Agenda
The Annual Meeting finds Worldesign in a process of transition. After four years as a primarily service company, Worldesign is mid-way through the process of transforming itself into a product manufacturing and marketing company. The challenges we face are not slight, including for most of us a good deal of product-company "on the job" learning while we continue our work on current service assignments.
Our New Product Focus. Building on our prior experience, we are focusing our product development on the nexus where virtual worlds and spatial technologies -- for example, GIS (geographic information systems) -- meet. We believe that the conjunction of these enabling technologies will produce synergies that exceed the current capabilities of each of these technologies individually. In turn, we will help our future business customers, who purchase our products, to maximize the efficiency with which they carry out business activities with a spatial character: in effect, nearly everything they do. Consumers too should benefit from our products which will give them the ability to do things they never could before, like locating needed goods and services using their inherent spatial skills.
Our first products will be built upon the foundation provided by WorldSpace(TM), a product developed while Worldesign worked with Puget Power Co. WorldSpace, which is being patented, is a powerful software tool for translating spatial data into three-dimensional maps that can be visualized and interacted with, and vice versa. We are recruiting an outstanding team of product-development managers, GIS experts, and programmers who will quickly convert WorldSpace into a robust, commercial product. Our marketing plan for this product is well thought-through and highly persuasive, including forays into telecommunications prior to widespread public roll-outs.
Our Information-Design Services Continue. Meanwhile, we have submitted proposals and are completing negotiations on several very large information-design projects. If we succeed in closing these deals, service revenues this year might exceed those of all previous years of operation combined. Moreover, these projects may result in additional products complementary to WorldSpace. To provide these services, we are relying heavily on contractors and partner companies that are expert in the technical tasks required for the projects' execution.
Ark Interface/Packard Bell and Japan Research Institute remain Worldesign customers. We are gratified that these large and well-known organizations find us a useful ally in their business activities.
Making the Transition: Structure and Personnel. Worldesign is likely to be bifurcated in the coming year into separate, formal divisions for product development and service provision respectively. It is necessary for us to acquire new management able to oversee product development and toward that end I have personally sought out and approached extremely well-qualified individuals who can assume leadership roles. Simultaneously, we have identified a cadre of technologists able to carry out an accelerated product development. Most have indicated a willingness to work with us. On the service side, we will recruit a general manager and a small team of designers, including some former employees (and shareholders) to work with our contractors and partner companies.
Making the Transition: Investment and Board Composition. To pay for our expanded technical staff, support staff, and capital investments, we are aggressively pursuing investment capital from both private individuals and venture firms. It is too soon to say whether this effort will ultimately be successful, but we are optimistic that we can find new investors to fund Worldesign's growth. The prospective management team is proving to be very helpful in this regard. Should investors and the Board of Directors reach a desired accommodation on investment terms, it is likely that additional equity will be issued. We believe that the growth in Worldesign's capabilities and its eventual success in the product market will more than compensate shareholders, in financial rewards, for the dilution they may experience.
To bolster the Board, we are considering its expansion to include individuals with operational and technological expertise. Also, investors may seek representation on the Board.
Prospects for Our Future. Virtual worlds technology appears to be on the verge of a renaissance. The emergence of reliable, affordable, and practical technology is removing the barriers to working in "3-space" that formerly plagued vendors in the industry. Around the world, revenues are up for both manufacturers of technology and service providers. Larger companies are getting into the business and pioneer entrepreneurs are finding themselves at the helm of substantial business organizations. All of this bodes well for Worldesign.
At the same time, the usefulness of the Internet for business purposes is no longer in question, and once again Worldesign stands to benefit. We have always advocated the use of distributed virtual worlds, rather than stand-alone installations, for business-oriented applications. Now this philosophy can be realized in actual products and services.
Getting from here to there is no small matter. Over time we have adopted a lean and mean operational style that may no longer be appropriate for an expanding company. We need resources to springboard into a new mode of operation, one that is predicated on growth and ever greater capabilities. Husbanding and leveraging our current resources is more important than ever. There are no concrete impediments blocking our progress, however. It's simply a matter of doing things right.
Appreciations. I would be remiss if I did not acknowledge the exceptional service rendered to Worldesign and its shareholders by Vice President Chet Dagit, who has assumed many responsibilities of both a strategic and tactical nature. Chet's role may change with Worldesign, but it will not be diminished. Also, before he took an extended leave, Vice President Peter Wong was the consummate technologist and a stabilizing presence. Today, Shannon Smith and Bruce Cherry provide many of the services Peter supplied. To their families (and my own), who put up with inordinate demands on their time and patience, I also am grateful.
Our Directors, Mark Anderson and Glen Hiemstra, continue to provide good direction. Additionally, Professor Tim Nyerges and my personal mentor Roy Aaron have proven capable "shadow directors" whose advice has always been welcome. Joe Garber, Forbes columnist, has been a source of industrial wisdom. Rick Satava, MD, program manager at ARPA, was a source of support and encouragement. Todd Pistorese at Tellus Inc. and Rod Cook at Ark Interface have proven good colleagues and workmates.
Our customers during the last year, Ark Interface and the Japan Research Institute, continue to employ us and for this we are honored. They have each been great fun to work with and the results of our mutual efforts have been impressive and valuable. Puget Power Co. and its former subsidiary, Tellus Inc.; UB Networks; and the Idaho National Engineering Laboratory were a pleasure to work with, too.
Our contractors and partner companies -- MesmerFX, MicroCrafts, PreText, San Francisco's Vivid Studios, Excell Data, and Anderson/Krieger in Portland -- have been good comrades as well as reliable suppliers of essential services and expertise. We look forward to continuing our relationship with them and enlarging it to include new partners Cole & Weber Advertising and the National Centre for Virtual Reality in the United Kingdom, who are assisting in new projects.
For our "Net in the VET" exhibition, support was provided by Netscape, Sun Microsystems, AmPro, American Music, and the Washington Software Association. We look forward to dealing with each of them again. Hewlett-Packard and ESRI were able participants in last year's Virtual Realty project. Sense8, Caligari, and Virtual I/O have provided us with valuable technology at modest or no charge. The HIT Lab at the University of Washington has been a good intellectual resource. We thank them all.
Finally, my thanks to the shareholders and other interested parties who continue to provide us with emotional support and encouragement. In their interests we labor.
Sincerely,
Robert Jacobson
President and CEO