State of the Company

Evening All!

Just wanted to do the best we can to answer as many questions as we can.

Starting with Sustainable Water Solutions (SWS), as per the press release earlier in the month, the record date for ownership of shares of ANDI in order to participate in the dividend is Friday April 26th, which is tomorrow. We are using the ratio of 1 common share of SWS for every 5,000 common shares of ANDI owned. SWS is moving forward with their audits and filings, and as anyone who has been involved with or followed a going public offering like they are doing, and one with a goal of being listed on the higher exchanges, knows, it does take a while to get completed, and usually it is a fluid situation right up until the end. Because of that, we don’t know when the shares will be issued to everyone receiving them or what mechanism will be used either. Don Keer, CEO of SWS, is working with his legal counsel as well as the investment banker to iron out those details, and as they are decided, we will inform you here. One thing for certain is, once the record date ends, we will be getting together a list of everyone who owns ANDI Common shares and how many they own and forwarding the information to SWS and their team. Once they have those names and numbers, it will help them decide how to proceed with issuing the shares.
Which leads us to the question of why didn’t we just keep SWS inside ANDI and take advantage of the revenues it would bring, which on a consolidated basis would have shown up on Andiamo’s financials? Quite simply the answer is that we were told they would never have been able to secure the funding needed to do the acquisitions and execute the expansion plans they have within the confines of Andiamo, a non-reporting pink sheet company. We were told this in no uncertain terms by more than one investment banker and also by other funding sources. So instead of losing any benefit from the deal altogether, the decision was made to allow them to essentially “buy” their way out of ANDI by issuing the Company 1,500,000 of their Common shares. Typically, a company would have kept all of those shares on its balance sheet as an asset. Instead, feeling an obligation to our shareholders, the decision was made to dividend roughly two thirds of the shares to our shareholders. Based upon that decision, it was a simple math equation: if you dividend 1,000,000 common shares of SWS and there are roughly 5 Billion common shares of ANDI issued and outstanding, then every 5,000 common shares of ANDI equates to 1 common share of SWS. Then just to be even fairer, while typically dividends or stock splits will have all fractional ownership rounded down, meaning if, for example, someone has 499,999 shares of ANDI then they get 99 shares of SWS, instead we decided to “round up” fractional ownership, meaning if, for example, someone owns 500,001 shares of ANDI they will get 101 shares of SWS – 100 for the 500,000 and then 1 more for the additional 1 share of ANDI. Truly as fair and beneficial as we could be to each and every individual shareholder of ANDI.
As to those who argue that we should dividend all of the shares of SWS to our shareholders, that just frankly isn’t a good business decision. It only makes sense that the company should benefit from a deal it made, especially since a vocal part of its shareholder base was against ANDI ever acquiring SWS in the first place. To not keep at least some of that benefit on the company books would be neglecting the fiduciary obligation management has to making Andiamo a strong and viable company. Keeping an asset such as roughly 500,000 shares of a potentially $3 or $4 dollar per share public company on the books, while giving away basically twice that seems a good and fair business decision to us.

 

Which leads us to the next obvious question: will we continue to do acquisitions and partnerships outside of the phone industry? The easy and direct answer is that of course we will. While maybe easy to forget, Andiamo has, for years, been a holding company. When a management team came in and decided to focus on one product and industry, it just simply didn’t work. Yes, the hope and promises were wonderful, and the stock price soared because of it, but when the financials came out, and showed during that 12-month period the Company only had a little more than $2,000 in income and losses of over $110,000 with no solution for improvement in sight, it became clear that we should move to a different formula.
That formula has already led to an acquisition, a partnership and a joint venture agreement. While the acquisition of SWS didn’t yield large revenues and profits as we had hoped, it has generated a real dividend of shares in a real company and hopefully what will be a future windfall for all of ANDI’s loyal shareholders. The partnership with MTAC, assuming we can get the phones to satisfy the deal, could lead to sales and increased brand awareness through a movie and other marketing arrangements. The joint venture we recently executed with AC Partners is already bearing fruit and will give us excellent revenues, which will be reported in Andiamo’s next quarterly filings with OTC markets, sustained growth, and hopefully at some point a large enough business base to justify the cost expenditure of becoming at the very least an audited and fully reporting OTC company, and possibly much more. Of course, we will continue to pursue the telecommunications industry (more on that later), but as we have learned firsthand that is a brutal market with a huge cost of entry and little to no margins on the hardware portion of the business because of “planned obsolescence” designed to keep the little guys out of the market. Because of these early successes and the great upside potential, ANDI will always strive to be a diversified group of companies with the same growth and profitability goals in mind. And while some will chide us for this decision, we will move ahead undaunted, knowing that we have made huge strides in what really amounts to only 6 months of working time on this business model.

