VANCOUVER, Sept. 22 /CNW/ - Chalk Media Corp. ("Chalk Media") today issued the following update letter from its President and Chief Executive Officer, Stewart Walchli:
I would like to take this opportunity to provide you with an update on our activities and progress over the past several months.
Year-to-Date Corporate Highlights:
- Earned record revenues of $1,605,053 for the six months ended June 30, 2004, up 85% from the same period in 2003 - Sales backlog of $2.8 million as at June 30, 2004 - Signed new deals with ATI, Bell Sympatico, Business Objects, Groupe Archambault Inc. (Quebecor Media), Hewlett Packard, HSBC, Intel, Lexmark, Samsung, Sony, Symantec, Targus and TELUS - Launched new television program, Spy Academy, along with interactive website with Corus Entertainment's YTV - Signed a strategic marketing agreement with Future Shop - Signed Telus as the title sponsor of the Dave Chalk Connected television and in-flight programs - Launched the B.C. Children's Hospital Internet Café for Kids with TELUS - Appointed Calvin Mah, CA, to position of CFO and Carrie Harrison to the position of Director, Sales & Marketing
Launch of Spy Academy & Dave Chalk Connected Season II
On September 11th, we launched the first season of Spy Academy. Produced in partnership with YTV, this kids' reality game show takes an innovative step towards the future of television and provides "tweens", ages 9-12, with the ability to participate in the program, online, as they watch. In each episode of Spy Academy, six techno savvy kids, paired in teams of two, use the most recent gadgets to navigate through a series of tests to see if they have what it takes to earn the title of "International Super Spy."
Spy Academy is particularly exciting for us as it is the first program that we have produced that targets the tween demographic. Furthermore, the show provides excellent branded content opportunities for our sponsors, such as Bell Sympatico. As well, we intend to pursue Spy Academy merchandise and international license sales opportunities as we go forward.
Later this fall, we will also be launching the second season of Dave Chalk Connected. TELUS and Future Shop have signed on to be our major sponsors for the coming season. Each week viewers will be able to see Dave Chalk and Mike Agerbo demonstrate the newest technologies. The show will air on numerous time slots across the country. See our website: www.chalktv.com for more information.
From a business perspective, both Spy Academy and Dave Chalk Connected have helped us build stronger relationships with our sponsors, creating other business opportunities for our company. As we go forward, we intend to continue developing media properties that have the potential for ancillary streams of revenue.
We have been successful in signing a record amount of sales contracts with a range of marquee customers. For the six month period ended June 30, 2004, we signed sales contracts with a value of approximately $3.8 million. This compares very favourably to 2003 when we signed a total of $2.6 million of sales contracts for the entire year.
I am often asked to explain the terminology of "signed contracts", "recognized revenues" and "sales backlog". Signed contracts refer to the executed agreements that we have with our customers to provide a service and / or product. Once we have completed and delivered a project and have reasonable expectation of receiving payment, we considered that revenue to be earned for accounting purposes. This earned revenue becomes what is referred to as recognized revenue. Our sales backlog is the difference between signed contracts and recognized revenues.
In February 2004, we announced that our recognized revenue targets for the year ended December 31, 2004 were $4.5 million to $5.5 million. Based on our recognized revenue to date, our sales backlog and deals in discussion and negotiation, we are confident that we will achieve this range for 2004.
Apart from sales growth, another key focus for our company is improving our gross margins, as well as our overall profitability. So far this year, we have not achieved the level of gross margins that we believe we are capable of generating. This is due to an investment in our proprietary Learning Content Management System ("LCMS") software, higher than expected production costs and the overall level of sales in the first half of 2004. Going forward, we have taken steps to improve the profitability of our individual projects and we have incurred the majority of expenses associated with our LCMS in the first half of 2004.
