IRVINE, CA -- January 12, 2018 -- InvestorsHub NewsWire
-- Adaptive Medias, Inc. (OTC: ADTM), formerly an ad-tech company,
today issued the following Special Letter to Shareholders from its
Chairman and Chief Executive Officer, John B. Strong:
Dear Fellow Shareholder:
Nearly two years ago, on April 14, 2016, we announced financial
results for the fiscal year ended December 31, 2015 of over $4.6
million in revenue. Revenue and margins were trending positively
with a fourth quarter gross profit that more than doubled year over
year to $457,340 on $1.68 million in revenue.
Concurrently, we were also working to close a merger with another
ad tech company that had developed a state-of-the-art ad blocker
bypass software program. However, market conditions did not support
financing and closing that transaction, and the effort’s extensive
expenditure of cash and management resources left the Company
under-capitalized to invest in an aggressive ad-tech business
plan.
You can be assured, as one of the Company’s largest shareholders
at the time, no one was more disappointed than I at this turn of
events. However, rather than perform a large toxic financing that
would have been highly dilutive to all shareholders, we decided to
‘go dark,’ cut staff and suspend public reporting company
activities to conserve cash in hopes that we could develop a new,
streamlined business plan that could be executed with minimal
capital requirements.
Highlights:
- Company has secured approximately $50 million from a
mix of domestic hedge funds and foreign institutional investors to
be redeployed to the most promising companies in the cannabis
industry.
Expects to rapidly become one of the leading providers of
growth capital to the cannabis industry, based primarily on its two
key competitive advantages: immediate access to capital and the
turnaround time in approving and funding new loans
New management team used last two years to streamline
operations, eliminate majority of long-term obligations to prepare
for its debut
Expects to announce new management team, company name and
ticker symbol shortly as part of transition
Company Begins Transition into Pure Cannabis
Play
Interestingly, during this transition period, a historic
phenomenon began to take place - - the legalization of cannabis in
both the United States and Canada for both medicinal and
recreational uses. This single event, which essentially was
responsible for the creation of a multi-billion-dollar market
overnight, will prove to become one of the most important events in
the history of the United States. It will also prove to
become one of the greatest financial opportunities offered to the
thousands of entrepreneurs that this nation was built on since the
days of the gold rush and the dot com era.
Given the industry’s rapid emergence as one of the fastest
growing markets in the United States, it is also no dark secret
that the companies that had first-mover advantage would always be
leap years ahead of their competition. And our situation is
no different. After a comprehensive analysis of the market
and its potential opportunities, we felt that the most lucrative
for us would be to help finance and grow what would no doubt
develop into thousands of new entrants into the market.
Accordingly, we formed a Special In-house Committee and
delegated one and only one task to them: to develop and begin the
implementation of a new business plan that was achievable in the
short-run, sustainable in the long-run and had the potential to
generate the highest return on invested capital for our
shareholders. After a thorough due diligence and vetting
process, we unanimously decided that it would be in our best
interest to divest the Company of its existing assets to generate
the needed cash to pay down nearly all of our debt obligations and
even provide for some initial working capital to support our entry
into the rapidly growing and very exciting legal cannabis industry,
an opportunity that we will no doubt experience only once in a
lifetime. However, please do keep in mind that we had to
overcome many obstacles to ensure our ability to carve ourselves a
small but very lucrative and growing niche in the cannabis
industry. These obstacles ranged from the settling of
lawsuits stemming from the Company’s former regime to what
personally was the most difficult for me - - the laying-off of some
of the most loyal and talented employees I have had the pleasure of
working with when I initially joined Adaptive Medias.
Unfortunately, these were not easy decisions to make but were
necessary if we had any hope or aspirations that our shareholders
could one day begin recouping their losses from their investment,
which based on the market’s reaction is already beginning to show a
positive reaction to our new business strategy.
