Article

The Power switch remains on

Despite less-than-robust financial reports, Power Interactive Media Inc. is confident its line of photo-driven kiosks will be a success.

February 17, 2002

Never mind the fact that his company is just in the developmental stage, or that its most-recent earnings were less than stellar. Power Interactive Media Inc. (OTCBB:PIAM) executive Mike Parker remains confident that his company's mix of baby-photo and entertainment kiosks will strike the right chord with customers.

But it is going to take a lot of work to convince potential investors of Power Interactive's stability, a situation Parker said his company is willing to face.

"Everyone here is 100 percent focused on completing the goals of our business plan," said Parker, Power Interactive vice president of sales and business development. "We will be a success and will be the envy of the kiosk business sector."

Power Interactive is facing the kind of struggle that is typical in the technology sector, where high concepts frequently collide with the stark reality of the bottom line. For Power Interactive, the battle is now on in earnest.

The money trail

A Florida-chartered company which has its headquarters in Markham, Ontario, Canada, Power Interactive launched into the kiosk sector in March of 2000 as Power Kiosks, Inc. This past March, the company adopted its current name.

"The industry's leading provider of interactive entertainment, multimedia and multifunction informational kiosks," is the stated goal on the company's Web site.

With that goal in mind, the company delivers retail products from digital photo imaging to interactive merchandised services.

But it is an optimistic outlook given its third quarter 2001 report (See story: Power Interactive files third-quarter figures). Power Interactive in that quarter, ending Oct. 31, 2001, lost $931,580 on revenue of just $7,555. The company also reported an overall loss of $18.3 million since the company's inception.

Though the numbers are more encouraging than the third quarter of 2000, when the company lost $3.6 million on no revenue, Power Interactive is still in a precarious financial position. In its recent filing with the Securities and Exchange Commission, the company disclosed that it has incurred significant expenditures on research, development, and marketing while it has not generated significant revenue.

Power Interactive Media's entertainment kiosks places a customer's face into the action at major sporting events.

"Management does not expect to commence generating revenue until customers are secured and financing can be obtained to fund the manufacture and distribution of the kiosks," the report said.

Securing customers and financing is exactly what Power Interactive is doing, Parker said.

"Our progress with regards to product development and market research is right on track," he said. "In fact, because of the restriction of funds, we have had to be more frugal with the monies we have. Thus we are very productive at what we do and what we create. More thought goes into a project when you are restricted by money."

Talks with potential unnamed investors are ongoing. But Parker admits the funding is not coming along as fast as he desires.

"The only progress that has been slow is raising the necessary capital to really start our mass rollout of kiosks," Parker said. "Because of the events of Sept. 11, it has had an impact on all businesses."

According to Parker, perception is one of the company's biggest enemies.

"With the pilot projects and data collected in five or six beta test sites over the last three years, we are confident that investors will see the potential if we were to have the funds to deploy 100 or so kiosks," he said. "Getting investors to trust a kiosk company is hard because of all the failures. We believe our business model and product offering is unique and provides a more stable environment for investors. We consider ourselves a media company first. Kiosks just happen to be our delivery medium."

Newborn babies, newborn kiosks

One of the company's projects that tap into this medium is the Power Baby Kiosk, which has been beta-tested at Clark Memorial Hospital in Jeffersonville, Ind., for the past year.

The two kiosks located in the hospital's nuseries take photos of the infants. Photo packages are prepared for the parents before they go home. The kiosk uses a sublimation printer and Kodak paper.

"We are at a 60 percent subscription rate for orders versus photos taken and we are average $55 plus dollars per order," Parker said. "This translates into a success in our books."

The hospital does not pay a hosting fee for the kiosk and recieves 40 percent of the kiosks's profits from Power Interactive, which retains ownership of the machines.

"It's just another positive note to the wonderful birthing experience," said Rita Stocksdale, Clark Memorial director of women's health services. "The families are very excited. They can go home with the photos and they have been very impressed with the quality and obviously with the service."

Stocksdale said the hospital's relationship with Power Interactive will probably continue indefinitely, while Parker added that five more kiosks will be deployed at hospitals within the next two months.

Product diversity

Baby photos are not Power Interactive's only project. The company is also developing a kiosk that produces a one-minute video that can be e-mailed. Parker said Power Interactive plans to approach high schools with this model for media arts classes and school Web sites.

"In our business model, we provide the school (with) the kiosk at no cost and share part of the revenue with the student council," Parker said. "Advertising options are available provide it is acceptable by the school boards."

Then there is the company's work horse, a kiosk that allows consumers to interact with the machines by using a touchscreen. That touchscreen sends commands to a digital camera which produces a photo. The kiosks, which cost between $14,000 and $25,000 to produce, can be used in entertainment venues (imagine your image on a photo with Michael Jordan).

Parker said the company has produced 70 of these kiosks, with plans for several deployments in 2002, including one that would involve shipping 100 units to shopping malls and other public venues. Power Interactive also plans to upgrade the kiosk, with a sit-down model available in the spring.

Getting the word out

Power Interactive will spend part of 2002 making an aggressive push into its core markets. Marketing firm IMC has also been brought in to market the company's entertainment kiosk, and Power Interactive representatives will hit trade shows, conventions, and sporting events.

"We are planning to be at two tradeshows this year, one hospital and one special retail show," Parker said. "These shows will allow us to showcase our products to the two markets that we will focus on first."

The company is also focusing on where to build its kiosks. Last May, Power Interactive announced that it was building a $7.5 million manufacturing facility in Macon, Ga., (See story: Macon gets kiosk plant) but those plans have been put on hold. The company has an opportunity to take over an existing plant in Buffalo, N.Y., about 90 minutes away from Markham, but no decision has been made.

"A decision will be made later this month or first part of next month," Parker said. "We would like to have a temporary location in either location by March, with manufacturing to start by summer 2002."