-----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, QMlw/tybgtGBO1DzrH8gAV9fgbOjqwmzbslcdS1GVPdx4+UtO6+k3AVx45N7VWfP PqMpLWDPDNrNgFiTtpRtwA== 0000950144-01-502089.txt : 20010515 0000950144-01-502089.hdr.sgml : 20010515 ACCESSION NUMBER: 0000950144-01-502089 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20010511 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNET PICTURES CORP CENTRAL INDEX KEY: 0001088022 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 522213841 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-26363 FILM NUMBER: 1631880 BUSINESS ADDRESS: STREET 1: 1009 COMMERCE PARK DR CITY: OAK RIDGE STATE: TN ZIP: 37830 BUSINESS PHONE: 8654823000 MAIL ADDRESS: STREET 1: 1009 COMMERCE PARK DR CITY: OAK RIDGE STATE: TN ZIP: 37830 FORMER COMPANY: FORMER CONFORMED NAME: BAMBOO COM INC DATE OF NAME CHANGE: 19990604 8-K 1 g69307e8-k.htm INTERNET PICTURES CORPORATION e8-k

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): MAY 14, 2001

INTERNET PICTURES CORPORATION

(Exact name of registrant as specified in its charter)
         
DELAWARE 000-26363 52-2213841
(State or other (Commission (IRS Employer
jurisdiction of incorporation) File Number) Identification Number)
         
1009 COMMERCE PARK DRIVE, OAK RIDGE, TENNESSEE 37830
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (865) 482-3000

N/A

(Former name or former address, if changed since last report)

ITEM 7: Financial Statements, Pro Forma Financial Information and Exhibits.

      (c) Exhibits

     
Exhibit
Number Description
99.1 Press Release dated May 14, 2001 regarding earnings.
99.2 Prepared script of 1st quarter 2001 earnings conference call remarks, May 14, 2001.
99.3 Press Release dated May 14, 2001 regarding investment.
99.4 Form of letter mailed to stockholders regarding financing.

ITEM 9. Regulation FD Disclosure.

      On May 14, 2001, Internet Pictures Corporation, a Delaware corporation, issued a press release announcing their first quarter earnings that is attached as Exhibit 99.1 to this Form 8-K and is herein incorporated by reference. Exhibit 99.2 is a transcript of a conference call held on May 14, 2001 in which first quarter earnings and current business initiatives were discussed with analysts and institutional investors and is attached to this Form 8-K and is herein incorporated by reference. The Company also announced in a press release dated May 14, 2001 that it has entered into definitive agreements for the sale of up to $30 million in Series B Preferred Stock. The text of the financing press release is attached as Exhibit 99.3. In connection with the announced financing the Company has sent a letter to all stockholders that provides a summary of the terms of the financing transaction. The stockholder letter is attached as Exhibit 99.4.

      SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER SECURITIES LITIGATION REFORM ACT OF 1995; CERTAIN CAUTIONARY STATEMENTS

      Certain portions of this document contain forward-looking statements which are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Actual future results and trends may differ materially from historical results or those projected in any forward-looking statements depending on a variety of factors included but not limited to those factors described in Exhibit 99.1, Exhibit 99.3 and those entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2000 and other factors as described from time to time in our SEC filings. Readers are cautioned not to place undue reliance on forward-looking statements. We assume no obligation to update such information.

             
Exhibits: 99.1 Press release dated May 14, 2001 regarding earnings.
99.2 Prepared script of 1st quarter 2001 earnings conference call remarks, May 14, 2001.
99.3 Press Release dated May 14, 2001 regarding investment.
99.4 Form of letter mailed to stockholders regarding financing.

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 hereunto duly authorized.

     
INTERNET PICTURES CORPORATION
 
Dated: May 14, 2001
 
 
 
