Top-Line Growth in Tandem with Bottom-Line Success
-
8/8/2019 MIW Q1 2010 Letter to Shareholders
3/18
Supplemental Information
Tables, Charts and Graphs
1) Technician Sales Analysis Table (pg. 4)2) Average Appointment Time (pg. 5)3)
Quarterly Revenues vs. Expenses 2009 (pg. 6)4) EBITDA by Quarter (pg. 7)
5) www.makeitwork.com webpage hits chart (pg. 9)6) blog.makeitwork.com webpage hits chart (pg. 10)
Financial Statements (Appendix A)
1) Comparative Statements of Operations (Income Statement)2) Comparative Balance Sheets3) Comparative Statement of Cash Flows4) MIW Quarterly Dashboard of Key Metrics
-
8/8/2019 MIW Q1 2010 Letter to Shareholders
4/18
1st
Quarter Overview
The first quarter of 2010 was focused on continuing the profitability of our operations, while also
introducing the Make It Work Media division which adds to our expanding scope of services. We
continued our profitability while launching targeted media marketing campaigns to supplement our
Tech News Radio Show along with our social media awareness campaigns. Make It Work successfully
launched our newest radio show in January, Make It Work with Jeremy Anticouni on KSFO 560from 3pm to 4pm on Saturdays, in San Francisco. Through MIWs syndication contract with Envision
Radio Networks, this show is now in the process of syndication as a 2 hour show to be launched in
markets across the nation. As we build the awareness for our services through the new show, we
will begin to launch our remote and on-site services in the geographies the radio show serves.
Further marketing and expansion details are highlighted in the Marketing section (pgs 8-10).
Operationally we maintained our high level of services in the first quarter. The Average Appointment
Time (AAT) remained steady at 1.44 hours per appointment, which was only a .02 drop from the
fourth quarter of 2009. Our average Neighborhood Support Agreement (NSA) sales perNeighborhood Technology Consultant (NTC) per month remained above the $9,000 mark, another
benchmark for MIW. MIW increased sales and revenues on a quarter over quarter basis, and also set
the pace to double our annual EBITDA. Further operational details will be charted and explained in
the Operations section (pgs 4-6).
In a parallel manner, we have worked to best utilize these productivity achievements by investing a
limited budget where best suited for further growth, and at the same time maintaining our efficient
new cost structure in order to further improve our financial standing. In doing so, we continued our
positive EBITDA trend throughout the quarter, netting $38k in positive EBITDA. MIW also kept
spending in check, and preserved the cash balance throughout Q1, netting a balance of $145k at the
quarters end. This is a slight increase from the $140k cash balance reported at year-end 2009.
Further highlights of our financial successes are detailed in the Financial section (pgs. 6-8) and on the
-
8/8/2019 MIW Q1 2010 Letter to Shareholders
5/18
geographies served, for our remote and on-site services. MIW has begun working on the syndication
process and recording of the new Make It Work radio show to roll out in the 2nd
quarter. We have
also begun laying the foundation for a new set of services MIW will offer targeted to small businesses
for web content building via the creation of a blog for the client and online presence via a search
engine optimization package. In addition, a realm of other media and online services can be added
to each package a la carte and any package can be customized to fit the clients needs. Financially,
we continue to strive for profitability, along with finding new ways to increase our top-line sales and
revenues. Operationally, MIW will maintain its tight controls now in place in order to boost
productivity further, and to increase brand awareness through our resources on-hand. Overall, theeconomic climate remains challenging, but the future for MIW brings many opportunities and we
look forward to serving the ever-growing needs of our customers with our ever-growing scope of
services.
Operations
In the 1st quarter of 2010 MIW again took the same approach as it has in recent past quarters by
further focus on streamlining our processes and procedures, increasing productivity, and most
importantly by delighting the customer with extreme customer service. In doing so, key metrics
show that the efforts that are driving our operational productivity to new highs are continuing to
drive greater profitability overall.
The Table below is a snapshot of the quarter over quarter operational results, even after a solid 4th
quarter.
Q110 Q409
NSA Sales $ 943,000 $ 920,000
Avg NSA Sales/NTC per month $ 9,525 $ 10,222
Avg NTC Headcount 33 30
Avg Appt Time (in hours) 1.44 1.46
# of Appts 6,655 6,035
As the table above shows, MIW was able to increase NSA sales due to a greater appointment count
in the quarter. At the same time, we saw slight decreases in the average appointment time, along
with the NSA sales per technician on average. While maintaining our streamlined operational focus,
we saw a slight growth in the number of NTCs needed to service the demand due to the increase in
appointments per day. We have experienced steady demand in the first half of the 2nd
quarter.
