Wednesday, September 16, 2015

IDI - A Potent Legacy Advantage $IDI

Below is an excellent new piece on IDI Inc (IDI) from Jeff Geygan and his team at Global Value Research Company. They understand the IDI story as well as anyone. I'm publishing this with permission. Stay tuned for the next in their series:

IDI, Inc. (NYSEMKT: IDI) as it exists today was created through a series of events that allowed for the combination of an extraordinary private technology company with a struggling public Chinese outdoor advertising company.

The new company describes itself as an information solutions provider focused on the data fusion market. Effectively IDI collects bits of information from thousands of data bases, links them to create previously unseen relationships, fuses it through proprietary computer algorithms, then reduces and analyzes the output in ways not evident at the time of input.

However, to understand the investment opportunity with IDI requires a review of its potent legacy. This article is the first in a series that will highlight the influences of the late Hank Asher on the technology and people that make up IDI today. His work sets the stage for what is one of the most intriguing and socially important industries today - data fusion.

The Legacy Begins:

Wikipedia describes data fusion as the process of integrating multiple points of data and knowledge, representing the same real-world objects, into a consistent, accurate, and useful representation. The expectation is that fused data is more informative and synthetic than the original inputs.

Hank Asher has been called the "father of data fusion." A December 2004 Vanity Fair article begins with a quote from Asher:

"It's the amalgamation of literally thousands of sources of data," Asher explains. Many of the databases in Accurint [now owned by LexisNexus], he says, are public information. Part of Asher's genius was to realize, more than a decade ago, that many local-, state-, and federal-government databases were available to anyone who wanted to buy them… Asher says he spent tens of millions of dollars assembling a wealth of data no one else can match.

Asher's humble beginnings were as freelance computer programmer. In 1992, he started a business called Database Technologies, LLC that used clusters of PCs to provide parallel supercomputing in place of more expensive mainframes and mini computers. His first contract was a data mining application for the insurance industry performed on records bought from the Florida's Department of Motor Vehicles.

Asher and his associates were among the best in the business. They made hundreds of millions of dollars developing and consistently improving their technology.

Fast forward to 2009, when Asher formed TLO (The Last One), which he described as having technology 100 times more powerful than that of his prior company. Asher died suddenly on January 11, 2013, at the age of 61, before he was able to fully exploit the genius of his work.

During his career, Asher had influenced many individuals, who would later have a material impact on the data fusion industry. Most important of those was Ole Poulsen, Asher's chief technology architect. Poulsen continues to be involved with data fusion today as IDI's Chief Science Officer.

Building of the Legacy:

Asher's data fusion ventures began when he built and later sold several companies, including Database Technologies (DBT), formed with Roy Brubaker in 1992. Database Technologies and Patlex merged in 1996 to form DBT Online. Asher sold his shares of DBT Online in 1999 for $147 million.

Asher next established Seismic Intelligence or Seisint, Inc. in 1999 with co-founder and CEO Michael Brauser. Ole Poulsen acted as Chief Science Officer, while Derek Dubner was appointed Corporate Counsel. Edirect, a subsidiary of Seisint, acquired Naviant in 2001. In 2002 Naviant was sold to Equifax, Inc. for $135 million. Equifax is a consumer credit reporting agency, considered one of the three largest American credit agencies along with Experian andTransUnion.

While at Seisint, Asher developed MATRIX (Multistate Anti-Terrorism Information Exchange) for the Florida Department of Law Enforcement as a tool to help find potential terrorists. Control of the system was handed over to law enforcement officials, although Seisint continued to house and operate it. After a demonstration of the system at the White House in January 2003, Matrix received US$4 million in grants from the U.S. Justice Department and the program was earmarked US$8 million by the U.S. Department of Homeland Security. This was just one of Asher's many data fusion innovations.

In 2004, Seisint was purchased for $775 million by Reed Elsevier Group, parent company of LexisNexis. At this point Asher and his team signed non-compete agreements.

About the same time Asher's sister was dying of cancer, which led him into cancer research data mining. He formed JARI Research Foundation, a philanthropic endeavor to support breakthrough cancer research. The foundation evolved into JARI Research Corporation a year later, in cooperation with the Mayo Clinic. He remained out of the commercial data fusion business until 2009 when his non-compete agreement expired.

In 2009 Asher and Poulsen co-founded The Last One, LLC (TLO), which Asher claimed would be his final data mining company. Kenneth Hunter was appointed CEO & CCO, Derek Dubner was General Counsel, James Reilly was Senior VP Sales & Business Development, and Dan MacLachlan was CFO. It is interesting to note that Asher, Poulsen, Hunter, Dubner and MacLachlan all worked together at JARI.

