-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Dz4ly/QocUgULe6KjPSgx+LXFDpVKNpfsXHwc8q9SLRUO73tLNPeR/14Fv3RtgHg tdl/sgXJ6w7nBrJztmvukA== 0000914760-05-000188.txt : 20050728 0000914760-05-000188.hdr.sgml : 20050728 20050728160646 ACCESSION NUMBER: 0000914760-05-000188 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050726 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050728 DATE AS OF CHANGE: 20050728 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APROPOS TECHNOLOGY INC CENTRAL INDEX KEY: 0001098803 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 363644751 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-30654 FILM NUMBER: 05981255 BUSINESS ADDRESS: STREET 1: ONE TOWER LANE 28TH FLOOR CITY: OAKBROOK TERRACE STATE: IL ZIP: 60181 MAIL ADDRESS: STREET 1: ONE TOWER LANE 28TH FLOOR CITY: OAKBROOK TERRACE STATE: IL ZIP: 60181 8-K 1 a54512_8kjuly28.txt JULY 28, 2005 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): July 26, 2005 Commission File number 000-30654 APROPOS TECHNOLOGY, INC. (Exact name of registrant as specified in its charter) ILLINOIS 36-3644751 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) ONE TOWER LANE, 28TH FLOOR OAKBROOK TERRACE, ILLINOIS 60181 (Address of principal executive offices, including zip code) (630) 472-9600 (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) 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 (see General Instruction A.2. below): [ ] 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 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On July 26, 2005, Apropos Technology, Inc. (the "Registrant") issued a press release announcing its results for the second quarter ended June 30, 2005. In conjunction with that press release, the Registrant conducted a conference call on July 26, 2005 to discuss those results with investors and financial analysts. A copy of the press release is attached as Exhibit 99.1 and is incorporated herein by reference in its entirety. A copy of the transcript of the conference call is attached hereto as Exhibit 99.2 and is incorporated herein by reference in its entirety. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits Exhibit No. Description ----------- ----------- 99.1 Press Release dated July 26, 2005. 99.2 Conference Call Transcript. -2- 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, on July 28, 2005. Apropos Technology, Inc. By: /s/ Francis J. Leonard ------------------------------------------- Francis J. Leonard Chief Financial Officer and Vice President (Principal Financial Officer and Authorized Officer) -3- EX-99.1 2 a54512_8kjuly28x991.txt PRESS RELEASE APROPOS/Q2 2005 RESULTS PAGE 1 OF 4 [APROPOS LOGO] TUESDAY, JULY 26, 2005 APROPOS CONTACT APROPOS INVESTORS RELATIONS CONTACT Frank Leonard Leslie Loyet Apropos Technology Financial Relations Board Phone: (630) 472-9600 ext. 7724 Phone: (312) 640-6672 E-mail: frank.leonard@apropos.com E-mail: lloyet@financialrelationsboard.com ------------------------- ---------------------------------- APROPOS TECHNOLOGY REPORTS SECOND QUARTER RESULTS OAKBROOK TERRACE, IL - JULY 26, 2005 -- Apropos Technology (Nasdaq: APRS), a leading provider of real time multi-channel interaction management solutions, today reported revenues of $4.5 million for the second quarter ended June 30, 2005 compared to $5.0 million for the second quarter ended June 30, 2004. Revenues for the six months ended June 30, 2005 were $8.7 million compared to $10.1 million for the six months ended June 30, 2004. Net loss for the three months ended June 30, 2005, was $229,000, or loss of $0.01 per share, which includes a restructuring credit of $187,000, or $0.01 per share. This restructuring credit is due to the successful sublet of vacated space at the corporate headquarters. Net income for the comparable three months ended June 30, 2004, was $109,000, or income of $0.01 per share, which includes restructuring and other charges of $88,000.or $0.00 per share. Net loss for the six months ended June 30, 2005, was $740,000, or a loss of $0.04 per share, which includes a restructuring credit of $187,000, or $0.01 per share. Net income for the comparable six months ended June 30, 2004, was $124,000, or income of $0.01 per share, which includes restructuring and other charges of $456,000, or $0.03 per share. "This was a challenging quarter for the Company despite gaining traction with new customers," stated Ken Barwick, Board member and acting CEO. "We believe the Company has a very solid product offering that is competitive in the marketplace. In addition, the Company continues to maintain a very strong balance sheet and referencable customer base. My focus will be on driving process improvements, continuing to meet product deadlines, and maintaining our high level of customer satisfaction." "The Company continues to