MDI's CEO J. Collier Sparks Says 'Worst Times' Are Over

Sparks' company address outlines plans for future of business, new product angles


(i) REVENUE. Our primary focus is to create new sources of revenue and to generate new business from our existing customer base. Sounds basic, doesn't it? Well, it is. The Federal Systems group will manage our legacy business. Our Enterprise Sales group will manage our commercial business. Our Small Business group will manage our middle-market business. We will invest our resources by hiring a new team of territory sales representatives as part of the Small Business group. These representatives will target all PSA Dealers and other middle-market security dealers with our iTRUST, VIEWpoint and nTEGRITY product brands. The sales cycle for the middle-market products is weeks, not months. Accordingly, this business should lead to a more predictable revenue stream as in the Enterprise Business.

(ii) MARKETING. We are focusing our marketing efforts on developing new sales and distribution channels. We will continue to grow our international business by developing established distribution partners who have the capability and customer relationships in key countries. Combined programs that include our marketing, outside sales and inside sales departments working together to deliver valuable product information to our dealers will assist in gaining dealer mind-share, which should eventually transfer into market share.

(iii) CASH. Even though we have just raised approximately $4 million, which is to be used for general operating purposes, we are continually mindful that we need to invest our cash wisely and to keep a watchful eye out for unnecessary expenses.

(iv) PEOPLE. To keep and attract the needed people to run our Company will be a challenge. Today, we are blessed with a core group that has endured some tough times over the last year or so, but who remain committed to seeing our Company succeed. As their President, I am grateful for their hard work and dedication. I also am mindful that the cost of replacing people is expensive and time consuming. I believe that employees are the key to a Company's success and that they should share in its success.

Looking to the Future

Now that we have overcome our short-term cash challenge, and with our increased focus on sales, I believe that we will be successful in obtaining significant orders for our products. However, reaching profitability will not be easy. Let me be specific. Our latest 10-QSB for the quarter ended June 30, 2005, shows revenue for the quarter of $1.8 million. It also shows operating expenses for that period of $2.7 million. Assuming our costs and margins remain constant, we will continue to use more cash than we will generate from operations, until we increase revenues. Therefore, our future efforts will be focused on generating revenue. Based on the above assumptions, we will need an additional $900,000 in revenue each month to become profitable.

To this end, our Federal Systems, Enterprise Sales and Small Business Sales groups will be the core components in our strategy. We will invest in our Sales team and give them the products and tools necessary to deliver the right message, to the right prospects, with the right frequency.

In closing, it is my firm belief that the worst times are behind us and the future looks very bright. I will continue to communicate with you, our shareholders and partners, as we progress down this journey together.

Thank you for your continued support.

J. Collier Sparks
President and CEO
MDI Inc.