Winter Garden, Florida, September 29, 2011 – Vidaroo Corporation (OTCQB: VIDA) (PINKSHEETS: VIDA) today has issued an open letter to its shareholders.
To the Shareholders of Vidaroo Corporation:
As we conclude the issuance of our annual report and continue on in a new fiscal year, I am writing to Vidaroo’s shareholders to apprise you of the Company’s recent accomplishments and milestones.
In the Past Year, we have culled our offerings and focused the company on fully bringing our flagship product, Vidaroo’s Online Video Platform (OVP), to completion as a market ready and mass salable product. The Company is now poised for real growth in software sales revenue. The continuing growth in our more mature video production services will continue and has been instrumental in supporting our more focused endeavor for Vidaroo’s future. Focusing on these two business units while ensuring our administrative costs and infrastructure are hyper-efficient has clearly produced positive economic and cultural results. This focus on being a product-based company has lead to the achievement of a stable and ready for scale Software-as-a-Service product. Moving forward these fundamentals will be proven in the marketplace. These efforts left the company with less attention for the public market, but with improved business fundamentals. While we are aware of the importance of being seen as a pro-active Company in the public equity marketplace, and have future plans to do so, we expect our business performance to be the driving factor recognized in relation to the future valuation of Vidaroo.
With so much achieved and good business fundamentals in place, Vidaroo’s Capital structure is clearly an issue at the forefront of my mind. Management, shareholders, and creditors are all concerned and eager to bring positive resolution to our current situation of having defaulted on our debt obligations. Over the past year we were able to maintain operations without reliance on additional external funding, practically eliminating accumulation of further debt and were able to manage Company operations to generate positive cash flow. With that being understood, management is diligently working to add the restructuring of our debt to our current list of recent successes.
While the capital structure remains an issue, and we have significant challenges ahead of us, the realization and execution of our business objectives during the past year amounted to nothing short of an exceptional year for Vidaroo. This was clearly a year devoted to achieving milestones associated with building sound business.
Software as a Service
Our OVP is delivered under an on demand Software-as-a-Service methodology and is intended to produce monthly recurring revenue that is scalable and replicatable. Marketing, sales, customer support and affiliate sales relationships must all have a balance of automation and positive customer experience to achieve product stability on a mass scale. We have positioned the company and the product, at this juncture, to be fully equipped and prepared to perform.
Our goal is to generate critical mass by delivering a high quality product that is easy to use, delivered at an acceptable price point and generates value for our customers. The OVP delivers highly desirable capabilities that includes the ability to deliver video either live or on demand, social tools, time of day programming, content management and a fully native ad serving module. Plans are designed to provide clients flexibility by permitting for an unlimited number of users, channels and live events while offering competitive diskspace and bandwidth thresholds.
On the road to completing a fully competent Software-as-a-Service product based offering, the importance of “on demand” cannot be overstated. Vidaroo has developed these well balanced tools and systems to ensure long term product scalability and stability. Over the past year, we have matured our OVP in many ways and grown revenue from a very small amount last year to over $300,000 this year. Last year at this time, we had only just begun to offer our OVP as a Software-as-a-Service product and had very little on demand marketing in place. During the first portion of the year, significant work was performed in finalizing initial software development, and preparing the marketing and business tools associated with fully launching a salable and scalable on demand SaaS product. During the last quarter, we fully launched our new marketing site (http://vidaroo.com), which includes an on demand automated interface allowing new customers to sign up for our OVP without any human contact with the Company. We have also launched an on demand affiliate portal (http://vidaroo.com/affiliate/), allowing individuals and organizations to represent Vidaroo and earn substantial commissions by promoting the OVP through multiple channels including online and viral promotions.
In launching our new marketing initiatives, we have rolled out pricing that we believe will be attractive to a significant portion of the population. All of our plans include a 30 day free trial and start as low as $49/month. Our intention is to create critical mass for the Company by enabling delivery of video in a way that creates value for our customers that is exponential to their monthly investment made in the platform. At this point in the Company’s growth cycle, we are building on our current complement of marketing materials to convert the investment in our platform into a monetized return.
Production Services
Our production services have been a foundation of revenue for the Company for many years. A majority of our production services are performed for major entertainers in the largest entertainment venues in the world. These services have remained healthy and in fact grew over the past year producing revenue of over $1.2 million. We continually challenge our production capabilities to expand our offerings and add revenue. We expect that our production services will continue to grow as our output is consistently regarded as the highest quality.
Capital Structure
Since going public in 2008, the capital markets have been very difficult to access for any organization and extremely challenging for a small startup company like Vidaroo. Over the history of the Company, we have raised approximately $3 million in capital, fairly evenly split between equity and debt. While that capital has enabled the Company to survive, the debt burden on the Company has been substantial in comparison to our ability to grow quickly in the short run. While the Company has focused on its core business strategy of software and production and discontinued its advertising business unit, we were unable to repay or refinance the outstanding debt and were forced to discontinue making interest payments. This situation has become unacceptable to both management and our creditors. We are currently working with our creditors to restructure our debt, with the expected outcome of providing increased value to both our creditors and shareholders.
During this past summer, we authorized additional shares of our common stock and created a class of preferred stock. We expect to be able to use these instruments to address our outstanding indebtedness.
Conclusion
Saying that we were able to operate the Company with positive cash flow for the past year is a testament to the talent, hard work and veracity that I know exists amongst both the executives and employees of this Company. In fact, it can be stated that this company has pivoted over the last 12 months. During the year ended June 30, 2010, the company required in excess of $800,000 in external capital to operate, while this year we operated the Company on positive cash flow basis.
With our opportunities clearly defined and our challenges receiving appropriate attention, Vidaroo is poised to build on the hard work performed to date and achieve success and profitability as the Company grows and matures. We believe that upon attainment of sound business fundamentals and restructuring of our current indebtedness, the investor community will come to realize, what management already believes, that our current share price and market capitalization are significantly undervalued. I strongly feel Vidaroo has been proven an unstoppable and adaptable company, soon to be proven an extremely valuable market winner.
Mark E. Argenti
Chairman of the Board and Chief Executive Officer
About Vidaroo Corporation
Vidaroo Corporation is a video technology company that provides a cutting edge Online Video Platform, and state of the art Video Production. Vidaroo’s Online Video Platform, and Video Production has earned the trust of a growing list of current and former clients including advertising agencies, iconic artists, media companies, organizations, businesses, and national brands such as Microsoft, Coca-Cola Company, Tribune News Company, Toyota, Emmis Communications, Clear Channel, Black Eyed Peas, Justin Timberlake and more. Vidaroo’s Online Video Publishing Technology enables firms to easily create, deliver and monetize video and advertising delivery.
To learn more about the Company please visit http://vidaroo.com
Some of the above statements may be ‘forward-looking’ statements as defined by section 27A(c)(1)(A)(i) of the Securities Act of 1933.
See Vidaroo.com for a full safe harbor disclosure statement.
Contact:
Vidaroo Corporation
Tom Moreland
tom.moreland@vidaroo.com