closely monitor its operating activities, using cash from operations during the second quarter of approximately $220,000. The Company's cash and investment balances decreased from the prior quarter by $167,000 to $41.1 million at June 30, 2005. With the current quarter results, -more- APROPOS/Q2 2005 RESULTS PAGE 2 OF 4 the Company has reported quarterly increases in their cash and investment balances six of the last seven quarters. " During the second quarter, the Company received new and add-on customer orders from BMC Company, British Plaster Board, eBay Inc., Jacobs Engineering, and Wolseley. In addition, the Company entered into six new alliance partner agreements during the quarter. A conference call will be conducted by the Company at 5:00 p.m. Eastern Time (ET) on Tuesday, July 26. The conference call will be available to all interested parties over the Internet. To listen to the call on the Internet, go to www.apropos.com or www.earnings.com at least fifteen minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call at www.apropos.com, www.earnings.com or by dialing 888-203-1112 or 719-457-0820 (international) and providing access code 5408323. The replay will be available by phone through August 2, and over the Internet for 30 days. ABOUT APROPOS TECHNOLOGY Apropos Technology, Inc. (Nasdaq: APRS) develops communications management solutions for contact center operations and customer experience management. Apropos solutions are largely used in customer service and support applications for technical products and credit union member contact centers. Apropos solutions integrate with existing systems to provide multi-channel interaction management and a single, universal queuing system. Organizations rely on Apropos to differentiate, prioritize and intelligently route customers to the right agent across voice, voicemail, e-mail, web chat, VoIP, and fax communications. Founded in 1989, the company serves over 300 clients worldwide from its corporate headquarters in Oakbrook Terrace, Ill., and from its European headquarters in the United Kingdom. Additional information about Apropos and its solutions can be found at www.apropos.com. Apropos Technology statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, including statements regarding Apropos Technology's expectations, anticipations, goals, beliefs, targets, hopes, intentions or strategies regarding the future. Forward-looking statements include statements regarding business model, product introduction and acceptance, future sales, sales growth and sales channels, profitability and results of operations, gross margins, operating expenses and financial stability. These forward-looking statements are subject to various risks and uncertainties as more fully set forth under the caption "Risk Factors Associated with Apropos' Business and Future Operating Results" in Apropos Technology's Annual Report on Form 10-K for the year ended December 31, 2004, as filed with the Securities and Exchange Commission. Apropos Technology's actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statements; Apropos Technology makes no commitment to disclose any revisions to forward-looking statements, or any facts, events or circumstances after the date hereof that may bear upon forward-looking statements. -tables to follow- APROPOS/Q2 2005 RESULTS PAGE 3 OF 4 APROPOS TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 2005 2004 2005 2004 REVENUE (Unaudited) (Unaudited) (Unaudited) (Unaudited) Software licenses $ 1,358 $ 1,638 $ 2,458 $ 3,625 Services and other 3,095 3,330 6,210 6,503 -------------------------------------------- TOTAL REVENUE 4,453 4,968 8,668 10,128 -------------------------------------------- COST OF GOODS AND SERVICES Cost of software 61 116 96 287 Cost of services and other 995 1,020 2,072 1,871 -------------------------------------------- TOTAL COST OF GOODS AND SERVICES 1,056 1,136 2,168 2,158 -------------------------------------------- GROSS MARGIN 3,397 3,832 6,500 7,970 OPERATING EXPENSES Sales and marketing 1,755 1,760 3,493 3,433 Research and development 1,160 1,032 2,256 2,084 General and administrative 1,176 946 2,183 2,043 Restructuring and other charges (credit) (187) 88 (187) 456 -------------------------------------------- TOTAL OPERATING EXPENSES 3,904 3,826 7,745 8,016 -------------------------------------------- INCOME (LOSS) FROM OPERATIONS (507) 6 (1,245) (46) OTHER INCOME (EXPENSE) Interest income 287 107 527 203 Other income (expense), net (9) (4) (22) (33) -------------------------------------------- TOTAL OTHER INCOME 278 103 505 170 -------------------------------------------- NET INCOME (LOSS) $ (229) $ 109 $ (740) $ 124 ============================================ NET INCOME (LOSS) PER SHARE Basic $ (0.01) $ 0.01 $ (0.04) $ 0.01 Diluted * $ 0.01 * $ 0.01 WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING Basic 17,878 17,273 17,834 17,188 Diluted * 18,614 * 18,575 * Diluted weighted-average number of shares outstanding for 2005 are not shown as the effect would be anti-dilutive.