/s/ John Kalec
John Kalec
Executive Vice President and Chief Financial Officer

Exhibit Index

     
Exhibit Description
99.1 Press release dated May 14, 2001 regarding earnings.
99.2 Prepared script of 1st quarter 2001 earnings conference call remarks, May 14, 2001.
99.3 Press release dated May 14, 2001 regarding financing.
99.4 Form of letter mailed to stockholders regarding financing.
EX-99.1 2 g69307ex99-1.txt PRESS RELEASE DATED MAY 14, 2001 1 EXHIBIT 99.1 PRESS RELEASE Company Contact: IR Contact: - ---------------- ----------- Stu Roberson Corey Cutler iPIX Morgen-Walke (925)242-4050 (212) 850-5696 stu.roberson@ipix.com ccutler@morgenwalke.com iPIX REPORTS FIRST QUARTER RESULTS Narrows Recurring Operating Loss to $0.18 per share - Secures Commitment for Financing SAN RAMON, CA, and OAK RIDGE, TN -- May 14, 2001--Internet Pictures Corporation (Nasdaq: IPIX; "iPIX"), today announced financial results for its first quarter ending March 31, 2001. Revenues for the first quarter were $9.5 million, compared to $8.3 million for the same quarter last year. Excluding merger expenses, restructuring and impairment expenses, extraordinary items, loss on the disposal of assets and non-cash charges related to stock-based compensation and goodwill amortization of intangible assets, net loss for the quarter was $11.4 million or $0.18 per share compared to a net loss of $18.9 million or $0.41 per share for the same period last year. iPIX(R) has made gains on the plans management announced in October 2000 to focus on higher margin revenue and address the costs associated with operating the full-service real estate business. During the first quarter of 2001, iPIX sold the sales and marketing rights and certain assets for the U.S. residential real estate market to Homestore.com(TM) for cash and recurring revenues. As a result of these efforts, gross margin for the quarter also improved to 50%, up from 42% for the same period last year. Jim Phillips, chairman and CEO of iPIX commented, "The strategies we put into place last October are beginning to bear fruit. We are committed to continuing improvements of gross margins and reaching profitability. iPIX dynamic imaging technology has achieved global brand recognition and leadership in key markets including real estate, travel and hospitality, and auctions." In a separate press release today, the Company also announced it has secured a commitment for up to $30 million in a private financing (see iPIX release, "iPIX Receives Investment Commitment Led by Paradigm Capital Partners and The Memphis Angels"). iPIX will hold a conference call regarding first quarter earnings and the recent financing at 10:00am EDT Monday, May 14. Interested parties may listen to the call by dialing (952) 556-2834 or (800) 960-1012. A replay of the call will be available starting May 14, until May 31, 2000 by dialing (703) 326-3020 or (800) 615-3210 and using pass code 5238317. 2 ABOUT IPIX Internet Pictures Corporation (iPIX(R)) provides Internet imaging solutions to facilitate commerce, communication and entertainment. The Company's end-to-end solutions include the capture, processing, management and distribution of digital imaging and the associated data to make the images meaningful. iPIX's solutions encompass many types of rich media content, including still images, 360(degree) by 360(degree) immersive images, video, animation, text and audio. A broad array of industries -- including real estate, auctions, travel, government, education, automotive, sports and entertainment -- are capitalizing on iPIX dynamic imaging to give viewers better information, more interaction and a richer online experience. Twenty-two of Media Metrix's top twenty-five web sites use iPIX to make their sites more dynamic. The company is headquartered in Oak Ridge, Tennessee, with co-headquarters in San Ramon, California. http://www.ipix.com ### Internet Pictures and iPIX are trademarks and service marks of Internet Pictures Corporation. The securities to be sold in the investment have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release contains forward-looking information within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the safe harbors under those sections. In some cases, you can identify forward-looking statements by terminology such as "expect," "may," "will," "plans," and "anticipate," or the negative of such terms or comparable terminology. Forward-looking statements appearing herein include statements concerning operating and profitability plans and goals, restructuring efforts, and the timing and amount of private investment proceeds, and are based on current expectations. Actual results may differ materially from those projected in the forward-looking statements based upon a number of factors including (i) the inability to close on a portion of the proposed investment, (ii) changes in the demand for iPIX products and services, (iii) the loss of existing, or an inability to attract new, iPIX customers, (iv) technological changes, (v) general economic, financial or market changes or developments, and (vi) an inability to successfully implement restructuring and profitability plans. The matters discussed in this press release also involve risks and uncertainties described from time to time in Internet Pictures Corporation's filings with the Securities and Exchange Commission. In particular, see "Risk Factors" in the annual report filed on Form 10-K with the SEC on April 2, 2001 (www.sec.gov). 