U.S. Legal Cannabis Market Expected to Exceed $21
Billion by 2021
According to Arcview Market Research, a
third-party provider of unbiased research to the
cannabis industry, consumer spending on legal cannabis in the
U.S. grew by over 34% in 2016 over 2015 and is expected to grow to
a new high of over $6.7 billion in 2021. As additional states
legalize the use of cannabis, an increasing number of Americans
will have access to cannabis. Democratic member, representative
Earl Blumenauer noted that, "More than two-thirds of Americans now
live in jurisdictions that have legalized either the medical or
adult use of marijuana." In addition to dealing with chronic pain,
the report indicated that states with legalized medical cannabis
have a very easily measurable amount of deaths due to overdosing on
other drugs such as opioid painkillers. The report also stated
that, "in November, the journal of the American
Association for the Advancement of Science published a
study finding that the annual rate of deaths due to overdose on
opioid painkillers was nearly 25% lower in states that permitted
medical marijuana, and that the effect had grown stronger in the
five years after states approved medical marijuana."
Accordingly, we decided to completely shift our business
strategy from one that focused on ad-tech to one that would help
meet an absolute necessity for any new entrant into this market:
access to capital and access at a quicker pace than our
competition. While it is very true that the financing of the
cannabis industry is not the sexiest or most exciting proposition,
it is one of the safest and most secure investments one can make,
particularly when considering the almost daily changes and evolving
legislations relating to the industry. However, we didn’t
stop there. We wanted to make sure that we not only
capitalized on this market opportunity but capitalized on it in a
significant manner and that’s when we decided to completely divest
what was left of Adaptive Medias and form an entirely new entity,
which will be announced next week, that should rather quickly
solidify its position in the market as a “one-stop-shop” for
services ranging from financing to merchandising. And again,
the two factors that will enable us to capture the largest
percentage of the industry’s market share will be due to immediate
access to growth capital and the speed that we can close a loan
from inception to funding - - which we believe can be done in as
quickly as 20-30 days compared to the industry’s current average
pace of over 90 days.
Through the implementation of the First Phase of our business
plan this month, we are confident we can reach positive cash flow
very shortly. We are also working diligently towards gaining
our status as a fully reporting company with the SEC and
relaunching a shareholder relations program that will be designed
to keep you updated on every step of our progress.
We expect to have further developments to report to you later
this month and all throughout the first half of 2018. I appreciate
your support and confidence and look forward to keeping you
updated.
Sincerely yours,
John B. Strong
Chairman and Chief Executive Officer
ABOUT ADAPTIVE MEDIAS, INC.
Adaptive Medias, Inc. (ADTM) is a leading provider of mobile video
delivery and monetization solutions for publishers, content
producers and advertisers. The Company’s comprehensive mobile video
technology platform, Media Graph, facilitates the delivery of
integrated, engaging video content and impactful ad units across
all screens and devices.
FORWARD LOOKING STATEMENTS
This Press Release may contain certain forward-looking
statements within the meaning of the Securities Litigation Reform
Act of 1995. Adaptive Medias, Inc. has tried, whenever possible, to
identify these forward-looking statements using words such as
"anticipates," "believes," "estimates," "expects," "plans,"
"intends," "potential" and similar expressions. These statements
reflect Adaptive Medias' current beliefs and are based on
information currently available to it. Accordingly, such
forward-looking statements involve known and unknown risks,
uncertainties and other factors which could cause Adaptive Medias'
actual results, performance or achievements to differ materially
from those expressed in or implied by such statements, including
without limitation; the risk of downturns in the ad-tech industry;
the effects of local and national economic, credit and capital
market conditions on the economy in general, and other risks and
uncertainties described herein, as well as those risks and
uncertainties discussed from time to time in our other reports and
other public filings with the U.S. Securities and Exchange
Commission ("SEC"). Adaptive Medias undertakes no obligation to
update or provide advice in the event of any change, addition or
alteration to the information contained in this Press Release
including such forward-looking statements.
Investor/Media Contact:James Chen
Vice President, Investor Relations
Phone: (855) FUND-420
Company Contact:John B. Strong
Chairman & CEO
Phone: (855) FUND-420