 

Which brings us to the questions of where does that leave us with Utopya and what’s up with them these days? Utopya is still around, although we can’t promise you that it always will be. Their focus isn’t on a retail smartphone product they can bring to market and sell one at a time. In discussions with Ian Brewster, CEO of Utopya, and getting answers to questions asked both verbally and through email, it is clear that small lots of phones are not currently in their distribution plan, but rather they are choosing to focus on larger distributors. Their business model these days is much more globally based and designed to go after large size orders, and possibly even other portions of the telecommunications industry than just selling phones. It is why they have opened up several other companies, as we stated in a recent blog, with similar names. They are seeking business and taking advantage of international opportunities and connections which require them to form other related entities in order to protect their original businesses and assets. This is all very common in business done across multiple countries and continents. Every good business does it from McDonalds to Sony to Nintendo and beyond. Are we saying Utopya is the next Sony? Of course not, but if you don’t dream and plan big you simply never will be, so you can’t fault them for it.
As far as the recent departure of Jason Steinberg from the CTO position at Utopya, a statement I received via email from Ian said:

“Jason is no longer with Utopya or Andiamo and has gone on to pursue other ventures. The entire Utopya team wish him well. We are currently in discussions with possible replacements for the CTO position.”

Upon further discussion, it was disclosed that different people are filling different roles in order to move the company forward. As to Ian’s role, he is one of the founders and still active in the daily business. Don Keer, counsel for Utopya, gave this statement about Ian and his current role with Utopya:
“Ian as one of the company’s founders and its CEO continues to help spearhead the vision of Utopya as we make the decisions necessary to push the company forward. We have many exciting things on the horizon. We assure all of the valued ANDI shareholders we have not gone anywhere, and we are here for the long haul to build Utopya into a great brand.”

It was also generally said, as the CTO position is filled, expect an announcement from Utopya on the future roles everyone will play and the positions they will hold.
With other items related to Utopya, Andiamo was asked about Teralight and we were told Utopya is “speaking to Teralight in regard to software and hardware opportunities”, and they “hope these talks create amazing opportunities for both companies.”
On the relationship between Pheonyx and Utopya, “there is no connection. Pheonyx is a separate company.”

 

Seeing these answers from Utopya and their commitment to a globally directed business model, the question becomes: where does this leave ANDI Mobile? To which we would answer that this type of focus by Utopya is the exact reason ANDI Mobile was started, meaning ANDI Mobile’s mission is to deliver on the promise of retail smartphone sales becoming a reality. And in our minds, the definition of “retail smartphone sales” is for the company to be able sell smartphones direct to consumers, one at a time, via online, kiosk, or brick-and-mortar locations. And since we started the ANDI Mobile division, we have found out, for a multitude of reasons, this is much easier said than done. One of those reasons is the cost of entry for hardware inventory, meaning the only way we have found, so far at least, to acquire a competitive smartphone which can be resold at a fair price is to spend a few hundred thousand dollars on inventory, packaging, and such, with no guarantee those phones will sell before they become obsolete with the next technology upgrade cycle. On that front, we are talking to several manufacturers with the hopes of getting a cost effective, unmarked smartphone we can purchase in small quantities and brand ourselves for direct sales to consumers. The second issue, since hardware sales is low margin and the market is flooded with inexpensive phones, is that ANDI Mobile needs a nationwide cellular service it can resell along with the phone to gain recurring revenues for the company. To solve this, we have spoken to several companies and are currently waiting on information from two final service providers. Hopefully one of them is the solution to this problem. All of that being said, in thirty days we will be reviewing ANDI Mobile and the progress it has made towards accomplishing its mission of delivering retail smartphone sales to the Company. If it hasn’t accomplished the mission by that date, then, dependent upon the evaluation’s results, we could decide the retail smartphone business is just not the right place for Andiamo to be and close down the ANDI Mobile division. Either way, a decision will be made on the future of Andiamo and the telecommunications business. We certainly hope it is something we can do, but seeing what Utopya, with all their experience, and our work has yielded so far, the better business decision may be to focus our energy, time, and resources in a more profitable direction. It might not be what people want to hear, but it will be the totally transparent truth.

 

On the subject of the Series B Convertible Preferred shares, while we won’t discuss specific shareholders and their holdings in Andiamo, we will make everyone aware of an agreement concerning the purchase of these shares. If everyone remembers, in a blog post from January 18th where the question of ANDI being for sale was addressed, a part of the post from our CEO stated:

“What I am looking for is an investment partner who is willing to help the Company with funding and shoring up our debt structure, and for that I am willing to offer up PART of Andiamo but not all of it. Hopefully recent discussions will bring us just such a partner, but even if it doesn’t, I have no intention of selling Andiamo any time soon.”

From those discussions an investment partner was found, and he has finalized an agreement with the majority shareholder of Andiamo’s Series B Preferred shares to purchase those shares. As per the agreement, the Buyer has until September 2019 to do so, and as such the Holder of the Series B shares cannot convert anymore shares until then, and then only if the sale has not gone through. There is also an option to extend this purchase date for an additional 90 days, meaning that worst case scenario, even if the sale isn’t finalized, none of those shares can be converted until at least December of this year.
Further news on these shares is that when the Buyer does finalize the purchase of these shares, he has committed to either retiring the shares completely or at the very least changing the conversion ratio down to something much more manageable for the Company capitalization structure and far below their current 2,000 to 1 ratio. Either option is a great help to the Company and would be a welcome relief from pressure upon the stock and Andiamo’s future viability as a public company.

 

We know it was a lot to digest, but felt all of it, both the good and the bad, needed to be said. Hopefully it answered more questions than it raised. Just know we are always striving to move ANDI forward, sometimes behind the scenes and sometimes out in front of them, but either way we have the Company’s best interest at heart and will constantly be on the lookout for more and better ways to make Andiamo a profitable and growing company.

Thanks for your continued support!