3 INTERNET PICTURES CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, ------------------------------- 2000 2001 ----------- ----------- (In thousands, except per share data) Revenues $ 8,283 $ 9,523 Cost of revenues 4,766 4,745 ----------- ----------- Gross profit 3,517 4,778 ----------- ----------- Operating expenses: Sales and marketing 15,507 9,719 Research and development 2,365 2,472 General and administrative 5,478 3,814 Stock-based compensation 2,774 1,218 Goodwill amortization -- 608 Restructuring and impairment -- 3,000 Loss on disposal of assets -- 1,769 Merger expenses 15,175 -- ----------- ----------- Total operating expenses 41,299 22,600 ----------- ----------- Loss from operations (37,782) (17,822) Interest and other income, net 892 (187) ----------- ----------- Net loss before extraordinary gain (36,890) (18,009) Extraordinary gain -- 901 Net loss $ (36,890) $ (17,108) =========== =========== Basic and diluted net loss per common share $ (0.79) $ (0.27) =========== =========== Shares used to calculate net loss per share 46,645 63,677 =========== =========== Net loss, excluding merger expenses, restructuring and impairment expenses, extraordinary items, loss on the disposal of assets and non-cash charges related to stock-based compensation and goodwill amortization $ (18,941) $ (11,414) =========== =========== Basic and diluted net loss per common share, excluding merger expenses, restructuring and impairment expenses extraordinary items, loss on the disposal of assets and non-cash charges related to stock-based compensation and goodwill amortization $ (0.41) $ (0.18) ----------- -----------
4 INTERNET PICTURES CORPORATION CONSOLIDATED BALANCE SHEETS
DECEMBER 31, MARCH 31, 2000 2001 ----------- ----------- (In thousands) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 5,322 $ 6,718 Securities available-for-sale 5,713 -- Accounts receivable, net 13,732 9,677 Inventory, net 1,061 734 Prepaid expenses and other current assets 6,790 3,807 ----------- ----------- Total current assets 32,618 20,936 Property and equipment, net 20,965 7,608 Other assets 1,555 397 Goodwill and other intangible assets 5,476 4,868 ----------- ----------- Total assets $ 60,614 $ 33,809 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 4,077 $ 6,668 Accrued liabilities 16,682 12,323 Deferred revenue 9,077 1,384 Current portion of promissory note and obligations under capital lease 1,608 1,584 ----------- ----------- Total current liabilities 31,444 21,959 ----------- ----------- Promissory note and obligations under capital lease, net of current portion 957 455 STOCKHOLDERS' EQUITY 28,213 11,395 ----------- ----------- Total liabilities and stockholders' equity $ 60,614 $ 33,809 ----------- -----------
EX-99.2 3 g69307ex99-2.txt PREPARED SCRIPT OF CONFERENCE CALL 1 EXHIBIT 99.2 I. OPENING - MORGEN WALKE - WELCOME TO THE IPIX(R)CONFERENCE CALL. PRESENTING FROM MANAGEMENT WILL BE: - JIM PHILLIPS, CHAIRMAN AND CEO - DON STRICKLAND, PRESIDENT AND COO - AND, JOHN KALEC, CFO - MANAGEMENT WILL GIVE A COMPREHENSIVE REVIEW OF FIRST QUARTER RESULTS, TODAY'S ANNOUNCEMENT ON FINANCING, ITS BUSINESS TRENDS, AND PLANS FOR THE FUTURE. AS A RESULT, WE WILL NOT BE HAVING A Q&A SESSION AS PART OF THIS CALL. A. SAFE HARBOR STATEMENT - MORGEN WALKE - BEFORE MANAGEMENT PRESENTS, I MUST INFORM EVERYONE THAT CERTAIN ASPECTS OF TODAY'S CALL MAY CONTAIN FORWARD-LOOKING INFORMATION CONCERNING OPERATING AND PROFITABILITY PLANS AND GOALS, RESTRUCTURING EFFORTS, AND THE TIMING AND AMOUNT OF PRIVATE INVESTMENT PROCEEDS, AND ARE BASED ON CURRENT EXPECTATIONS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS BASED UPON A NUMBER OF FACTORS INCLUDING (I) THE INABILITY TO CLOSE ON A PORTION OF THE PROPOSED INVESTMENT, (II) CHANGES IN THE DEMAND FOR IPIX PRODUCTS AND SERVICES, (III) THE LOSS OF EXISTING, OR AN INABILITY TO ATTRACT NEW, IPIX CUSTOMERS, (IV) TECHNOLOGICAL CHANGES, (V) GENERAL ECONOMIC, FINANCIAL OR MARKET CHANGES OR DEVELOPMENTS, AND (VI) AN INABILITY TO SUCCESSFULLY IMPLEMENT RESTRUCTURING AND PROFITABILITY PLANS. THE MATTERS DISCUSSED IN THIS CALL ALSO INVOLVE RISKS AND UNCERTAINTIES DESCRIBED FROM TIME TO TIME IN INTERNET PICTURES CORPORATION'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. IN PARTICULAR, SEE "RISK FACTORS" IN THE ANNUAL REPORT FILED ON FORM 10-K WITH THE SEC ON APRIL 2, 2001 2 - ALSO THE COMPANY WILL PROVIDE COMMENTS ON A PRIVATE INVESTMENT THAT WAS ANNOUNCED IN A PRESS RELEASE EARLIER TODAY. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN APPLICABLE EXEMPTION FROM REGISTRATION REQUIREMENTS II. WELCOME REMARKS & HIGHLIGHTS OF CALL - JIM - THANK YOU FOR JOINING US - IN OCTOBER, WE INTRODUCED A STRATEGIC PLAN TO STREAMLINE IPIX FOR A FUTURE OF HIGHER MARGIN REVENUE AND GROWTH - WITH THESE FIRST QUARTER RESULTS WE CAN CLEARLY SEE THE FRUITS OF THESE EFFORTS AND CONFIRM THAT THIS STRATEGY WAS A PRUDENT AND EFFECTIVE COURSE OF ACTION. - WE HAVE SEVERAL SIGNIFICANT EVENTS TO SHARE WITH YOU TODAY. - FIRST IS EVIDENCE THAT THE PLAN WE PUT INTO PLACE IS ALREADY PRODUCING RESULTS. WE PREVIOUSLY STATED THAT OUR EARNINGS WOULD GO FROM A PER SHARE LOSS OF $0.40 IN Q4 2000, TO A $0.21 CENTS PER SHARE LOSS IN Q1. I AM PLEASED TO REPORT THAT WE ARE TODAY REPORTING AN EARNINGS PER SHARE LOSS OF $0.18 (EXCLUDING NON-RECURRING ITEMS) EXCEEDING OUR PREVIOUS ESTIMATE BY $0.03 PER SHARE. - BEFORE REVIEWING OUR QUARTERLY RESULTS MORE CLOSELY, I WANT TO DISCUSS ANOTHER KEY ANNOUNCEMENT. (PAUSE) WE HAVE SECURED FINANCING FOR UP TO $30 MILLION ENABLING US TO CONTINUE EXECUTION ON OUR PLAN TOWARD PROFITABILITY. III. ANNOUNCE/REVIEW FINANCING - JIM - OVER THE PAST SIX-MONTHS, MANAGEMENT HAS BEEN KEENLY FOCUSED ON SOLIDIFYING THE FINANCIAL STRENGTH AND FUTURE OF THE COMPANY. I AM CONFIDENT WHEN I SAY WE ARE ON SOLID GROUND AND HAVE THE RESOURCES NECESSARY TO 3 ACHIEVE PROFITABILITY. - THROUGH A PRIVATE INVESTMENT LED BY PARADIGM CAPITAL PARTNERS AND THE MEMPHIS ANGELS, WE EXPECT TO SECURE UP TO $30 MILLION IN FINANCING. THE INVESTMENT WILL OCCUR IN TWO TRANCHES. TRANCHE A CONSISTS OF $3 MILLION FUNDED TODAY AND $7 MILLION THAT WE EXPECT TO OCCUR IN ABOUT TWO WEEKS. TRANCHE B WILL CLOSE AFTER THE ANNUAL SHAREHOLDER MEETING THAT WILL OCCUR LATER THIS SUMMER AND WILL INCLUDE UP TO AN ADDITIONAL $20 MILLION. THE PROCEEDS WILL BE USED FOR SALES AND MARKETING EFFORTS, RESEARCH AND DEVELOPMENT AND GENERAL WORKING CAPITAL PURPOSES. UPON COMPLETION OF BOTH TRANCHES, WE CURRENTLY DO NOT ANTICIPATE A NEED TO RAISE ADDITIONAL CAPITAL TO REACH OUR PROFITABILITY GOALS. - FOR THOSE OF YOU UNFAMILIAR WITH OUR NEW SHAREHOLDER, PARADIGM CAPITAL PARTNERS AND THE MEMPHIS ANGELS ARE BASED IN MEMPHIS, TENNESSEE. THEIR FOCUS IS ON FUNDING COMPANIES IN THE SOUTHEAST WITH AN EMPHASIS ON TECHNOLOGY. OVER THE PAST SEVERAL WEEKS ALL OF US AT IPIX HAVE BEEN ACTIVELY WORKING WITH PARADIGM TO COMPLETE DUE DILIGENCE AND ANALYZE OUR BUSINESS PLAN. WE ARE PLEASED TO HAVE FOUND AN INVESTOR GROUP THAT IS BOTH SUPPORTIVE AND ACTIVE IN ENSURING THE FUTURE SUCCESS OF IPIX. AT THE CLOSE OF TRANCHE A, PARADIGM WILL ASSUME FOUR POSITIONS ON A REVISED BOARD OF DIRECTORS WITH SEVEN MEMBERS. WE LOOK FORWARD TO THEIR CONTRIBUTION TOWARD THE SUCCESS OF THE COMPANY. - I WILL NOW TURN THE CALL TO JOHN KALEC, OUR CHIEF FINANCIAL OFFICER, TO REVIEW SOME OF THE MAJOR HIGHLIGHTS OF THE RECENT QUARTER. IV. FINANCIAL HIGHLIGHTS - JOHN KALEC - THANK YOU JIM....... - TOTAL REVENUE FOR THE QUARTER WAS $9.5M REPRESENTING A 4 15% INCREASE OVER THE SAME PERIOD LAST YEAR. IN OUR CORE ACTIVITIES,.... THE HIGH MARGIN, TECHNOLOGY INTENSIVE SIDE OF OUR BUSINESS, OUR REVENUES INCREASED 20% OVER THE FOURTH QUARTER OF LAST YEAR. - THE GROSS MARGIN ON A TOTAL COMPANY BASIS WAS 50%,.... WITH A 56% MARGIN GENERATED IN OUR CORE BUSINESS UNITS EXCLUDING THE FULL-SERVICE REAL ESTATE OFFERING. OUR CORE BUSINESS IS CHARACTERIZED BY TRANSACTION, LICENSE, AND PROFESSIONAL SERVICE REVENUES GENERATED FROM OUR COMPLETE IMAGING SOLUTIONS INCLUDING IMMERSIVE IMAGING AND THE RIMFIRE(TM) IMAGING PLATFORM. WE HOPE TO SEE CONTINUED IMPROVEMENTS IN OUR GROSS MARGIN AS WE LEVERAGE OUR INFRASTRUCTURE WITH INCREASES IN REVENUE FROM OUR EBAY RELATIONSHIP AND THE ADDITION OF INDIRECT CHANNEL CUSTOMERS. - NET LOSS FOR THE QUARTER, ...EXCLUDING MERGER EXPENSES, RESTRUCTURING EXPENSES, EXTRAORDINARY ITEMS, THE LOSS ON THE DISPOSAL OF ASSETS, AND OTHER NON-CASH CHARGES RELATED TO STOCK BASED COMPENSATION AND GOODWILL WAS $11.4M, OR $0.18 PER SHARE AS COMPARED TO A NET LOSS OF $24.6M OR $0.40 PER SHARE IN THE FOURTH QUARTER OF LAST YEAR. - DURING THE FIRST QUARTER THE COMPANY RECORDED A RESTRUCTURING CHARGE OF $3M RELATED TO A REDUCTION IN WORKFORCE, THE CONSOLIDATION OF FACILITIES, AND THE WRITE-DOWN OF CERTAIN ASSETS TO THEIR NET REALIZABLE VALUE. IN ADDITION A NET CHARGE OF $868,000 WAS TAKEN RELATED TO THE DISPOSAL OF CERTAIN ASSETS RELATED TO OUR REAL ESTATE BUSINESS. - OUR TOTAL COMPANY HEADCOUNT AT THE END OF THE FIRST QUARTER WAS 544 AS COMPARED TO 750 AT YEAR END 2000. WITH THE CONCLUSION OF THE ISC TRANSACTION, OUR HEADCOUNT CURRENTLY STANDS AT 194 IN TOTAL, ...US SOLUTIONS AND INTERNATIONAL AT 144 AND REAL ESTATE 50. - SELLING AND MARKETING EXPENSES WERE REDUCED FROM 5 $19.2M IN THE FOURTH QUARTER OF 2000 TO $9.7M IN Q1.....A 49 % REDUCTION. R&D EXPENSES WERE $2.5M FOR THE QUARTER (A 21% DECREASE) , AND G&A DECLINED 44% TO $3.8M IN THE FIRST QUARTER OF 2001. THE LOWER OPERATING EXPENSE LEVELS WERE DRIVEN MAINLY THROUGH PERSONNEL REDUCTIONS, NEW INDIRECT CHANNEL STRATEGIES, AND FACILITY CONSOLIDATIONS. - THAT CONCLUDES THE FINANCIAL REVIEW. I WILL NOW TURN IT BACK TO JIM. V. MOVING THE BUSINESS FORWARD - JIM - AS YOU HAVE HEARD, WE HAVE MADE GREAT PROGRESS ON OUR PLAN FROM OCTOBER. WITH FINANCING IN PLACE, GROWTH IN OUR MARGINS, AND PROGRESS IN REFORMING OUR REAL ESTATE BUSINESS, WE ARE WELL POSITIONED TO GROW THE COMPANY TOWARD PROFITABILITY. - WITH IPIX'S FINANCIAL STRENGTH IN TACT, ADDITIONAL LEADERSHIP AT THE BOARD LEVEL, AND COMMITMENT FROM THE SENIOR MANAGEMENT TEAM TO TAKE THE COMPANY FORWARD AND CONTINUE ON THIS NEW PATH, I AM TAKING THE OPPORTUNITY TO CHANGE MY ROLE WITHIN THE COMPANY. WITH THE BOARD'S PERMISSION, I WILL BECOME CHAIRMAN EMERITUS AT THE CLOSE OF THE FIRST TRANCHE OF THIS FINANCING. DON STRICKLAND, WHO FOR OVER SEVEN MONTHS HAS BEEN OUR PRESIDENT AND COO, WILL TAKE A MORE PROMINENT ROLE AS CHIEF EXECUTIVE OFFICER AND LEAD IPIX THROUGH ITS NEXT STAGE OF DEVELOPMENT. IN WORKING TOGETHER, I FIRMLY BELIEVE THAT DON HAS THE VISION AND FORTITUDE AND DEDICATION TO BRING IPIX TO THE NEXT LEVEL AND I LOOK FORWARD TO BEING A STRATEGIC ADVISOR TO HIM ALONG THIS PATH. DON WILL NOW SHARE WITH YOU OUR CURRENT BUSINESS INITIATIVES VI. OVERVIEW OF CURRENT BUSINESS INITIATIVES - DON - THANK YOU JIM, 6 - I AM HONORED TO PROVIDE LEADERSHIP FOR IPIX WITH THE SOLID FOUNDATION JIM HAS CREATED. OUR EXPERIENCED AND LOYAL TEAM IN TENNESSEE AND CALIFORNIA WILL BE BUILDING ON THE STRATEGY FOR SUCCESS THAT JIM PUT INTO PLACE LAST OCTOBER. - MOVING FORWARD, IPIX WILL CONTINUE OUR FOCUS ON HIGH-TECHNOLOGY PRODUCTS THAT DELIVER HIGH MARGINS AND HIGH GROWTH OPPORTUNITIES. WE WILL EXIT OR SEEK PARTNERSHIPS TO ADDRESS MARKETS THAT DO NOT MEET THESE OBJECTIVES. - FOR EXAMPLE, DURING THE FIRST QUARTER OF 2001, IPIX SOLD THE SALES AND MARKETING RIGHTS AND CERTAIN ASSETS FOR THE US RESIDENTIAL REAL ESTATE MARKET TO HOMESTORE.COM(TM) FOR CASH AND RECURRING REVENUES. - THE TRANSFORMATION OF THE REAL ESTATE BUSINESS CONTINUES. LAST THURSDAY, WE COMPLETED THE FULL SPINOUT OF IMAGING SERVICES CORP. ISC WAS THE FULL SERVICE CAPTURE PORTION OF OUR BUSINESS RESPONSIBLE FOR MANAGING OVER 800 CONTRACT PHOTOGRAPHERS USED FOR THE CAPTURE OF IMAGES PRIMARILY IN THE US RESIDENTIAL REAL ESTATE MARKET. ISC IS NOW A COMPLETELY INDEPENDENT BUSINESS WITH NO TIES TO IPIX. THEY WILL CONTINUE TO SERVICE THE FULL SERVICE NEEDS