MDI takes over LearnSafe

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Saturday, September 1, 2007

SAN ANTONIO--Effective July 11, command-and-control software maker MDI now owns the "Safe Initiatives" brand portfolio, formerly owned by Stratis Authority, which at one time was the single largest investor in MDI. MDI will now discontinue the use of the Stratis name, which MDI purchased, and move all "Safe Initiatives" operations, formerly housed in Miami, to its own headquarters here. Terms of the transaction have not yet been fully released, however, in a July 24 letter to investors, president and chief executive officer J. Collier Sparks did shed some light on the relationship between Stratis and MDI.
After agreeing to sell Stratis 5.3 million shares of MDI stock for $2.6 million, to be paid over six months, "the financial backing for Stratis Authority deteriorated to the point that it could not pay for the shares without jeopardizing its financial stability." Instead, Ridgemont Investment Group, the principal shareholder in Stratis, will purchase the shares and have control over those 5.3 million shares "once MDI receives payment for them." In exchange, the Safe Initiatives were to be "delivered to and operated by MDI."
Sparks and MDI vice president of sales and marketing Mike Garcia did not make themselves available for comment or respond to questions delivered via email.
Most notably, MDI now has full control of the Learn Safe (Work Safe, Play Safe, and Live Safe are less developed, but in the pipeline) initiative, for which it was previously the point entity for physical security (search "MDI and LearnSafe" at www.securitysystemsnews.com) and which has won a number of contracts to provide all-inclusive security systems for school districts in Texas and other southern states. The initiative provides electronic security systems, but also includes such services as background screening, psychological profiling, manned guarding and IT security for educational entities both public and private.
The acquisition of the "Safe Initiatives" also includes the unique funding model by which Learn Safe effectively "gives" the security systems to schools. The schools outsource their payroll and benefits services to an MDI-controlled professional employer organization, or PEO. The profit the PEO makes in handling those duties for the school districts allows MDI to provide the security systems and services.
Also as part of the transaction, James Vandevere, chief executive director of Stratis Authority, resigned from the MDI board of directors as he became an employee of MDI and was no longer independent of the company and thus was in violation of NASDAQ rules about board membership. He was also a major stockholder in MDI. It is not yet known if he retains ownership of that stock. Other former Stratis employees Jack Walser and Kelly Tomeo are also now employed by MDI and working on the Safe Initiative.