Update on Financing:
In July 2004, we announced that we engaged Paradigm Capital to raise up to $3 million by way of a private placement. Since that time, we have actively been meeting with investors, primarily in Toronto and Vancouver. While the reception to our company was generally very positive, the markets unfortunately have not cooperated and the effect of the summer slow-down was greater than anticipated. As a result, we have not yet completed the financing and are not certain as to whether we will be able to do so in the near term. We are continuing to work on this financing and will provide you with further updates as we go forward.
Chalk Media is an expert in creating user-friendly "how-to" content that explains our clients' products and services to their customers, channel partners and employees. We work with global blue-chip companies to help increase the understanding and adoption rates of their products and services leading to lower return rates and increased sales. We have a unique integrated media model that utilizes network television, in-flight programming, DVDs and the Internet.
Currently, we have two business units: Broadcast Media, which includes network television and in-flight programming, and Interactive Solutions, which includes online training and marketing solutions. Our two business units work together closely. In addition to generating revenues, our Broadcast Media group has created branding and awareness for our company. This enables us to build close relationships with companies such as TELUS, Sony, Bell Sympatico and FutureShop. We have leveraged our media exposure and relationships to provide an extensive range of Interactive Solutions to a broad range of global blue-chip companies.
Eventually, we hope to leverage our brands, know-how and key industry relationships to expand our sales offering to include Consumer Branded Products. This may include things like DVDs, magazines and other consumer merchandise. While we do not have a definite timeline for the launch of these products, we are assessing the opportunities.
As we go forward, we have a focused growth strategy that includes the following elements:
- Grow our existing relationships with our blue-chip customer base - Focus on key industry verticals such as technology, telecommunications and financial services - Expand sales efforts into the U.S. and U.K. markets - Broaden media platform with the launch of new media properties that support our overall strategy - Execute on a disciplined acquisition strategy
We are all very excited at Chalk Media about our market opportunity and accomplishments thus far. On behalf of the Board of Directors and employees of Chalk Media, I thank you for your continued support.
President & CEO
Chalk Media's revenue targets for 2004 are based upon expected revenues from the company's existing media properties and clients. The loss of a key customer or the discontinuation of one of the company's media properties may cause the actual results to vary materially from the revenue targets stated above.
Chalk Media's financial statements for the three and six months ended June 30, 2004, and related management discussion and analysis, can be read at www.sedar.com.
While the information contained herein is believed to be accurate and reliable, Chalk Media and its subsidiaries and / or affiliates, and their respective directors, officers, employees and shareholders make no representations or warranties, expressed or implied, as to the accuracy or completeness of such information, and Chalk Media expressly disclaims any and all liability that may be based on such information, or errors or omissions thereof.
The forward-looking statements contained herein (such as statements relating to the future anticipated direction of the media and high technology industries, plans for future expansion, revenue targets, various business development activities, planned capital expenditures, future funding sources, anticipated sales growth and potential contracts) involve important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may vary materially from those expressed in any forward-looking statements made by or on behalf of Chalk Media.
There can be no assurance that Chalk Media will achieve the results projected or implied by the forward-looking statements included herein. These risks and uncertainties include, but are not limited to, those relating to Chalk Media's ability to raise sufficient financing to fund its business plan, development and expansion activities, dependence on existing management, financial activities, domestic and global economic conditions, changes in federal or provincial income tax laws, and market competition factors.
The TSX has not reviewed the contents of this release and is not responsible for its accuracy.
About Chalk Media Corp.
Chalk Media produces network television & in-flight entertainment programming and online training & marketing solutions. The company's award-winning television shows, ranging from Dave Chalk Computer Show to Dave Chalk Connected, have served to build a highly recognizable brand name. Leveraging this brand has allowed the company to build relationships with a blue-chip customer base and provide the customers with custom online training and marketing solutions. Chalk Media's custom solutions help industry-leading companies communicate more effectively with their customers, distribution partners and employees.
/For further information: please contact: Chalk Media Corp., Kris Sutherland, Executive Vice President, Tel: (604) 453-4424, kris(at)chalk.com/