-
8/8/2019 MIW Q1 2010 Letter to Shareholders
6/18
many further consulting offerings in online social media, home user software, and small business
user software. In the 1st
quarter of 2010, MIW was able to maintain above the 1.4 hours per
appointment mark and ended up at 1.44 hours per appointment. It is worth noting that this was on
over 600 more appointments in the quarter.
The chart below displays the AAT per quarter since Q4 2008.
MIW will continue in its efforts of expanding its services scope in order to keep increasing this metric
and also to further delight our customers.
In conclusion to our operational metrics and discussion, we continue to see the challenge of
sustaining future revenues. As previously reported, over the course of 2009, MIW increased its
percentage of NSA customers overall. We know that the key measure of our success comes in thesales of the Neighborhood Support Agreement (NSA). With this sale come future revenues, and the
substantial increased probability of repeated appointments for the clients future technology needs.
In Q1 2009, we saw 73% of our clients that completed an appointment were NSA customers, and by
Q4 2009, we saw that number increase to 76% of all customers that completed an appointment were
NSA clients In Q1 2010 the 76% ratio was maintained on 600+ more appointments in the quarter
-
8/8/2019 MIW Q1 2010 Letter to Shareholders
7/18
Financial Results and Objectives
On the top-line, MIW saw services sales increase by 3% quarter over quarter, while revenues for
services also experienced an increase of 9% quarter over quarter. The increase in the number of
appointments was the major factor in these variances quarter over quarter. This further illustrated
the increased focus on AAT and productivity. Year over year, we see that the services sales were flatfor the comparable quarter, while services revenues were down 6%. MIW maintained its highly
variable structure to combat these metrics. MIW was able to continue on its path of profitability as
we increased gross profits as a percent of revenues by 11%.
The chart below displays the progress of aligning our cost structure with our top-line allowing for
MIW to fundamentally sustain its operations.
As previously mentioned and illustrated, MIW has made a coordinated effort at targeted expense
reductions. We have streamlined our mini-cooper fleet and reduced by 10 the number of cars in the
field to closer align with our number of technicians. This has resulted in nearly $5,000 per month in
savings. We have maintained our internal controls on spending and our variable model equating to
1st
quarter run-rate of doubling our annual Earnings Before Interest Tax Depreciation and
Amortization (EBITDA). We remained focused in investing in our Tech News Radio Show in Los
-
8/8/2019 MIW Q1 2010 Letter to Shareholders
8/18
our streamlined ongoing cost-structure to eliminate unnecessary spend. MIW cash balance at the
end of the 1st
quarter 2010 was $145k. We have seen further challenges to preserving our cash
balance in the beginning of the 2nd quarter 2010 and we plan to work hard in order to preserve ourcash balance. We will stay the course also with paying down our existing payables and legacy
payables, while continually working to pay down our short-term debt.
The highlight of our financial successes in Q1 2010 stands out in our EBITDA (Earnings Before
Interest, Tax, Depreciation and Amortization) improvement. EBITDA for the quarter was $38k
compared to $13k in the 4th
quarter of 2009. This marks the 4th
straight quarter of positive EBITDA
for MIW. We accomplished an 890% increase in our EBITDA year over year in 2009. In the 1
st
quarter of 2010, we saw a quarter over quarter increase of nearly 200%. Make It Work concertedly
focused its combined efforts to improve the bottom line of the company in 2009 and we have
continued that focus with great success as vividly illustrated in the chart below.
Overall, in Q1 financially we have seen a slight top-line increase that is consistent with the overall
economy and tech sector for the start of 2010. Concurrently, across all of our scopes of services we
saw a boost in demand in the first quarter, yet were able to maintain fiscal discipline and keep our
variable model in place in order to maximize profits . By increasing productivity, streamlining
operations, and carrying out targeted spending cuts, Make It Work has laid the foundation for
streamlined growth and self-funding. We look forward to expanding our scope of services, while also
servicing new demand within our expansion plans in the upcoming year. At the same time MIW will
continue to focus its efforts on bottom-line success and profitability. Detailed financial results are
-
8/8/2019 MIW Q1 2010 Letter to Shareholders
9/18
The marketing initiatives in the 1st quarter of 2010 were focused around a few new campaigns and
at the same time we re-visited traditional radio advertising to compliment our Tech News radio show
on KNX.
The utmost attention of our marketing team has been channeled into perfecting our radio shows.