-more- APROPOS/Q2 2005 RESULTS PAGE 4 OF 4 APROPOS TECHNOLOGY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) JUNE 30 DECEMBER 31 2005 2004 ------------------------ ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 24,045 $ 12,291 Short-term investments 17,027 28,867 Accounts receivable, net 2,637 3,155 Inventory 43 34 Prepaid expenses and other current assets 407 355 ------------------------ TOTAL CURRENT ASSETS 44,159 44,702 Equipment, net 533 565 Other assets 28 21 ------------------------ TOTAL ASSETS $ 44,720 $ 45,288 ======================== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 444 $ 155 Accrued expenses 1,421 1,854 Deferred revenues 3,592 3,403 Other current liabilities 809 856 ----------------------- TOTAL CURRENT LIABILITIES 6,266 6,268 ACCRUED RESTRUCTURING, LESS CURRENT PORTION __ 245 SHAREHOLDERS' EQUITY Common shares 179 176 Additional paid-in capital 103,571 103,155 Accumulated deficit (65,296) (64,556) ------------------------ TOTAL SHAREHOLDERS' EQUITY 38,454 38,775 ------------------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 44,720 $ 45,288 ======================== ### EX-99.2 3 a54512_8kjuly28x992.txt CONFERENCE CALL TRANSCTIPT - -------------------------------------------------------------------------------- Final Transcript - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CONFERENCE CALL TRANSCRIPT APRS - Q2 2005 APROPOS TECHNOLOGY, INC. EARNINGS CONFERENCE CALL EVENT DATE/TIME: JUL. 26. 2005 / 4:00PM CT EVENT DURATION: N/A - --------------------------------------------------------------------------------
- ---------------------------------- ---------------------------- --------------------- ------------------------ ----- Thomson StreetEvents streetevents@thomson.com 617.603.7900 www.streetevents.com 1 - ---------------------------------- ---------------------------- --------------------- ------------------------ -----
(C) 2005 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. Final Transcript - -------------------------------------------------------------------------------- JUL. 26. 2005/4:00PM, APRS-Q2 2005 APROPOS TECHNOLOGY, INC. EARNINGS CONFERENCE CALL - -------------------------------------------------------------------------------- CORPORATE PARTICIPANTS LESLIE LOYET Apropos Technology Inc. - Financial Relations Board KEN BARWICK Apropos Technology Inc. - Member of the Board, CEO FRANK LEONARD Apropos Technology Inc. - Chief Financial Officer CONFERENCE CALL PARTICIPANTS TED KETTERER TK Associates - Analyst DAN ZEFF Zeff Capital - Analyst PRESENTATION - -------------------------------------------------------------------------------- OPERATOR Good afternoon ladies and gentleman. Welcome to the Apropos Technology Inc. second quarter 2005 earnings conference call. Today's call is being recorded. [OPERATOR INSTRUCTIONS] I would now like to turn the conference over to the Ms. Leslie Loyet of Financial Relations Board. Please go ahead ma'am - -------------------------------------------------------------------------------- LESLIE LOYET - APROPOS TECHNOLOGY INC. - FINANCIAL RELATIONS BOARD Thank you, afternoon everyone and thank you again for joining us for the Apropos second quarter conference call. By now everyone should have received a copy of the press release that was been out this afternoon. If anyone needs a copy, it is available on Apropos' Website at www.appropos.com or you can contact Samir Patel at 312-640-6771 and he will send you a copy immediately. Before I turn the call over to Ken Barwick Board Member and Acting CEO, I do need to remind you that certain statements made during this conference call that are not historical may be forward-looking statements within the meaning of the Private Securities Litigation and Reform Act of 1995. Although Apropos believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, they can give no assurance that the expectations will be attained. Factors and risks that can cause things to differ materially from expectations are detailed in today's release and from time to time in the company's filings with the SEC. Additionally we want to let people know that the information in statements made today are made as of the date of the call, July 26, 2005. Listeners to any replay should understand that pass of the time by itself will diminish the quality of the statement. Also the contents of the call are the property of the company. Any replay or transmission of the call may be done only with the consent of Apropos Technology. With that said, I would now like to turn the call over to Ken Barwick for his opening remarks. Go