Sensio Technologies Inc SNIOF

RE:And a new extension...

[RabidIsBack]

So let's see what's new...

From the motion to extend the stay period:

• Lease is terminated and all equipment and furniture was sold, although the revenue from this sale was too negligible to be included in the sales process. Remaining employees are apparently working part-time.

• There were indeed arrangements with suppliers (I'm guessing Neulion being the main one) to ensure that 3DGO remains online during the sale process.

• Regarding the sales process: as I suspected, there were no bids submitted by the February 15 deadline. SIO pinned that on the Chinese New Year, as most potential buyers are apparently Chinese and were on vacation prior to the deadline. SIO therefore extended the deadline to March 1st, but no binding offers were made by that date either. According to SIO, "several follow-ups were made (...) in order to determine whether or not there was any interest in (SIO's) assets. (SIO was) advised by certain parties that they were interested in potentially submitting an offer in respect of the Company's 3DGO streaming services, but requested more time to perform their due diligence and properly consider such possibility." Apparently, 6 potential buyers have gone so far as to sign NDAs, up from 2 in January.

• There is also something about SIO continuing its efforts to "sell its rights as licensor to some of its remaining license agreements to its licensees". Not sure what this means exactly... at first I thought it something to do with rights to movies on 3DGO, but I can't see who would be the licensee - TV manufacturers, perhaps? But the more I think about it, the more I think it has to do with SIO's past activities - maybe they have license agreements for software or technologies that they're trying to sell to licensees of SIO's legacy techs... Anyone who can shed more light on this is more than welcome.

Additional info from the trustee's report

• SIO's new location appears to be an office building located on Leduc Blvd in Brossard, QC, a suburb of Montreal. Looking at the budget, the rent seems unbelievably low: $250 a month. Upon doing some research and finding that particular address on its promoter's website, it appears they are renting a "virtual office", providing them with mail and call forwarding, as well as meeting space if needed. Judging by the price paid for the rent, they have taken a short-term agreement (3 months) with the (virtual?) landlord. 

• They submitted a new budget which should allow them to remain cashflow positive until April 22, a day after the new stay period expires. The initial budget was supposed to take them all the way to March 15. Sadly, while the cash outflows are detailed, the cash inflows are not, so it's hard to tell if the expected revenue is solely from 3DGO. 

• With regard to what I've just said regarding inflows, if we suppose that they are only from 3DGO, they seem higher that what we could have expected in the past (meaning perhaps a relatively successful boost from LG and Samsung), and they outweight the supplier payments. Then again, these payments may be smaller than normal due to the "arrangements" mentioned earlier - and we don't know what level of service SIO is getting under these arrangements (tech support, customer support, new movies, etc?). We also don't know if payment is due to studios at some point - judging how these ranged in the hundreds of $ks in the past, I doubt they're included in the $12k/month expenses. 

• Judging by the sudden drop in salaries in March, it seems they either cut hours by nearly half, or got rid of more employees (or both). 

 

• Traveling expenses are almost nonexistent. In all likeliness, Routhier's trip to France was personal, and not to meet potential French buyers (or he's now making business trips on his own dime).

• The "investment opportunity" brochure was not updated from last time - still shows Feb 15 as the agreement deadline.

So here's one more month and a half of suspense. Personally, I'm skeptical about a purchase by Chinese buyers. I remember past CCs when Routhier was asked if he'd be considering an expansion to China, and he replied that while it looked like a promising market for 3D, licensing agreements with studios were a big obstacle, hence why he preferred to look to Europe for further expansion. Of course, the Chinese could keep what's left of the North American market, and attempt to go to Europe like SIO originally intended, but I'm pretty sure their main objective would be to take 3DGO to China - would they then encounter the same hurdles that SIO brought up in the past?

I'd also be very curious to know how many people still work there and what they are doing exactly. With no actual office space, what kind of work actually gets done? Are Routhier and Choquette counted on that payroll? $15k every 2 weeks is still nearly $400k at the end of the year. That means that if all 9 employees mentioned in the December report (including the 7 that had been laid off) have been reinstated, their salary would amount to an average of $45k each - not too bad for a part-time job working from home. Of course, I suspect that not all of the laid-off employees (if any) were kept, and salaries are never equal, so I'm thinking some people still haven't learned the meaning of making a sacrifice in hard times, even when they brought those hard times upon themselves...