Dear Shareholder,
RE: AN INFORMAL NOTE FROM THE PRESIDENT OF SKYNET TELEMATICS.COM INC
In the first instance I apologise for the delay in filing our 10K (Annual accounts) for the year ended 31st December 2000. These have now been filed and Skynet's first quarter accounts for the three months to 31st March 2001 should be filed, slightly late, within 4 weeks.
Delays in filing seem inevitable when faced with UK Lawyers and Accountants and USA Lawyers and Accountants all of whom have a say in the preparation of the accounts, which are prepared in the UK to US GAP. However, the Skynet Financial Director has been given the task of ensuring that future account dates are met on a timely basis - Good luck Mark Dingley!
Gumball 3000 Car Rally
London to St. Petersburg (Russia) and back - 13 countries in 4 days, a distance of 3,800 miles. 120 top class vehicles driven by some of the most important people in the World, celebrities and Skynet's dream team of Tom Wilmot and Kevin Wilmot.
Skynet sponsored this rally by providing the security teams and the BBC (British television - International star Ruby Wax was in one of the BBC vehicles) with Skynet pro-active tracking units and also entering one vehicle in the rally. Unfortunately the designated drivers for the Skynet car claimed that they were too busy fitting units and working on Telematic technological solutions, to drive, so at the end of the day there were only two possible drivers, Kevin Wilmot and myself. FIVE DAYS with very little sleep, virtually no food and no alcohol hurtling around Europe is NOT my idea of an ideal weekend - I have never been so tired - and Kevin did most of the driving!!!. However, from Skynet's point of view the rally was a huge success. The Skynet units worked brilliantly roaming from country to country with considerable ease. Incidentally the GSM reception in Lithuania, Poland, Latvia and Russia is far better than the UK.
Lives saved
Inevitably there were vehicle crashes and many emergencies as well as demands for information, mapping, and re-routing
the lost. Skynet's multi-lingual competencies were essential when tracking down Insulin in Russia. The UK and Slovakian monitoring stations have never been so busy. Skynet accurately recorded the longitude and latitude of the very nasty vehicle crash in Latvia, with local ambulances directed to the accident.
Locals chasing vehicles and attempts at hi-jacks became common-day incidents all handled with professionalism by enthusiastic monitoring staff providing full 24-hours per day support available at the press of a Skynet button.
Monday-it must be Copenhagen by overnight ferry
"Tom's Diary"
It gets worse, no sleep or proper food for days and we are on a ferry without a berth-we missed the earlier ferry which had accommodation. The only way to sleep is to find a couple of chairs and lie across them. Although uncomfortable, this works well for a short while until about 3am when the Danish and Swedish drunks started pouring out of the bars and decided to chat. "Nice shoes" poke--poke with finger, is that a real Rolex? Where's the toilet? Do you know when breakfast starts?---leave me ALONE I want to sleep. With hindsight it was hilarious, but at the time my patience started to give way to short temper!! The things I do for Skynet.
Security and Damon Hill
Security on the rally was provided by Bill Scully-ex SAS (Special Air Service - UK Elite Armed Force - specialising in undercover, crisis and delicate hostage situations) and his team of personal security experts all of whom are ex SAS. The consensus from these experts was that the Skynet Telematics device is an essential tool for security and that they intend using our device and recommending it to all their customers.
Damon Hill (Formula One World Champion) was so impressed with the device that he has ordered 25 units.
We expect to receive a large number of orders from Gumballers, their Advisors and Associates. The Gumball Rally tested our equipment and staff to the absolute limit and the Skynet Telematics device and staff came through this short sharp test with flying colours.
Gumballers
Gumballers are important, thoughtful people concerned about security, safety, ease of communication and the ability to re-organise appointments and busy schedules at the press of a button - Skynet Telematics provides this service NOW.
Bobcat
Skynet are fitting Bobcats (mini excavators, skid steerers and Telehandlers) as quickly as they come on site at Bobcat Wales, MTS Bobcat Wakefield, MTS Bobcat Newcastle, MTS Bobcat Wigan, Bobcat in Isle of Wight and Bobcat Bristol.
Bobcat USA have asked us to start a full trial on 50 Bobcats in Italy and 10 Bobcats in each of the other European countries - a total of 160 units. The first 50 into Italy are expected to be fitted next week. If this trial is successful we expect Bobcat to recommend the fitment as standard on the 35,000 Bobcats produced annually for Europe - (as we have over 200 units already fitted to Bobcat we have every confidence that it will be highly successful).
Telematics Industry
The Telematics industry has gone through many false dawns. Telematics technology has now stabilised, it is reliable and robust. The unique sensors developed by Skynet places Skynet in a very strong position to capitalise on markets where real-time reporting is essential for security and protection of assets from theft and user abuse. However, sales in the UK are hard to come by, and the industry has become very competitive with units being sold at below cost to achieve volume.
Skynet On Track for Telematics Success
The Skynet device is by far the most flexible, reliable Telematic unit. We are holding our base profit margin at 15% with further revenue coming from connection bonuses, airtime uplift, monitoring fees and premium rated calls. The cost of airtime line rental is still far too high for Telematics, as most customers already have mobile phones and object to paying a second line rental. However, this is expected to be resolved in the near future, with dual SIMS and/or a substantial reduction in Telematic line rental. We are therefore concentrating on sales to luxury car owner, high profile people, people at risk and fleets where real savings can be shown. Last year we fitted 251 units. So far this year, I am pleased to be able to say that we have exceeded this number and currently have back orders for 300 units.
We expect to fit 100 units in May 2001 and 200 in June 2001.
"Brick by brick the strong foundations of a world class business are being laid".
The breakeven for Skynet is 1,000 units per month, this is expected to be achieved in August/September, as the Bobcat fits move into full swing. We are currently capable of fitting 20 units per day, but with the delivery of new looms in June, this capability will increase to 40 per day - 6 days a week.
In my opinion, Skynet is about to start reaping the rewards for years of HARD work and innovation. It is therefore curious that Skynet's current share price and capitalisation of the company values the company at slightly more than the sale value of the carried forward tax losses. In my view, this is absolutely ludricious and leaves Skynet vulnerable to un-wanted take-over bids at a time when the business is beginning to mature.
Skynet, being a developing company, needs to raise capital to meet its on-going obligations before it moves into profit. From time to time Skynet completes small private placings of reg 'S' shares at a discount to the market price on a first come, first served basis. If you are interested in further details, please contact Kevin Wilmot by email on kwilmot@skamp.co.uk
Skynet is currently negotiating a number of large contracts - however, to succeed in "landing these deals" Skynet balance sheet needs to be substantially strengthened. This year our objectives are:
Sales, sales, sales
Reduce annual overheads to below US$3million before depreciation
Strengthen balance sheet with an investment of £5million (US$8million)
Move into profit on a month by month basis
Thank you very much for your continuing support in these difficult times, but I am sure that this is the nadir of the Groups fortunes and that there is a very strong light at the end of the tunnel (no it's not a train). We are all working very hard at Skynet to be "Simply the Best".
Kind Regards
Tom Wilmot
President, Skynet Telematics.Com Inc
