CMG Holdings Group, Inc. (CMGO) (OTCQB: CMGO) (PINKSHEETS: CMGO)
www.cmgholdingsinc.com, a full service marketing communications
holding company operating across the sectors of digital media,
alternative advertising, social media, event marketing and
commercial rights, today is providing the following updates
regarding the company's financials, the corporate spin-off, the
elimination of corporate debt, the expansion to align its business
around growth opportunities.
FINANCIAL HIGHLIGHT SUMMARY FROM 2011 ANNUAL
REPORT
- Revenues of $7,231,069 for fiscal year ended December 31, 2011
compared to revenues of $4,972,093 for fiscal year ended December
31, 2010.
- Revenue increase of 45% for fiscal year ended December 31, 2011
compared to fiscal year ended December 31, 2010.
- Cost of sales of revenues of $5,085,957 in fiscal year ended
December 31, 2011 compared to cost of sales of revenues of
$2,702,047 in fiscal year ended December 31, 2010.
- Operating expenses of $4,994,199 in fiscal year ended December
31, 2011 compared to operating expenses of $5,674,094 in fiscal
year ended December 31, 2010.
- Net Loss from Operations of $6,722,609 in fiscal year ended
December 31, 2011 compared to net loss from operations of
$3,702,381 in fiscal year ended December 31, 2010.
- Excluding the impairment of inventory expenses, Net Loss from
Operations of $3,482,107 in fiscal year ended December 31, 2011
compared to net loss from operations of $3,702,381 in fiscal year
ended December 31, 2010.
- Net Loss $7,787,877 in fiscal year ended December 31, 2011
compared to net loss of $4,191,682 in fiscal year ended December
31, 2010.
"Fiscal 2011 was a transformative year for CMG Holdings Group,
Inc." said Jim Ennis, the Company's Chief Operating Officer.
"Through the execution of organic growth initiatives, our revenues
for fiscal year ended December 31, 2011 increased by $2,258,976 or
45% compared to the same period for prior year. Our consolidated
expenses from operations decreased for fiscal year ended December
31, 2011 by $679,895 or 13% compared to the same period for prior
year. Excluding the impairment of inventory expenses, our net loss
from operations decreased by $220,274 in our fiscal year ended
December 31, 2011 compared to the same period for prior year."
"During Fiscal 2012 we plan to further expand our digital media
offering and as we progress through the remainder of this year, the
benefits from this expansion strategy should become more evident,
particularly those involving initial startup expenses for sales and
services expansion that began during the third and fourth quarter
of fiscal 2012. In addition, as our digital media platform gains
further traction, we anticipate an additional revenue streams to
reflect a growing proportion of digital media budgets from
corporate clients that will enhance the capabilities of XA, The
Experiential Agency, Inc. (XA) www.experientialagency.com."
Earlier this year, the company also announced plans to further
align its business around the explosive growth categories of
Digital Media and Digital Marketing solutions. "We are also moving
forward with acquisition and investment plans in order to
capitalize on Digital Media and Digital Marketing, two growing
market areas" said Jim Ennis. "In Digital Media, our company plans
to expand in content authoring solutions, enabling customers to
create, distribute and monetize digital content. In Digital
Marketing, our company intends to be the leader in solutions to
manage and optimize digital marketing and advertising. The
multi-billion-dollar digital media sector is poised to grow at an
incredible pace in the next decade as technological advances make
digital media and marketing practical and affordable platforms for
large and small businesses."
"On April 13, 2012, our company has also amended its Master
Agreement with Audioeye Acquisition Corporation regarding the
spin-off and share exchange of Audioeye, Inc. and signed an Option,
Note Purchase and Note Modification Agreement for the Purchase and
Modification of Convertible between AudioEye Acquisition
Corporation, CMGO Investors LLC related to the Company's amendment
of its June 22, 2011 Master agreement with AudioEye Acquisition
Corporation. We believe that this agreement will enhance value for
Audioeye, Inc., our company as well as our shareholders, in the
form of a dividend, which is 5% of the capital stock of AudioEye"
said Jim Ennis. "We are working to expedite and closing this
transaction as soon as possible."
The company also provided additional updates to the revised
master agreement and option, note purchase note modification
agreement for purchase and modification of convertible notes. Below
is a summary of revised master agreement and option, note purchase
note modification agreement for purchase and modification of
convertible notes. For complete filing details of the Company's
filings regarding these agreements, please refer to CMG Holdings
Group, Inc.'s 8-K filed with the SEC on April 27, 2012 and May 3,
2012.
