CMG Holdings, Inc. "Chairmanís Letter" April 2014
Chicago, IL, May 17, 2014 --(PR.com
)-- "CMG Holdings, Inc. (OTCBB-CMGO). For CMG Holdings, Inc., 2013 was a year of tremendous changes and restructuring which we believe has resulted in a solid foundation for future growth and exciting business potential which we are confident can result in shareholder value and returns.
"I, along with a number of other CMG shareholders have for a long time seen the potential in XA, The Experiential Agency, Inc. ('XA') and I initiated actions to try to ensure that XA’s potential is realized. We have successfully restructured the entire CMG Board of Directors, beginning with the addition of advertising industry veterans Ronald Burkhardt and Jeffrey Devlin, with that sole goal.
"After spending a significant amount of time analyzing XA and its business and operations, I reached the conclusion that XA needed change from the top. Mr. Burkhardt is leading this initiative with tremendous vision and a desire to create the industry leader in the experiential advertising and marketing space. As set forth in our annual report on Form 10-K, Mr. Burkhard, along with Mr. Devlin and the rest of the management team are making changes to allow XA to be more dynamic and proactive in order to win more business and serve its clients better. Mr. Burkhardt has developed a strategy for XA to enhance its reputation in the market and to become an “Experiential Planet,” a one-world branding entity where clients can realize all their brand marketing/engagement and outreach objectives.
"Already, XA’s preliminary un-audited numbers show that its revenues have increased by more than 60% for the three months ended March 31, 2014 as compared to the three months ended March 31, 2013 and its net income has increased by more than 60% as well. We believe that this trend can continue through the remainder of this year.
"In order to grow XA’s business, it is pursuing a series of acquisitions and strategic alliances and has initiated discussions with smaller experiential branding/events companies and social media and digital marketing firms. In addition, XA plans to explore the acquisition of a boutique advertising/branding agency to further XA’s reach as a one-stop shop and broaden our engagement umbrella. XA also plans to expand by leveraging its blue-chip roster of relationships and adding key staff to grow current business in New York, expand our PR expertise and retainer revenues in our Chicago headquarters office and ramp up and relocate our office in Los Angeles from downtown to West Hollywood, where we will be better positioned to attract TV, entertainment and movie business. XA also plans to seek to open an office in the social and film hotbed of Atlanta where there are key opportunities and key relationship networks.
"XA also plans to add high-gross margin generating corporate training and video mapping divisions and to establish “XA Custom,” where high-profile celebrities and/or high-net worth individuals can access our unique skill sets for private or personal engagements.
"In order to provide better client service, XA is seeking to create/identify creative 'swat teams' capable of jumping in quickly to handle excess workloads and to increase our response time in pursuing new opportunities as they arise.
"XA plans to launch a multi-media branding campaign to broaden awareness of the XA brand and call attention to its creative leadership in the experiential business. XA has already commenced a weekly email outreach campaign to 5,000 key corporate and meeting event planners in New York, Illinois, California, Georgia, Texas and Florida.
"The XA website is being re-designed and re-launched to reflect more modern graphics, new client content, and to make it fully responsive on all platforms, including mobile. XA has also purchased state of the art Apple computers and equipment for its New York office enabling even higher quality work produced at a faster rate. In addition, they are used for video editing, which is a billable profit center.
"During 2013, CMG also made the decision to enter into a business with what we believe to be tremendous potential – eSports Gaming. Many of us are familiar with the growth of the online gaming industry. However, upon looking at the actual statistics, I was frankly stunned to see that according to Newzoo BV there are 163.9 million online gamers worldwide with 15.38% of them in the United States who play video games often enough for it to be a full-time job. As a result, we believe that eSports is not just a growing segment within the gaming industry, but within the much larger entertainment industry. It is not restricted by nationality, political affiliation, or socioeconomic status. eSports principal barrier is a simple one – internet access.
"I am truly excited to have completed our acquisition of Good Gaming, Inc. recently, having started investing in its business and infrastructure during 2013. Good Gaming’s goal is to complete its web platform and provide a subscription based service to gamers to improve their gaming skills allowing them to compete in gaming tournaments or even to become professional gamers. Good Gaming has already signed veteran talent in the gaming community and is broadening its network of veteran and pro players.
"Good Gaming recently established a partnership with a leading third party provider of an eSports tournament management system. This partnership will provide a crucial backbone infrastructure for Good Gaming’s proprietary tournament design and has done so at less than 1/10th the cost originally expected due to diligent work by our IT development team and the innovation of our partner.
"Good Gaming anticipates that it will be able to announce key publisher partnerships and agreements in the coming months that can place it near the top of eSports entertainment and solidify its projected membership base.
"During 2013, CMG was finally able to begin to monetize its stake in its former subsidiary, AudioEye, Inc. by sale of its shares held by CMG. We have already deployed this money to build out the business of Good Gaming and to pay off and eliminate 'toxic' debt that was negotiated by CMG’s former management. We now have the fresh start that we needed to move forward.
"The CMG website has been completely redesigned with the goal of providing our shareholders and other interested parties with current and complete information. I hope that you will visit our new website once it is launched in the next several weeks.
"As announced by CMG last week, I formally joined CMG as Chairman of the Board of Directors and as Chief Executive Officer transitioning from my former consultant position. I am confident in the foundation I have helped to build, so much so, that the bulk of my compensation is in the form of stock options which were granted at the market price. Quite simply, I go as CMG and its businesses go. I started out as a CMG shareholder, and, for the most part, I remain in the same boat.
"I appreciate the patience of all of our shareholders and I will continue to work feverishly to reward it."
Chairman & CEO
Caution Regarding Forward Looking Statements
Certain statements in this news release are forward-looking, including (without limitation) expectations or guidance respecting customer contract expansion, growing revenues and profits through organic growth and acquisitions, attracting new business that will increase the Company's revenues, continuing to maintain costs and consummating any transactions. Undue reliance should not be placed on such forward-looking statements because the matters they describe are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond the Company's control. The Company's actual results, performance and trends could differ materially from those indicated or implied by such statements as a result of various factors, including (without limitation) the continued strengthening of the Company's selling and marketing functions, continued customer satisfaction and contract renewal, continued availability of capable dedicated personnel, continued cost management, the success and availability of acquisitions, availability of financing and other factors, as well as by factors applicable to most companies such as general economic, competitive and other business and civil conditions. Information regarding certain of those and other risk factors and cautionary statements that could affect future results, performance or trends are discussed in the Company's most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and other filings made with the Securities and Exchange Commission from time to time. All of the Company's forward-looking statements are expressly qualified by all such risk factors and other cautionary statements.
Source: CMG Holdings