OF HOMESTORE USING IPIX TECHNOLOGY AND BE AVAILABLE TO PROVIDE IPIX SERVICE AS NEEDED. - EBAY CONTINUES TO BE A SIGNIFICANT PARTNER AND SUCCESS STORY FOR IPIX. DURING THE FIRST QUARTER WE SAW ADOPTION AND REVENUES STEADILY INCREASE. OVER 55 MILLION IPIX-MANAGED IMAGES ARE VIEWED ON EBAY EVERY DAY WITH OVER 600,000 NEW IMAGES CREATED IN THE PAST 24 HOURS ALONE. WE CONTINUE TO INTRODUCE NEW SERVICES SUCH AS SUPER SIZE PICTURES, AND NEW MARKETING PROGRAMS. I AM PLEASED THAT WE HAVE BEEN ABLE TO SUPPORT OUR SIGNIFICANT GROWTH WITH THE SCALABLE INFRASTRUCTURE WE ALREADY HAVE IN PLACE. - A KEY INITIATIVE TO IMPROVING OUR MARGINS IS CREATING AND 7 EXPANDING OUR RELATIONSHIPS WITH INDIRECT DISTRIBUTION PARTNERS WORLDWIDE. IN EUROPE, WE ARE AGGRESSIVELY EXPANDING OUR DISTRIBUTION THROUGH "TOP LEVEL PARTNERS" AND VARS. TLPS AND VARS PROVIDE US WITH "EXPERTISE" IN VERTICAL AND GEOGRAPHICAL MARKETS IN WHICH THEY PROVIDE THE SALES AND MARKETING TO PROMOTE AND DELIVER OUR TECHNOLOGY. THE ANNOUNCED PARTNERSHIP WITH LOOKAT, LTD., A PROVIDER OF FULL-SERVICE REAL ESTATE VIRTUAL TOURS IN THE UK, IS AN EXAMPLE OF THIS STRATEGY. TODAY, TLPS AND VARS ACCOUNT FOR OVER 60% OF OUR REVENUES IN EUROPE AND DELIVER GROSS MARGINS EXCEEDING 60%. - ON THE DOMESTIC FRONT, WE CONTINUE TO EXPAND OUR INDIRECT CHANNELS BY WORKING WITH LARGE CONSULTING FIRMS AND INTEGRATORS SUCH AS IBM. IN THE PAST THREE MONTHS, WE HAVE INITIATED SEVERAL LARGE-SCALE PROJECTS THAT LEVERAGE IPIX PRODUCTS AND TECHNOLOGIES ALONG WITH THE WORLD-CLASS PRODUCTS AND SERVICES OF OUR PARTNERS. THESE JOINT-EFFORTS PROVIDE IPIX WITH ENTRY INTO MARKETS THAT WE COULD NOT REACH ALONE. - AS MOST OF YOU KNOW, OUR STOCK HAS BEEN TRADING UNDER A DOLLAR FOR MORE THAN 30 DAYS. WE WILL BE WORKING DILIGENTLY WITH NASDAQ TO MAINTAIN OUR LISTING ON THE EXCHANGE. OUR FOREMOST CONCERN HOWEVER IS RETURNING VALUE TO OUR SHAREHOLDERS BY GROWING OUR CORE BUSINESS WITH HIGH MARGINS TO BRING US TO PROFITABILITY. IPIX IS IN A UNIQUE POSITION, WE HAVE PROVEN REVENUE STREAMS, DIFFERENTIATED AND PROTECTED TECHNOLOGY, AND AN IMPRESSIVE CUSTOMER LIST THAT WE WILL LEVERAGE TO GROW OUR BUSINESS. VII. CONCLUSION - JIM - THANKS DON. WE HAVE DEMONSTRATED HERE TODAY IPIX IS ON A FIRM FOUNDATION AND WELL POSITIONED FOR FUTURE SUCCESS. MANAGEMENT'S PRIMARY GOAL OVER THE PAST SIX-MONTHS WAS TO CREATE A STRONG FINANCIAL PLATFORM FROM WHICH TO GROW THE BUSINESS - THIS IS NOW COMPLETE. 8 WITH UP TO $30 MILLION SECURED, WE CAN COMFORTABLY SEE OUR WAY TO PROFITABILITY AND REFOCUS OUR ATTENTION TO CREATING ADDITIONAL OPPORTUNITIES TO DRIVE OUR BUSINESS. - WE BELIEVE WE ARE TURNING A CORNER AND ARE WELL POSITIONED TO ACHIEVE OUR LONGER TERM GOALS --- EXTENDING THE REACH OF OUR TRUSTED IMAGING SOLUTIONS, ADVANCING THE IPIX BRAND, FURTHER DEVELOPING STRONG CHANNEL PARTNERS AND CREATING MORE AVENUES FOR RECURRING REVENUE GROWTH. - AT THE HEART OF THE COMPANY IS A UNIQUE AND SUPERIOR TECHNOLOGY - THAT IS NOW UNIVERSALLY ACCEPTED AS THE LEADING DYNAMIC IMAGING SOLUTION AVAILABLE ON THE MARKET TODAY. BUYERS AND SELLERS OF HOMES WORLDWIDE RECOGNIZE THE IPIX BRAND; CONSUMERS IN THE RAPIDLY GROWING AREA OF ONLINE AUCTIONS UTILIZE OUR SERVICES; TRAVELERS HAVE GROWN ACCUSTOMED TO THE VALUE ADDED BENEFITS WE BRING TO THE HOSPITALITY INDUSTRY. AND THERE ARE MANY MORE SECTORS THAT HAVE YET TO BE EXPLORED - SECTORS WHERE WE SEE ENORMOUS OPPORTUNITY TO ENTRENCH IPIX AS THE CATEGORY KILLER. - OVER THE NEXT FEW QUARTERS, WE LOOK FORWARD TO UPDATING YOU ON OUR PROGRESS AS MANAGEMENT IS FREED TO CONCENTRATE ON THESE OPPORTUNITIES. GOOD DAY! EX-99.3 4 g69307ex99-3.txt PRESS RELEASE DATED MAY 14, 2001 1 PRESS RELEASE Company Contact: IR Contact: Stu Roberson Corey Cutler iPIX Morgen-Walke (925)242-4050 (212) 850-5696 stu.roberson@ipix.com ccutler@morgenwalke.com IPIX RECEIVES INVESTMENT COMMITMENT LED BY PARADIGM CAPITAL PARTNERS AND THE MEMPHIS ANGELS Financing to Fund Company's Plans for Profitability SAN RAMON, CA and OAKRIDGE, TN - May 14th, 2001 - Internet Pictures Corporation (NASDAQ: IPIX; "iPIX"), today announced a definitive agreement for a private investment led by Paradigm Capital Partners and the Memphis Angels. The agreement calls for the investment to occur in two tranches. Tranche A consists of $10 million in convertible notes and warrants, of which $3 million will be funded today and $7 million is expected to be funded within the next two weeks. The Tranche A securities may be converted or exercised for up to 60 million shares at an effective conversion or exercise price for common stock of $.25 (for up to 52 million shares) and $.50 (for up to 8 million shares). Tranche B is expected to close after the annual shareholder meeting that will occur later this summer and will include up to an additional $20 million in convertible preferred stock, which may convert into common stock at a rate of $.25 per share. Warrants evidencing the Tranche B securities will be issued pro rata to the Tranche A investors. A notice outlining the specific terms of the investment has been mailed to stockholders today, in accordance with Nasdaq requirements. Proceeds of the investment will be used for sales and marketing efforts, research and development and general working capital purposes. At the closing of $10 million under Tranche A, the Board of Directors will be restructured, with the new investor group assuming four positions on a seven member Board. This financing provides capital to enable the Company to implement its revised business plan, through which it plans to reach profitability. The financing also facilitates completion of the Company's restructuring efforts. In October 2000, the Company began restructuring its business to focus on its core technologies in higher margin, higher growth businesses. As a result, iPIX(R) sold its direct sales and support functions dedicated to US residential real estate to Homestore.com(TM) for cash and recurring revenue streams. The Company anticipates completing its restructuring efforts by the end of the second quarter 2001. Operating details for the first quarter of 2001 are set forth in a separate press release issued today. "This investment along with our revised business strategy provides us with necessary operating capital and a disciplined focus to implement our plan for profitability and penetrate select high- 1. 