HRD harvestroad limited

emerging situation

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    The following was the lead article in yesterdays "The West Australian" IT section
    Foreign soil aids software harvest
    By Hugh Halloran
    PERTH software developer HarvestRoad has kicked off a new marketing push with the signing of two overseas deals with an estimated value of more than $500,000.
    The company sold its flagship software HarvestRoad Learning Content Management System (LCMS) to both the University of South Florida and the Emerge Consortium, which consists of five universities and colleges in the Netherlands.
    HarvestRoad LCMS is an internet browser-based content repository for collecting, managing and sharing any kind of content material used in the delivery of online courses.
    The exact values of the sales were not immediately clear, because the two buyers will pay in US dollars and euros respectively and the total payments will take the form of annuities over several years.
    But HarvestRoad executive chairman Grame Barty said previous similar deals had averaged $US180,000, indicating that together the software sales could be worth "well more" than $500,000.
    Mr Barty said the sales did not necessarily represent a great deal in upfront dollars, but they would provide the company with steady income in the near future.
    He claimed the company expected to sign up another US customer soon, and there were a "number of other parties" interested in the LCMS software, including corporate customers.
    As a result of the Dutch deal, HarvestRoad was now "probably the leading provider" of learning content management systems in the Netherlands - which itself was arguably the world's leading country in the use of such systems.
    The deal with Emerge should also propel HarvestRoad's cashflow beyond the point of breaking even in the June quarter, after it predicted in its March quarterly report that both sales receipts and operating expenses would total $750,000.
    A non-renounceable rights issue of 10.65 million shares to raise a further $850,000 closed recently, and Mr Barty said although there had been a shortfall in the number of existing shareholders taking up their full entitlements, he expected that shortfall to be taken up by other parties.
    He and the other directors had taken up some of their personal entitlements.
    Mr Barty said that with a long period of costly research and development past and the capital raising virtually out of the way, the company was now able to focus on fixing its sales process.
    It would do this by developing a more consistent revenue line and shortening its sales cycle and cash collections.
    "Our bottom line looked pretty sick while we invested in R&D (but) that essentially was completed in January," Mr Barty said.
    "We launched our product on a global basis at the end of February, and we have global distribution partners in place with continuing interest in the product and we're beginning to ramp it across three markets, which I think is pretty exciting.
    "The worst thing we could do now is to have developed a couple of million lines of code - serious intellectual capital - and keep it in the cupboard. Our shareholders didn't ask us to do that, they don't expect us to do that, they expect us to go out and sell it."
    The Emerge deal was typical of a growing trend for universities to form consortia to buy the software, a process that allowed for costs and infrastructure to be shared while each university was able to retain control over its own work and brand.
    But as well as universities, HarvestRoad was aiming to sell its LCMS to the corporate market and education departments, both state and national.
    Mr Barty said the company hoped to confirm further sales in the UK in the next month and corner a share of the market before bigger software companies were able to develop similar programs.
    This he expected to occur in the next 12 to 18 months.
    It had not yet happened because a lot of big companies had disbanded their research and development teams - which would have focused on developing similar software - after the dotcom downturn that started in 2000.
    Companies that had been able to stay focused and specialise were in a strong position and it would be very hard for large organisations to capture the small firms' intellectual capital quickly.
    "What we do see is that the degree of interest in the larger vendors partnering the smaller vendors is probably the strongest I've seen in my IT career," Mr Barty said.
    "That's a good outcome, it gives us opportunities going forward that we've never had before. Even in the dotcom boom you couldn't get heard above the noise. Now it's very clear."

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