Spokane Journal of Business

MEISolutions.com signs deals that spur growth

Pacts predicted to bring millions in added sales to software company here

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MEISolutions.com Inc., a Spokane-based maker of software for retail transactions, has signed two agreements that could bring it millions of dollars in new sales and royalties over the next three years, says John E. Molloy, the companys chairman and CEO.

The new pacts have kick-started a hiring drive at the 16-year-old company, and spurred plans for it to move into a new office space thatll be nearly double the size of its current Spokane Valley location.

In one of the arrangements, the company has signed an agreement with Vital Processing Services, a Tempe, Ariz.-based credit-card transaction processor, through which MEISolutions.com will provide the operating software for Vitals credit-card transaction machines, which commonly are used at all types of businesses. That agreement alone could be worth millions in sales during the next three years, and perhaps as much as $300 million in all during that time, Molloy asserts. Vital Processing says it handled 5 billion transactions in 1999 and operates more than 1 million terminals. It has put on its Web site an announcement from MEI of the agreement between the two companies.

In the other agreement, MEI-Solutions.com has sold the patent rights to its target loyalty system, called Sierra Share Builder, to Tampa, Fla.-based Catalina Marketing Corp. to provide operating software for coupon machines in supermarkets. That deal could translate into $4 million in sales and royalties for the Spokane company in the next three years, he says.

Because of the new agreements, MEISolutions.com has hired 40 people in the past 90 days, giving it 70 employees companywide, Molloy says. The company plans to add another 20 workers by the end of the year, he says, altogether tripling its staff size this year. The company had employed 80 people at its peak four years ago before paring down its staff.

To accommodate its currently growing work force, the company has agreed to lease a 48,000-square-foot building currently under construction in the Liberty Lake area, Molloy says. It hopes to move this fall into that building, at 2218 N. Molter, from its current 25,000-square-foot office space, at 9922 E. Montgomery.

The exterior of the new building is completed, and its developers have applied for a building permit to do the interior work there, says Steve Schmautz, who is developing the building with Bill Lawson through a company they formed called Jackson IV LLC. Schmautz expects the $4.8 million building to be ready for occupancy in November.

Separately, MEISolutions.com earlier this year opened a technology-development office in San Antonio, Texas, even before singing the two new agreements, Molloy says. That office employs five people.

Its an exciting time for this company. By the end of 2001, well have record-breaking numbers, Molloy says, although he declines to disclose current annual sales. Three years ago, the company reported annual sales ranging between $4 million and $5 million, and annual sales obviously would be substantially higher than that if the new agreements fulfill the potential that Molloy expects.

Even as it grows with some of its established products, MEISolutions.com hopes to unveil four or five new software products in October, Molloy says. He declines for now to disclose details about those products, but says one will be an Internet-based transaction-monitoring software that will allow all parties involved in a transaction to monitor its progress via a merchants Web page.

The new products are part of an effort by MEISolutions.com, which formerly was known as Micro Enhancement International Inc., to shift its focus toward becoming an Internet-based software company.

It traditionally has made software that controls or works in conjunction with the cash-register systems at retail outlets, especially supermarkets. Molloy says it has adapted all of its established software products for use on the Internet, in hopes that they will appeal to a wide range of Internet-based business, namely those involved in business-to-business transactions.

The companys Internet-based focus, coupled with its recent boon in business, has rejuvenated talk of the company going public. Molloy says the company currently hopes to make an initial-public offering next summer.

The company had planned to hold an IPO five years ago, but dropped those plans shortly thereafter. It later sued the Coopers & Lybrand LLP accounting firm and that firms former managing partner here, Gordon Budke, accusing them of accounting malpractice, breach of contract, and negligent misrepresentation, charging that the accounting firm failed, on a timely basis, to prepare financial statements MEI needed to gain approval of the planned IPO.

Molloy says that case currently is on appeal. A jury found that Coopers & Lybrand was negligent, but that the firm didnt cause the stock offering to fail and therefore didnt owe any damages.

Linn  Parish
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Editor Linn Parish has worked for newspapers and magazines since 1996, with the bulk of that time being at the Journal. A Montana boy who has called Spokane home for some time now, Linn likes Northwest trails, Deep South foods, and lead changes in the ninth inning.

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