2 growth vertical markets such as classifieds, insurance, and observation and surveillance," stated Jim Phillips, Chairman and CEO of iPIX. "Raising capital to support the growth of the Company remained a primary goal during the last six months," continued Mr. Phillips. "The entire management team has worked extraordinarily hard to complete the restructuring and secure investors." In addition, Phillips stated, "I have elected to become Chairman Emeritus at the close of the first tranche of this announced financing, and am pleased to announce that Donald Strickland, currently President and COO, will succeed me as the Chief Executive Officer. While my title will change, I will be active in transitional activities to Don and will continue to help the Company form strategic alliances in key verticals to leverage the technologies that we have built." Bill Razzouk, Managing Director of Paradigm Capital Partners commented, "We are pleased to make this investment in iPIX. The Company has a highly talented and seasoned management team as well as a promising suite of products and services. Paradigm Capital is excited to identify an investment opportunity with a significant presence in Tennessee and one that allows us to leverage the expertise of our investor group, the Memphis Angels, and our strategic advisors," continued Mr. Razzouk. iPIX will hold a conference call regarding first quarter earnings and the recent financing at 10:00am EST Monday, May 14. Interested parties may listen to the call by dialing (952) 556-2834 or (800) 960-1012. A replay of the call will be available starting May 14, until May 31, 2000 by dialing (703) 326-3020 or (800) 615-3210 and using passcode 5238317. ABOUT IPIX Internet Pictures Corporation (iPIX(R)) provides Internet imaging solutions to facilitate commerce, communication and entertainment. The Company's end-to-end solutions include the capture, processing, management and distribution of digital imaging and the associated data to make the images meaningful. iPIX's solutions encompass many types of rich media content, including still images, 360(degree) by 360(degree) immersive images, video, animation, text and audio. A broad array of industries -- including real estate, auctions, travel, government, education, automotive, sports and entertainment -- are capitalizing on iPIX dynamic imaging to give viewers better information, more interaction and a richer online experience. Twenty-two of Media Metrix's top twenty-five web sites use iPIX to make their sites more dynamic. The Company is headquartered in Oak Ridge, Tennessee, with co-headquarters in San Ramon, California. http://www.ipix.com ABOUT PARADIGM CAPITAL PARTNERS Paradigm Capital Partners, LLC serves the capital and advisory needs of companies principally located in the Southeast. With a dedicated team of 10 investment professionals located in Memphis, TN, Paradigm focuses on offering its portfolio companies a wide network of resources, business development consulting and management services to minimize the risks typically associated with early stage and emerging growth companies. Paradigm has led private funding rounds for a number of Southeastern-based companies including dotLogix, FirstDoor.com, Memphis Networx and Thoughtware Technologies. For more information about Paradigm, visit http://www.paradigmcp.com. 2. 3 ABOUT MEMPHIS ANGELS Paradigm Capital Partners launched the Memphis Angels, an angel investment group, to evaluate and fund early stage and emerging growth companies located primarily in the Southeast. This group includes prominent leaders, entrepreneurs, and members of several Memphis-based companies with significant expertise in multiple domains. To aid in the development and ongoing success of this initiative, McKinsey & Company, a leading international management consultancy, was tapped as the strategic advisor for both the Memphis Angels and Paradigm Capital Partners. The Memphis Angels are a select group of accomplished individuals representing some of North America's most successful public and private companies and include: - - Robert B. Blow, Managing Director of Paradigm Capital Partners; - - William B. Dunavant Jr., Chairman and CEO of Dunavant Enterprises; - - Thomas M. Garrott, Chairman of National Commerce Financial Corporation; - - J.R. "Pitt" Hyde III, Founder and Retired Chairman of AutoZone; - - Frederick W. Smith, Chairman and CEO of FedEx Corporation; - - Willard R. Sparks, Chairman of Sparks Companies, Inc.; and - - The Kemmons Wilson Family. For more information about the Memphis Angels visit http://www.memphisangels.com. # # # Internet Pictures and iPIX are trademarks and service marks of Internet Pictures Corporation. The securities to be sold in the investment have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release contains forward-looking information within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the safe harbors under those sections. In some cases, you can identify forward-looking statements by terminology such as "expect," "may," "will," "plans," and "anticipate," or the negative of such terms or comparable terminology. Forward-looking statements appearing herein include statements concerning operating and profitability plans