Our KNX Tech News radio show continues to account for 20% of all of our new customers acquired insouthern California and is a great driver of the expansion of our Make It Work brand. It is also the
lowest cost of acquisition source for new customers of all of our current marketing campaigns. We
launched our second radio show, Make It Work with Jeremy Anticouni, in January on San Franciscos
KSFO 560. This show airs Saturdays from 3-4pm and will be the show we syndicate nationwide. On
April 16, 2010, we signed a formal syndication agreement with Envision Radio Networks to syndicate
this show nationwide.
We continually work to expand our online presence, and have now focused much of the marketing
departments attention to Search Engine Optimization (SEO) campaigns which include a strategic
Google Adwords campaign along with content building in our websites, newly developed blog and
social media networks. We have redeveloped our Make It Work website to be more user-friendly and
to better encompass the many legs of the business. See our most updated look here:
-
8/8/2019 MIW Q1 2010 Letter to Shareholders
10/18
Each of our radio show websites have been improved to further engage our audience.
Los Angeles KNX 1070: http://www.cbstechnews.com
San Francisco KSFO 560, along with Syndicated, national 2-hour show:
http://www.makeitworkradio.com
Our newest media venture is called T3, Todays Tech Trends. T3 is a 3 minute
video that captures three of the latest trending topics in the world of
technology. This builds more brand awareness for MIW and also
compliments our SEO campaign as all of the videos are searchable online
with the topics of discussion in each video. T3 is produced and distributed
on Mondays, Wednesdays, and Fridays via YouTube, the MIW Blog and
through partner websites and blogs. Our launch partner Noozhawk carries an
automatically updated version of our embedded media player athttp://www.noozhawk.com, which captures over 7,000 unique visitors per day. We look to build on
this relationship in order to branch out onto many other credible websites, in order to further build
the MIW brand. You can also find T3 on our blog at: http://www.makeitwork.com/t3.
k k h b h d i f li i l di i l di bl i d i l
-
8/8/2019 MIW Q1 2010 Letter to Shareholders
11/18
attention to our blog at http://blog.makeitwork.com. These efforts build brand recognition in the
social media arena, and have introduced MIW to an entirely new audience. In addition our onlineengagement has solidified and expanded existing relationships with our radio sponsors and has
brought new potential sponsors to the negotiating table.
Our future marketing plans and objectives run consistent with our current marketing agenda.
To continue to perfect our radio shows in order to further expand into new marketsvia syndication with Envision Radio Networks contract.
To continue the Make It Work presence in the social media arena for further brandawareness and online recognition driving hits to our websites and services.
To further build quality content on all of our websites for our Search EngineOptimization campaigns in combination with a highly targeted Google Adwords
campaign. To continue to produce high quality content for our websites and T3 in order to
achieve brand awareness and to serve our clients with an ever expanding scope of
services.
To continue to come up with new creative, highly efficient, low-cost means of
-
8/8/2019 MIW Q1 2010 Letter to Shareholders
12/18
Conclusion
Overall, MIW is pleased to see the increased demand in Q1 2010, for its premium services in what is
still an extraordinary economy. The opportunity for the expansion of our radio shows coupled with
the organic growth of our services into these territories of best fit lies ahead in the next 3 quarters of
2010. Operationally, the enhancement of productivity in the field-team resources has rendered
increasing profits. At the same time, our delight index has risen once again to 3.92 overall on a scale
of 0 - 4, with 4 being a perfect score. In the process of continuing to delight our customers, we have
worked harder to build the relationship even further, and have watched our rate of converting newclients to repeat clients rise as more customers purchase Neighborhood Support Agreements.
Financially, we have persistently worked to maintain our tight controls to reduce spend where
necessary in order to reinvest where we see the greatest return. In doing so, we achieved 4
consecutive profitable quarters as a company. MIW recorded $38k in Earnings Before Interest, Tax,
Depreciation, and Amortization (EBITDA) for the quarter, on pace to double last years total EBITDA.
On the marketing side, MIW has branched out into new avenues with social media awareness, while
also refining those campaigns showing the most promise. Of these, our Make It Work radio shows
stand out as the key driving force behind affordable new customer acquisition and geographic
expansion. We also have revamped our websites for the greatest Search Engine Optimization,
producing results we are now starting to see in the 2nd
quarter. We have also expanded into new
online brand awareness with our Make It Work blog, T3, and through revamping our Facebook and
Twitter display and strategies.