ahead, Ken. - -------------------------------------------------------------------------------- KEN BARWICK - APROPOS TECHNOLOGY INC. - MEMBER OF THE BOARD, CEO Thank you, Leslie and good afternoon everyone. Thank you for taking time to join us today. As Leslie said, my name is Ken Barwick and I am the acting CEO of Apropos Technology. I have been in that role of acting CEO since June 28 and have been a Board Member since May 2002. As a brief background, I have been in the high-tech industry for more than 25 years, having served in leadership roles in both private and public companies, ranging from start- ups to billion dollar corporations. I began my career in sales and for a number of years served as CEO, COO and General Manager roles. Over the past few years, I have been in a consulting arena focusing on helping companies in the area of rapid revenue growth and turnarounds. With me today is Frank Leonard, our Chief Financial Officer. Our agenda for today will again that Frank covering Apropos' financial results for the second quarter. After his comments I will highlight some of the non-financial activities of Q2 and will open the call for questions. I would now like to turn the call over to Frank. - -------------------------------------------------------------------------------- FRANK LEONARD - APROPOS TECHNOLOGY INC. - CHIEF FINANCIAL OFFICER Thank you, Ken. Revenues for second quarter 2005 were $4.5 million were down 10% from the $5 million in the year ago period. In the current quarter, the software license revenue component totaled $1.4 million compared to $1.6 million in the second quarter 2004. However, we did experience an increase our the mix from new customers. Software license revenue from new customers, which includes the SEC order received late last quarter, accounted for 46% of software revenues compared to 41% in the year-ago quarter. Notable new customers in the current quarter were Jacobs Engineering a professional technical services firm headquartered in California, UK-based British Plasterboard, a supplier of building materials, and UK-based Wolseley, a distributing of heating and plumbing supplies. Revenue from services and other in the second quarter 2005 of $3.1 million is down 0.2 million or 7% from the year-ago period. Support revenues up $2.3 million are down just over 2% from last year's quarter. This decrease was primarily due to changes in customers' internal agent requirement. Service revenues up $733,000 were down from the $883,000 in the year ago quarter. Service revenues were impacted by lower utilization rates and the type of services provided. The current quarter service mix had new system implementation and more upgrades and special projects than the year-ago quarter. On a channel basis, the indirect and OEM business in the second quarter 2005 was 21% compared to 20% for the same period a year ago. In the current quarter, the company added several new alliance partners. Two of these new partners was Solonis, a leading provider of customer sensored solutions for banks and credit unions, and Unicras (ph) leading mid-market provider of web-based service desk automation software. We believe these new relationships can expand our channel opportunities. On a geographic basis North American business in the second quarter of 2005 accounted for 79% of revenues compared to 83% in the same period a year ago. Our May operations have delivered four consecutive increases in quarter over prior-year quarter revenues. Gross margins for the second quarter of 2005 was 76.3% were down slightly from 77.1% from the same quarter a year ago, a shift in product mix principally due to a decrease in higher margin software revenues had a negative impact on margins of 0.2%. Also, services and other margins were low in the current quarter versus the year-ago period due to a lower professional services staff utilization rate and the mix of services performed. Operating costs for the second quarter totaled $3.9 million compared to $3.8 million in the year-ago quarter. Both quarters include restructuring transactions. The current quarter had a credit of $187,000 for the successful sublet of the vacant corporate headquarters space, and last year's quarter charge of 88,000 also related to the same big corporate space. Excluding charges on both period current quarter operating costs would increase by approximately $350,000 or a 9% from the year-ago period. This increase was primarily due to higher marketing program costs, outside service fees, and recruiting costs. Even with this increase in spending, the second quarter 2005 represented the seventh consecutive quarter when recurring operating costs have been less than $4.1 million. Total staffing including the professional service organization was under a 100 at June 2005 compared to 99 a year ago June. That has been a slight increase