and goals, restructuring efforts, and the timing and amount of private investment proceeds, and are based on current expectations. Actual results may differ materially from those projected in the forward-looking statements based upon a number of factors including (i) the inability to close on a portion of the proposed investment, (ii) changes in the demand for iPIX products and services, (iii) the loss of existing, or an inability to attract new, iPIX customers, (iv) technological changes, (v) general economic, financial or market changes or developments, and (vi) an inability to successfully implement restructuring and profitability plans. The matters discussed in this press release also involve risks and uncertainties described from time to time in Internet Pictures Corporation's filings with the Securities and Exchange Commission. In particular, see "Risk Factors" in the annual report filed on Form 10-K with the SEC on April 2, 2001 (www.sec.gov). 3. EX-99.4 5 g69307ex99-4.txt LETTER DATED MAY 14, 2001 1 EXHIBIT 99.4 [LOGO] World Headquarters 1009 Commerce Park Drive Oak Ridge, TN 37830 (865) 482-3000- phone (865) 482 -5447 - fax www.ipix.com May 14, 2001 Stockholders of Internet Pictures Corporation: I am pleased to report to you that Internet Pictures Corporation (the "Company") has entered into a definitive agreement for an investment of up to $30 million by investors led by Paradigm Capital Partners, LLC and Memphis Angels LLC (collectively, the "Investors"). The proposed investment is structured into two separate tranches. In Tranche A, the Investors will purchase up to $10 million of the Company's 8% Senior Secured Convertible Promissory Notes (the "Notes"). The investors will also receive (i) warrants to purchase a number of shares of Preferred Stock (as defined) equal to one-half the number of shares of Preferred Stock into which the Notes may be converted (the "Tranche A Warrants") and (ii) warrants to purchase up to $20 million of Preferred Stock at the Tranche B closing (the "Tranche B Warrants" and together with the Tranche A Warrants the "Warrants"). The Notes are convertible at a fixed conversion price into the Company's 8% Cumulative Convertible Series B Preferred Stock (the "Preferred Stock"). Simultaneously with the execution of the definitive agreement, the Investors purchased $3 million of the Notes, and will purchase the remaining $7 million as soon as certain conditions are met, including compliance with regulatory matters. In Tranche B, the Company will issue up to $30 million of the Preferred Stock, $10 million of which will be represented by conversion of the Notes and $20 million of which will be received upon the exercise of Tranche B Warrants. The Tranche B closing will occur within five days of the Company's annual stockholders meeting scheduled for July of 2001. The Preferred Stock is convertible into Common Stock at a fixed conversion price of $0.25 per common share subject to customary anti-dilution protections. In addition, upon the purchase of the entire $10 million of Notes, the Company's board of directors will decrease to seven members. The Investors will have the power to appoint four of the seven directors. Pursuant to Rule 4350(i) of the Nasdaq Marketplace Rules, the Company hereby notifies you of its intention to consummate the above-mentioned transaction, whereby it will issue a number of securities to Investors that will be deemed a "change of control" and may constitute a significant sale, issuance, or potential issuance of equity securities for less than fair market value under the Nasdaq National Marketplace Rules, without 2 obtaining stockholder approval. In addition, the Company has requested relief from the voting policy requirements of Rule 4351. Nasdaq Marketplace Rule 4350(i) requires stockholder approval when a significant issuance or potential issuance of securities will result in a change of control of the issuer or may be made at less than fair market value. Nasdaq Marketplace Rule 4350(i), however, provides relief from stockholder approval if a delay in securing stockholder approval would seriously jeopardize the financial viability of the enterprise and reliance by the company on the exception is expressly approved by the Audit Committee of the company. Nasdaq also has the ability to waive the strict compliance with Rule 4351 in reliance upon SEC Release 34-35121 (the "Voting Policy Release"). Under the Voting Policy Release, Nasdaq may waive strict compliance when a company in financial distress has issued preferred stock with heightened voting protection necessary to protect the interests of the preferred stock purchasers. In order for the Company to avail itself to the exception of the rule, it must notify stockholders of the potential transaction at least ten (10) days prior to consummation of the transaction. If the Company is delayed in closing this round of financing, it will be forced to evaluate all of its alternatives, including a liquidation of the Company. In light of the severity of the current situation, the Company believes that any delay in securing stockholder approval would seriously jeopardize the Company's financial viability. In addition, the Company's Audit Committee, after reviewing the Company's latest annual and quarterly financial statements, has expressly approved the Company's reliance on the exception from the requirements concerning stockholder approval. The financing is necessary in order to maintain the Company's existence and will play an integral part in its ability to move forward. Set forth below are more details about the investment. THE NOTES The Notes will be senior debt that is secured by substantially all of the assets of the Company and its subsidiaries. The Company received $3 million under the Notes on May 14, 2001 and expects to receive the remaining $7 million upon the occurrence of certain conditions, including the expiration of regulatory notice periods. The Investors may convert the Notes to Preferred Stock at any time, but the Notes must be converted at the time of the Tranche B closing. At the time of conversion, the Investors may either convert all unpaid accrued interest into shares of Preferred Stock, or receive the interest in cash. The conversion price is equal to $20.00 per share, as adjusted for stock splits, stock dividends, recapitalizations, combinations or the like, for a maximum of 500,000 shares of Preferred Stock. Unless the Notes have been converted, the outstanding principal amount of the loan, plus interest, shall be due and payable fifteen months from the date of issuance. 