Looking ahead to 2010, our key objectives continue to be maintaining and increasing financial
controls to sustain bottom-line profitability. At the same time, we look to preserve the cash balanceand further shore up the balance sheet, all the meanwhile the ultimate goal is supporting the growth
of our scope of services and geographies served. Operationally, we have put forth metrics objectives
of:
1.50 AAT (Average Appointment Time - based in hours) 80% perfect 4.0 delight scores on respondent surveys $10k per month per technician in NSA sales
On the marketing side, we will further concentrate on the web branding campaigns, produce newcreative tech video content, and also continue to fine-tune and perfect our Make It Work radio
shows as we prepare for nation-wide syndication. On the whole, we look forward to the
opportunities for growth ahead, while also recognizing the challenges.
-
8/8/2019 MIW Q1 2010 Letter to Shareholders
13/18
I personally thank you for your continued support. I know you have been patient and everyone at
MIW appreciates it. We are working feverishly to find the best possible return for our shareholders.This economy has been the toughest time in my career, but I remain bullish in my belief that we will
achieve the results we all seek. Please remain positive in your thinking and happy in your lives.
To the moon,
Eric Greenspan
CEO
Make It Work Inc.
P.S. If you wish to discuss anything in this report or any other matter, I am available to you as
needed. You may email me directly at [email protected] or friend me on Facebook at
http://www.facebook.com/ericgreenspan and Twitter at http://www.twitter.com/ericgreenspan soyou may keep track of our progress on a day to day basis.
The information provided in this report is private and confidential and is not to be shared with anyone other than you, MIW Shareholder.
-
8/8/2019 MIW Q1 2010 Letter to Shareholders
14/18
Appendix A
Financial Statements
1) Comparative Statements of Operations (Income Statement)2) Comparative Balance Sheets3) Comparative Statement of Cash Flows4) MIW Quarterly Dashboard of Key Metrics
-
8/8/2019 MIW Q1 2010 Letter to Shareholders
15/18
STATEMENT OF OPERATIONS($ in thousands)
(Unaudited)
Period Ending Period EndingFiscal Q1, 2010 Fiscal Q4, 2009
Billings (1) 1,199 1,160
Revenue (1) 1,117 1,028
Cost of sales (2) 511 491
Gross profit 606 537
General and administrative expenses (3) 485 468Sales and marketing (3) 137 116
622 584
Operating income/(loss) (16) (47)
Other (Income)/Expense 3 (5)
Net income/(loss) (19) (42)
Reconciliation of Net income/(loss) to EBITDA
Net income/(loss) (19) (42)
Depreciation and amortization 47 49
Tax and interest 10 6
EBITDA 38 13
Notes1 Billings include sales of neighborhood support agreements whereby customers
commit to a predetermined number of hours paid in advance. For revenue recognition purposesthe company defers the value of hours sold until actually used.
2 Cost of sales includes the compensation of the Neighborhood Technology Consultants, tools andequipment to perform services, the operating cost of the Mini Cooper fleet as well as the cost ofproducts sold.
3 Sales and marketing expenses include advertising costs which are expensed as incurred.
-
8/8/2019 MIW Q1 2010 Letter to Shareholders
16/18
BALANCE SHEETS($ in thousands)
(Unaudited)
Period Ending Period EndingASSETS Fiscal Mar. 2010 Fiscal Dec. 2009
Current AssetsCash and cash equivalents 145 140Receivables 5 6Inventories (1) 67 65
Other current assets(2) 40 40
Total current assets 257 251Net fixed assets and intangibles(3) 365 384Other assets (2) 167 157
TOTAL ASSETS 789 792
LIABILITY & SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable 137 124Accrued Liabilities (4) 108 142
Short Term Debt (5) 311 340Current Portion of long-term debt (6) 15 20
Total current liabilities 571 626Long-term debt (6) 31 40Deferred Revenue 2,818 2,734Shareholders' equity (2,631) (2,608)
TOTAL LIABILITIES &
SHAREHOLDER EQUITY 789 792
Notes
1 Inventories consist of computer products for resale and are stated at the lower of cost or net realizable value.2 Other assets comprised of vehicle deposits, miscellaneous non-trade receivables, rental deposits and prepaids.
3 Fixed assets are stated at cost less accumulated depreciation.Depreciation is applied using the straight-line method over their estimated useful lives of between 3-5 years.
4 Accrued liabilities comprises commissions payable, accrued expenses, sales tax payable and other non-trade payables.5 Short term debt consists of bank lines of credit.
6 Long term liabilities consists of auto loans and equipment loans payable within one year.7 Deferred revenue relates to neighborhood support agreement hours sold but not yet used.
-
8/8/2019 MIW Q1 2010 Letter to Shareholders
17/18
-
8/8/2019 MIW Q1 2010 Letter to Shareholders
18/18