ANTs Software Chairman and CEO Addresses Shareholders on Company Progress

Thu Mar 17, 2011 4:10pm EDT

* Reuters is not responsible for the content in this press release.

ANTs Software Chairman and CEO Addresses Shareholders on Company Progress

ANTs software inc. (OTCBB: ANTS), a leader in database consolidation solutions, today issued an executive letter by his Chairman and CEO, Joseph Kozak, to address shareholders on the general state of the business and key corporate areas. Next is the letter.


Dear ANTs Shareholders,

It has been too long since our last in depth update and I would like to take this time to share with you recent developments within the company. While we try to post information on our corporate blog at regular intervals, from time to time it is better to communicate directly to the shareholders.

Strategic Alliances

In the area of strategic alliances, we continue to enjoy a very strong relationship with the IBM Information Management division. The OEM agreement with IBM will prove to be a major milestone in the history of ANTs. Every partnership experiences bumps in the road and we have had our share as well. In every case, however, both parties had a lively discussion about the issues, agreed on a resolution, and moved forward. Allow me to provide some examples of some speed bumps encountered during the past year:

  • Initial contracts were a bit light on revenues to ANTs and did not include any services. In the spirit of partnership IBM addressed both issues at the first of this year.
  • As we know, the IBM DB2 SQL Skin is a complex product designed to make application re-hosting far easier for customers to reduce cost and complexity within their organizations. According to major analysts, there is no comparable product on the market and the competitive barrier to entry grows with every enhancement we make to the product. We encountered some issues with performance and stability in a small number of projects. Upon evaluation, it was determined that both SQL Skin and DB2 were in need of additional functionality. These challenges had to be resolved before we could continue to sign new customers. Both IBM and ANTs responded aggressively and fix software patches are now in place for current customers and on their way to general availability for new customers. We did, however, experience a three month pause in new go-to market initiatives until all major open issues could be addressed.
  • Later this month, we will meet with IBM executives to get back on track for the global rollout. The three month pause in the sales campaign was painful for a company like ANTs but necessary for IBM since it protects their brand. We learned a few hard lessons. One, IBM is committed to success and stepped up and added code immediately to their DB2 flagship product. And two, we need to expand our reach so as to not be so dependent on IBM.

We believe IBM has a plan for ANTs, due to their signing of the OEM agreement. We also believe that IBM’s plan includes a timetable providing them an opportunity to measure revenue generated and our ability to develop a solid software solution and address any issues along the way. The timetable is subject to change, especially if another vendor were to start expressing interest in ANTs. It’s important to remember that IBM put their global brand on our product and agreed to stand behind the product and support the customer. This was a major commitment on the part of IBM that should not be discounted. I would encourage shareholders to take some time to research IBM OEM agreements and the eventual outcome of the partnership. I believe that the more shareholders learn about IBM’s past history in dealing with IBM OEM partners the more comfort shareholders will have.

The ANTs Software Stock

The ANTs.OB stock has experienced heavy trading and has had some selling pressure as of late. We believe there are multiple causes and I want to share one such cause you may not be aware of at this time. In 2009, the Company initiated an internal program for its employees to acquire Company stock. The Company’s intent was to incorporate the ANTs stock into an existing 401k plan so that participating employees would not need to recognize revenue relating to the value of ANTs stock until those employees made withdrawals from their 401k plans. We submitted a plan for approval to the IRS. Unfortunately, the IRS rejected our plan, thereby accelerating the time at which our employees have had to recognize the value of their ANTs stock for income tax purposes. The ANTs stock was recently distributed to all current and former employees who participated in the program and, in many cases, employees sold shares to cover their tax exposure. We expect that this selling may have contributed to the downward price pressure. We also expect that some new investors may have sold stock after an initial investment. We believe that long term investors in the Company should view current weakness as an opportunity to acquire stock.

Concluding Thoughts

Our management team, our board of directors, and all of our investors are acutely aware that revenues are needed to prove the technology is being accepted in the market. We launched our current product line in late May 2010. In retrospect, the IBM team did an excellent job in securing multiple customers in the last half of 2010. They started with no pipeline, little education for the sales team, and no production ready reference customers. The initial customers are moving forward into production and IBM is creating case studies to share with upcoming customers. The initial launch was for DB2 for LUW (Linux, UNIX, and Windows) platforms only and the DB2 for z/OS (mainframe) product is scheduled for general availability later in 2011.

In summary, we’ve traveled a long, hard-fought path to get to where we are today. The ability to have reference customers, a mainframe version of the product, a successful global rollout, meaningful revenues, and interest from other companies in ANTs Software, will go a long way toward achieving our common goal. The entire company is dedicated to making ANTs a success and I truly believe it is a matter of when and not if. We need to continue to communicate with our investors and we commit to doing so via shareholder updates and our corporate blog.

As always, please feel free to learn more about ANTs Software and read our company blog at http://www.ants.com/blog or contact us at investorrelations@ants.com.

Thank you as always for your continued support.

Joseph Kozak.

Chairman of the Board & Chief Executive Officer.

ANTs Software Inc.

www.ants.com


Safe Harbor Statement

This press release and shareholder letter is neither an offer to sell, nor a solicitation of offers to purchase securities.

This press release and shareholder letter contain “forward-looking statements” within the meaning of the federal securities laws, including statements concerning financial projections, product development activities and sales and licensing activities that are subject to risks, uncertainties and other factors that could cause actual results or outcomes to differ materially from those contemplated by the forward-looking statements. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements that are not historical facts and are not guarantees of future performance. These statements are sometimes identified by words of condition such as “should,” “could,” “expects,” “may,” or “intends” and other words of similar meaning. These statements are based on our current beliefs or expectations and there are a number of risks and uncertainties, known and unknown, that could cause actual results to differ materially from those intended or anticipated.

Such risks include, without limitation: that the Company may not meet its revenue projections; the projected revenues might not meet the Company’s business and financial goals; the market may not respond positively to the IBM DB2 SQL Skin or ANTs Compatibility Server; the Company’s strategic alliances may not have positive results; the Company may face challenges from competition, problems encountered in commercializing the ANTs technology, undetected infringing technologies non-infringing competitive technologies, difficulties experienced in product development, roadblocks experienced in sales and marketing activities, longer than expected sales processes, difficulties in recruiting knowledgeable and experienced personnel, possible problems in migrating applications using the IBM DB2 SQL Skin or ANTs Compatibility Server, and potential problems in protecting the Company’s intellectual property; expense reductions may not occur as planned; and necessary financing for continued operations may be unavailable or insufficient to fund continued operations.. Further information concerning these and other risks is included in the Company’s filings with the Securities and Exchange Commission, including the Company’s most recent quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2010. The Company undertakes no obligation to update or revise such forward-looking statements to reflect events or circumstances occurring after the date of this shareholder letter.

Investor Relations:
For ANTs software inc.
Todd Fromer, 212-896-1215
tfromer@kcsa.com