in staffing mix towards sales, marketing, and professional services from the year-ago period. The US GAAP net loss of the second quarter was $229,000, a basic net loss of $0.01 a share. This compares to the US GAAP net income for the second quarter of 2004 of $109,000 of basic net income up $0.01 a share. The above-mentioned GAAP results include restructuring credit of $187,000 in the current quarter and restructuring charge of $88,000 in a year ago quarter. Look at our balance sheet and we can conclude our financial condition remains strong. Our cash and investment balances totaled $41.1 million at June 30. Trade receivables at June 2005 totaled $2.6 million. Day sales out standing at June 30th up 53 days over represents an increase of three days from the 50 days at March 31st. Over the last year the company has seen DSO levels stay in the nearer range of 50 up to 53 days. Going to cash flows were negative for the first time in seven quarters. For the current lower the company had negative cash of $167,000. Positive changes in working capital were not enough to offset net losses before restructuring credit. Even so, the company's cash and investments balances are still higher than a year ago. At June 30, 2005 there were just over 17,907,000 shares outstanding. Our book value per share was $2.15. Separately, the combined cash and short-term invest balances represents $2.29 per share. Let me take a moment to discuss our expectations going forward. I would again refer you to our opening remarks regarding forward-looking statements. In last quarter's conference call we indicated that the company lacked solid revenue visibility for the second quarter and for the near term perceivable future. That continues to be the case. It is clearly our goal to grow the business. With that being said, it is difficult to predict the timing of closing of new business and thus forecasting revenues is subject to wide variation. Because of this, our current policy is not to issue forward- looking financial guidance. At this time we also do not believe it would have any constructive value to our investors. As a result of no solid revenue visibility we have and will continue to closely monitor our cost structure. And the current revenue environments we believe targeting staff levels near 100 persons make sense. We are also reviewing all of other expenses with the view of how we can contribute to increasing revenues. For the first half of 2005 it has been difficult, our efforts are focused on top line growth and returning to profitability. We believe the operational improvements already in place and current product offerings provide strong fundamental to make this happen. At this time I would like to turn the discussion back over to Ken. - -------------------------------------------------------------------------------- KEN BARWICK - APROPOS TECHNOLOGY INC. - MEMBER OF THE BOARD, CEO Thank you Frank. Let's begin by talking about progress of business in Q2. First of all, we did achieve 5.6% sequential revenue growth over Q1. While the growth was modest, it was led by growth in license revenue particularly in North America. Second, the pipeline continues to grow. The sales cycle for product offerings traditionally have been long, sometimes 12 months or more, and it takes time for growth and a pipeline to be reflected in increased revenue. The good news is that we're seeing more deals and larger deals come into the pipeline. That is promising. Moving forward our primary focus for the near term will be driving sustaining license revenue growth. Since the end of Q2 I have worked closely with the VP Sales to do a comprehensive review our key accounts and prospects. To determine which opportunities have the highest potential for closure in Q3 and beyond. We're working to ensure a process to increase sales through execution and to compress the sales cycle were possible, resulting a higher fully license revenues that are repeatable and sustainable. We're also looking closely at the alignment of our marketing initiatives with our sales efforts to ensure the right messages being delivered to enhance license sales and to get the greatest return for marketing efforts. Secondly, I am actively involved in a search for permanent CEO. The board is in discussions with several strong candidates and we hope to have replacement completed as soon as possible. Our focus is in securing the best Candidate possible, regardless of the time frame, but obviously sooner it's better. The right candidate will be Chicago based and had demonstrated strong leadership skills that was propelled Apropos forward. The selected individual also has extra vision and perspective to re-ignite Apropos sales and operational growth. Additionally, we will continue to play close attention to maintaining a strong balance sheet enhancing