MOD Systems has had a very busy year punctuated by the launch of our first two commercial customers. We have developed an end-to-end digital content distribution system that delivers digital movies and music to retail and other out-of-home locations through self-service kiosks. MOD is the only company in the U.S. with broad rights from music labels and movie studios to deliver premium entertainment content in a retail setting using SD cards, USB drives, and flash memory in portable media players and smartphones.

We have more than 60 digital movie and music kiosks live with two retailers and other strategic locations, and a number of additional deployments in contract or negotiation. The solution performs exceptionally well, achieving close to 99.9% uptime, and more than 80% of customer survey respondents are either likely or highly likely to recommend it.   

While we’re pleased with our product development and performance to date, we need to take important and appropriate steps to ensure the long-term health of the company.  We are exploring a number of strategic alternatives to ensure a more scalable financial model and continued growth, and are in discussions with our major shareholders and other third parties about a number of options, including potential strategic transactions and additional financing.  

As part of this evaluation, MOD has decided to streamline our operations. We are slowing the pace of our new product and feature development while we learn from existing customers, and beginning to work more closely with partners to help fund future market development and deployment activities. We are also implementing a series of cash conservation measures to reduce costs, including a reduction in sales and marketing spending, and a reduction in the number of employees and contractors by 35%. (Customer-focused operations and support services are not affected by these changes.)

Having to say goodbye to exceptional employees is one of the most difficult decisions we as a company can make. We have an incredible team of highly talented professionals here who helped create and support the products we have in the market today. We recognize the tireless and passionate contributions they’ve made to the company, and we just cannot thank them enough for their commitment.

While these are incredibly difficult decisions, they are the right ones for the business at this time. We expect to have positive news to report at CES in January where we are demonstrating our solutions to the industry in a suite at the Las Vegas Hilton and appearing in partner booths on the show floor.


Thanks,

Anthony Bay
anthony.bay@modsystems.com
CEO, MOD Systems