3 THE WARRANTS At the Tranche A closing, investors will receive both Tranche A Warrants and Tranche B Warrants to purchase Preferred Stock. The Tranche A Warrants will evidence a right to purchase one half of the number of shares of Preferred Stock into which the Notes may be converted and will have a five-year exercise period. Warrants representing 60% of the Tranche A Warrants will have an exercise price of $20.00, and Warrants representing 40% of the Tranche A Warrants will have an exercise price of $40.00, in each case subject to weighted-average antidilution protection. Tranche B Warrants will be issued at the Tranche A closing to evidence the right of the Investors to acquire, on a pro rata basis, or transfer the right to acquire, a maximum of 1 million shares of Preferred Stock issuable pursuant to the Tranche B closing. Tranche B Warrants may be exercised at any time during the fifteen-month period following the Tranche A closing, unless the Tranche B closing is delayed for regulatory/consent reasons, in which case the exercise period will extend beyond such fifteen-month term to coextend with the period of time necessary until all such regulatory/consent conditions have been met. The Tranche B Warrants expire at the same time as the conversion of the Notes to Preferred Stock. There is no assurance that any Tranche B Warrants will be exercised. The exercise price will be $20.00, subject to weighted-average antidilution protection. It is expected that the Tranche B Closing will occur within five days of the Company's annual meeting of stockholders, which is expected to be held in July of 2001. THE PREFERRED STOCK At the option of the Investors, the Preferred Stock will be convertible in whole or in part at any time into Common Stock of the Company at a fixed conversion rate of eighty (80) shares of Common Stock for each share of Preferred Stock. Shares of Preferred Stock may not be converted if the Company does not have a sufficient amount of Common Stock authorized to issue upon conversion of such shares. The holders of the Preferred Stock will vote on all matters presented for a vote to the holders of Common Stock as if the Preferred Stock were converted at the then-current conversion rate. If the maximum amount of the Preferred Stock is issued pursuant to the Notes and Warrants, the holders of the Preferred Stock will own approximately 67% of the voting power of the Company. In addition, the holders of Preferred Stock shall be entitled to receive dividends at the rate of 8% per annum, accruing daily and payable quarterly in cash or as an accretion to the liquidation preference of the Preferred Stock. The holders of a majority of the Preferred Stock will have the right to require the Company to redeem, on or after the fifth anniversary of the Preferred Stock closing, each outstanding share of Preferred Stock from the holders of the Preferred Stock for an amount equal to the face value per share of the redeemed Preferred Stock plus all accrued and unpaid dividends. 4 REGISTRATION RIGHTS AND OTHER MATTERS The Company has committed to file a registration statement covering the public sale of the common stock underlying the Preferred Stock within 20 days of the closing of each of the Tranche A and Tranche B rounds and have such registration statement declared effective. The Company's registration statements must remain continuously in effect until all underlying securities can be sold within a 90-day period in accordance with Rule 144 under the Securities Act of 1933. The securities to be sold in the investment have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. At the closing of the purchase and sale of all $10 million of Notes, the Company's board of directors will be reduced from nine members to seven members, and the Investors will have the right to direct the appointment of four members. Upon conversion of the Notes to Preferred Stock, the holders of Series B Preferred Stock will have the right to elect four of the seven board members in the future. The appointment right will terminate on the date that less than 25% of originally issued shares of the Preferred Stock remain outstanding. In addition, the Compensation Committee of the board will consist of no more than three directors, two of whom will be directors appointed to the board by the Investors. All other board committees will consist of no more than three directors, at least one of whom will be a director appointed to the board by the Investors. CONCLUSION The Company believes that the consummation of the investment described above is an important step towards our path to profitability. Moreover, the transaction will allow us to continue to move forward toward our goal of creating stockholder value. While we have much work ahead of us in order to build stockholder value, I am very optimistic about the future. Thank you for your continued support. Sincerely, INTERNET PICTURES CORPORATION -----END PRIVACY-ENHANCED MESSAGE-----