The January 2013 death of Asher marked the first in a series of events that would eventually lead to IDI. After Asher's death, his two daughters, Desiree and Carly, assumed control of TLO as co-CEOs. The company was forced to seek Chapter 11 bankruptcy protection on May 9, 2013. Armando Escalante, a former executive with LexisNexis, was hired to run TLO throughout the bankruptcy proceedings.

Several notable businessmen formed Data Acquisitions Group, LLC (DAG) in May of 2013. They were prepared to make a $100 million plus offer to buy TLO while it was in bankruptcy. DAG's members included Dr. Philip Frost, a director of several companies including Miami-based Opko Health, Inc.; Jules Kroll, founder of Kroll Inc., a risk consulting/cyber security firm; and Thomas Glocer, former CEO of Reuters. Other DAG members included Michael Brauser, Michael Patipa and Jay Bernstein.

TLO was finally sold on Dec 12, 2013 to Trans-Union Corp. for $154 million. LexusNexus was left protesting, apparently hoping to add TLO to its previously acquired Asher business, Seisint.

(There remains an open lawsuit between IDI, Inc. and Trans-Union Corp. that has been in the US Court system for close to a year. There have been over 200 court documents filed. More on this complicated lawsuit in the next article.)

Mike Brauser and Barry Honig, business partners since 2003 through Marlin Capital Partners, LLC, then formed The Best One, Inc. (TBO) on September 22, 2014. TBO's management team included Derek Dubner - CEO, Ole Poulsen - Chief Science Officer, and James Reilly - President. Both Brauser and Honig were Directors of the company.

The following dates and events are significant:

· Oct 02, 2014: TBO acquires Interactive Data, LLC (an Atlanta based LLC)

· Dec 14, 2014: Tiger Media, Inc.(ticker IDI) initiates acquisition of TBO

· Mar 21, 2015: IDI, Inc. (formerly Tiger Media), completes acquisition of IDI Holdings, LLC (formerly The Best One)

On July 23, 2015 the company raised approximately $10 million in equity capital in a registered direct offering with a sophisticated investor, Mitchell Kopin of Intercoastal Capital LLC.

This capital raise provides ample cash and reinforces IDI's balance sheet. IDI has an asset light business requiring minimal amounts of growth capital. The capital raise coincided with the closure and final charge off of the Chinese Outdoor Advertising business. This brings to an end a business that was unable to produce as expected and potentially provided less cash than budgeted by IDI's successor management team.

The Other Company:

The last point and potentially the most interesting part of this article relates to a private company that may become the basis for a peer valuation.

In 2004 a Palo Alto start-up called Palantir Technologies was formed. Palantir is a privately held data fusion company. Its customers include various US Government agencies such as the FBI, the CIA, the Department of Defense, as well as many state law enforcement agencies.

Palantir advertises two data security products, Gothom and Metropolis. According to Palantir, simplistically, they function as follows: gather data from multiple sources; fuse the data; tag-secure-track the data; produce useful data analytics.

Sound familiar?

Palantir's co-founder Peter Thiel was also a co-founder of PayPal and co-authored of Zero to One. In his book he briefly discusses Palantir, describing the business as offering cutting edge data mining services. SEC filings confirm Palantir's recent equity capital raise valuing the company at $20 billion. Thiel states in Zero to One that Palantir could generate as much as $1 billion in sales in 2014. Although rough, this gives Palantir a price/sales ratio of 20x. For more on the company see

In the absence of any peer public companies, Palantir may be the only useful comp to IDI.

This unusual investment situation with IDI began when Mike Brauser had the foresight and wherewithal to reassemble an industry experienced team with a proven record in building and selling data fusion businesses. This time the team has a public vehicle and the financial support of billionaire investor Dr. Frost, who currently owns over thirty percent of the company. IDI has morphed into a cutting edge data fusion business from its former Chinese operated outdoor advertiser business.

Through Hank Asher's inspiration and genius, data fusion exists. IDI is the only pure play publically traded company available. Asher's legacy team members operate this business, and have proved they can build and sell this type of company. The team will soon announce its newest product launch, additional customer wins, and growing revenue.

Stay tuned for the next in this series.

More on Jeff and his team here: .

More on IDI here.

1 comment:

secure iDeals vdr said...

The new company describes itself as an information solutions provider focused on the data fusion market. Effectively IDI collects bits of information from thousands of data bases, links them to create previously unseen relationships, fuses it through proprietary computer algorithms, then reduces and analyzes the output in ways not evident at the time of input.