Major news out today from our current trading idea Bitzio. The US app company, today announced several major developments which strengthen the company’s balance sheet and executive team to further focus on the targeted app development for sports and entertainment properties.
First of all, Bitzio is making some management changes. Peter Henricsson is taking on the role of president and CEO of Bitzio. Previously, Henricsson was Chairman and CEO of CellPoint Inc. from 1996 until 2002. With customers such as France Telecom, British Telcom, Tele2, KPN, etc. CellPoint was the world’s leading company in the mobile technologies and services sector around location based services. The company achieved a market cap of USD 1bn, and was uplisted to a NASDAQ NMS listing in 2000. Commenting on his new executive role, Peter Henricsson, President and CEO of Bitzio, Inc. says, “Bitzio is focused and uniquely positioned to sweep the mobile app and game market with their access to long standing relationships with some of the largest international sports clubs and entertainment organizations in the world. I was so impressed with their strategy, team and strategic acquisitions as well as media their licensing relationships I knew that I wanted to take on a leadership role with the company.”
As a second move, Bitzio is divesting its Info-Products Suite, removing USD 700,000 in liabilities from the balance sheet. Henricsson continues, “The mobile applications market is growing rapidly, and experts predict 100 percent annual growth driving revenue from $10.2 billion in 2010 to $100 billion in 2015. As an early player in mobile industry, I’ve seen the industry change from simple phone calls to an entire new way of doing business within the app world. Bitzio embodies this new way of doing business, and this divestiture allows our team to focus 100% on acquiring media licensing rights and deploying the accompanying apps into the marketplace.”
Last but not least, Bitzio secured another round of financing, which provides working capital to help meet anticipated demand for its growing media license database and app development that is expected to lead to significant revenue growth in 2012 into 2013. The Company has raised approximately USD 600,000 in the form of secured one-year promissory notes accruing interest at 10% per year with no payments until maturity, and convertible into shares of common stock at a conversion price of USD 0.15 per share. The note investments included two-year warrants to purchase two times the number of shares issuable on conversion of the notes at an exercise price of USD 0.30 per share. Of this amount, USD 300,000 was invested by an entity controlled by Mr. Henricsson.
Former CEO William Schonbrun will become new Chairman of the Board and will remain as involved as before. On the heels of recent media licensing announcements with major players like the NFLPA, Schonbrun commented on Bitzio’s business focus, “What does Bitzio do? In simple terms, we deliver apps for people we already know something about. We acquire media rights and licenses from our target audiences and we use those rights to build relevant games and apps geared to their existing fans. We see that strategy as our path to continue our growth in this industry and we are more committed than ever to making that happen. I am pleased to see Bitzio add Peter to the team and I look forward to working with him and remaining an integral part of the Bitzio story.”
New CEO Henricsson concludes in today’s announcement: “Bitzio is an app company. That’s how it started. Now, armed with strategic acquisitions and unbelievable talent, we have a focus to drive our success by securing media rights, building apps and marketing them to existing fan bases. We couple this targeted approach with our ability to collect meaningful data, increase consumer engagement, while providing better content and apps to our user base. This focused strategy delivers higher conversion rates, higher CPM rates based on the quality of our analytics and more focused in app purchases.”
Our take: We like today’s move to divest the info-products suite. It strengthens the balance sheet and most importantly, focuses Bitzio’s business on app development. Recent partnership deals, amongst others with NFL Players, seem very promising and we are looking forward to see the first apps being published under this co-operation. Financing is crucial for start-ups and Bitzio seems to have committed management that is putting its money where its mouth is. We find this very encouraging and look forward to hear more about the new CEO’s visions and plans.
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