our product to new functionality and growth and support of our strong customer base. In that vein, we will be holding our conference entitled Apropos World 2005 in Chicago from September 11 through13th. We are looking forward to meeting face-to-face with many of our best customers and showing them our products and technology directions In summary, we are focused on the things that are essential for success and growth for all software companies, namely predictable, repeatable, and sustainable license revenue growth coupled with a strong balance sheet, a great product, and a strong and growing customer base. We will make adjustments in our business operations as necessary to achieve these goals. We believe we have the right focus and the key growth factors of the business moving forward. Thank you, and at this time, I will open up the call for questions. QUESTION AND ANSWER - -------------------------------------------------------------------------------- OPERATOR [Operator Instructions] we will take our first question from Ted Ketterer with TK Associates. - -------------------------------------------------------------------------------- TED KETTERER - TK ASSOCIATES - ANALYST I have two questions. It is an improvement over Q1. One SBC, which sort of those remember in the last conference call those guys came to you? Has there been any more or is there any more activity with SBC as a reseller? And secondly, can you explain or go into a little background or detail. It seems to me if Honey well will go up in this press release will agree to have their name in your press release, that you save them 3 million bucks, but there is a product here that has some appeal, but at the same time quarter-after-quarter licenses and activity just limped along at frankly, disappointing levels. Can you explain or give light on the contrast in the discrepancy? Thanks. - -------------------------------------------------------------------------------- FRANK LEONARD - APROPOS TECHNOLOGY INC. - CHIEF FINANCIAL OFFICER Obviously the relationship first and obviously it is one that is ongoing and we're trying to expand our relationship with SBC, with additional and end customers. At this point in time there are some discussions going on but there is not anything that is depending at this moment. But we do see it as an opportunity that we can expand upon going forward. - -------------------------------------------------------------------------------- TED KETTERER - TK ASSOCIATES - ANALYST Okay - -------------------------------------------------------------------------------- KEN BARWICK - APROPOS TECHNOLOGY INC. - MEMBER OF THE BOARD, CEO And just this Ken. I will attempt to address the -- give you background in detail over the quarter-to-quarter activity. You are right Ted there has been some limping along, to use your term. What I have spent the time that I have been here, predominately since June 28, is trying to understand in detail how our pipeline is made up, what is it made up of, where are the key prospects are in the sales cycle. And I think important Ted, is to make sure we are aligning where we think they are, being sales to where the customer is in the sales process. And sometimes that the line gets out of lag and causes opportunities to lag and roll over and take longer than we want to close. So I have really focused now and on making sure that we have the alignment, not only where the customer expectation garble what are sale the expectations are. - -------------------------------------------------------------------------------- TED KETTERER - TK ASSOCIATES - ANALYST That still does not shed much light on why if this product can achieve what Honeywell says it has for them, why can't be sold in greater volumes to other people? - -------------------------------------------------------------------------------- FRANK LEONARD - APROPOS TECHNOLOGY INC. - CHIEF FINANCIAL OFFICER Am I off base somewhere? - -------------------------------------------------------------------------------- KEN BARWICK - APROPOS TECHNOLOGY INC. - MEMBER OF THE BOARD, CEO No, I think that is obviously one of the things that we can see what we can have success with selected customers, and it is just a matter of trying to take that success and build upon it. You know, through marketing, press releases, and customer references, etc. - -------------------------------------------------------------------------------- FRANK LEONARD - APROPOS TECHNOLOGY INC. - CHIEF FINANCIAL OFFICER And ken, also to make sure we're focused on the right opportunities. Those being where we have the highest revenue opportunity and the largest return it to the company. And that is what I am trying to get my arms around now as I talk about the process. And there is the process there for doing that. The pipeline process and as well as the sales process. - -------------------------------------------------------------------------------- TED KETTERER - TK ASSOCIATES - ANALYST And speaking about the pipeline, can you give color on it in terms of quality? How it compares to this time last year? - -------------------------------------------------------------------------------- FRANK LEONARD - APROPOS TECHNOLOGY INC. - CHIEF FINANCIAL OFFICER Do you know I cannot give you a lot of detail, but I can tell you that the pipeline is growing. And it has grown since last year it has grown since last quarter. - -------------------------------------------------------------------------------- TED KETTERER - TK ASSOCIATES - ANALYST Okay. And one last thing, the sublet for your excess real estate, does that go through the entire term of- - -------------------------------------------------------------------------------- KEN BARWICK - APROPOS TECHNOLOGY INC. - MEMBER OF THE BOARD, CEO Yes, it does. Since, May of 2006. - -------------------------------------------------------------------------------- TED KETTERER - TK ASSOCIATES - ANALYST So you have, as long as that subleased stays in place you did not have any liability for future expenses? - -------------------------------------------------------------------------------- FRANK LEONARD - APROPOS TECHNOLOGY INC. - CHIEF FINANCIAL OFFICER Unfortunately the sublet does not equal what we are paying. - -------------------------------------------------------------------------------- TED KETTERER - TK ASSOCIATES - ANALYST I understand that - -------------------------------------------------------------------------------- FRANK LEONARD - APROPOS TECHNOLOGY INC. - CHIEF FINANCIAL OFFICER Okay, great. - -------------------------------------------------------------------------------- TED KETTERER - TK ASSOCIATES - ANALYST And last, what is the status of that last remaining class action suit? Frank Leonard There is activity on it. Again obviously, we are one of over 300 defendants in that. I know how they have a revised settlement that that they have been in front of the judge, actually the judge's direction as to what needs to be done. And I think the last discussion I have they are hoping to have something kind of, finalized in Q3 here. Great. Okay guys, Thank you. - -------------------------------------------------------------------------------- KEN BARWICK - APROPOS TECHNOLOGY INC. - MEMBER OF THE BOARD, CEO Thank you Ted. - -------------------------------------------------------------------------------- OPERATOR [Operator Instructions]. We do have a question from Dan Zeff with Zeff Capital (ph). - -------------------------------------------------------------------------------- DAN ZEFF - ZEFF CAPITAL - ANALYST I was wondering at the board level you were discussing possible sale of the company, if you would concurrently we had looking for a new CEO. If you haven't, how long do you give yourself to see the pipeline bear some fruit before that becomes a more active process? - -------------------------------------------------------------------------------- FRANK LEONARD - APROPOS TECHNOLOGY INC. - CHIEF FINANCIAL OFFICER I hope you can appreciate that I can't comment on what we discussed at the board level. I can tell you that we still believe there is room on the top end for revenue growth in this company. - -------------------------------------------------------------------------------- OPERATOR Ladies and gentlemen, there appeared to be no further questions at this time. I will turn the call back over to management for any closing comments. - -------------------------------------------------------------------------------- KEN BARWICK - APROPOS TECHNOLOGY INC. - MEMBER OF THE BOARD, CEO Thank you. In summary, I want to say one thing. It all starts with revenue. So the things we're looking at are increasing our revenue, but some things we are really strong for us that software companies are dying to have and at the strong customer base, a strong balance sheet, and a strong product. So, with that we can build on the future. Thank you for your time. We appreciate it, and that adjourns our discussion for today. - -------------------------------------------------------------------------------- OPERATOR This does conclude today's conference call. We appreciate your participation you can disconnect at this time. - -------------------------------------------------------------------------------- DISCLAIMER Thomson Financial reserves the right to make changes to documents, content, or other information on this web site without obligation to notify any person of such changes. In the conference calls upon which Event Transcripts are based, companies may make projections or other forward-looking statements regarding a variety of items. 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