REVISED MASTER AGREEMENT
On April 13, 2012 the Company and AudioEye Acquisition
Corporation amended their June 22, 2011 Master Agreement in order
to separate the Spin-off and Share Exchange so as to allow the
payment by AudioEye Acquisition Corporation of the outstanding the
Company Senior Secured Notes and to cause the release of the Senior
Notes to be effected as soon as practicable but no later than the
closing of the Share Exchange. The Amendment also removes the
requirement of shareholder approval as a prerequisite to the Share
Exchange and Spin-off. On June 22, 2011 the Company entered into a
Master Agreement subject to shareholder approval as may be required
under applicable law and subject to closing conditions with
AudioEye Acquisition Corporation., pursuant to which: (I) the
shareholders of AudioEye Acquisition will acquire from the Company
80% of the capital stock of AudioEye and (II) the Company will
distribute to its shareholders, in the form of a dividend, 5% of
the capital stock of AudioEye. The Company, on March 31, 2010,
entered into a share exchange agreement with the former
stockholders of AudioEye, Inc. whereby AudioEye became a wholly
owned subsidiary of the Company subject to the former stockholders
retaining the right to receive cash from the exploitation of the
technology of AudioEye. As part of the share exchange agreement,
the Company secured has 13% Senior Secured Convertible Extendable
Notes due with a current aggregate balance of $1,075,000.
OPTION, NOTE PURCHASE AND NOTE MODIFICATION
AGREEMENT FOR PURCHASE AND MODIFICATION OF CONVERTIBLE
NOTES
On April 13, 2012, the Company signed an Option, Note Purchase
and Note Modification Agreement for the Purchase and Modification
of Convertible between AudioEye Acquisition Corporation, CMGO
Investors LLC related to the Company's amendment of its June 22,
2011 Master agreement with AudioEye Acquisition Corporation which
was signed on April 13, 2012. The Option, Note Purchase,
Modification and Escrow Agreement for the Purchase of the
Convertible Notes are scheduled to close on or before May 31, 2012,
time being of the essence, in accordance with the Amended Master
Agreement, On April 13, 2012. The Company amended the June 22, 2011
Master agreement with AudioEye Acquisition Corporation pursuant to
which the shareholders of AudioEye Acquisition Corporation will
acquire 80% of the capital stock of AudioEye, Inc. from the
Company, and the Company will distribute to its shareholders, in
the form of a dividend, 5% of the capital stock of Audioeye, Inc.
The parties have concluded that it is in the best interests of all
shareholders to amend the Master Agreement to separate the Spin-off
and Share Exchange and to cause the satisfaction and release of the
Notes to be effective as soon as practicable but no later than the
closing of the Share Exchange.
In exchange for the assignment and transfer of the above
described notes to AudioEye Acquisition Corporation, AudioEye
Acquisition Corporation shall pay to CMGO Investors LLC the sum of
$1,500,000.00 which said purchase price being payable a follows;
(A) Upon execution of this agreement, AudioEye Acquisition
Corporation shall deliver to CMGO Investors LLC, to an account of
the CMGO Investors LLC's choice, the sum of $112,500.00 as an
Option Payment to secure AudioEye Acquisition Corporation's right
to purchase the Notes described herein. In the event that this
agreement is not consummated, through the fault of CMGO Investors
LLC or CMGO Investors LLC'S failure or refusal to perform as
provided for in this agreement, said funds shall be returned to
AudioEye Acquisition Corporation. In the event that this
transaction is consummated, said funds shall be credited toward the
Purchase Price payable by AudioEye Acquisition Corporation
hereunder. (B) On or before the "closing date" or such other time
which shall be mutually agreed to by the parties. AudioEye
Acquisition Corporation shall deliver to CMGO Investors LLC the sum
of $1,387,500.00 in the form of cash, cashier's check or wire
transfer in the total amount or, alternatively, $1,000,000 in the
form of cash, cashier's check or wire transfer and, $387,500.00 in
the form of 968,750 shares of restricted common stock in AudioEye
Acquisition Corporation. Said shares shall be exchanged, on a one
for one basis, for shares in Audioeye, Inc. subsequent to the
successful completion of the Spin-Out and share exchange
contemplated by the "Master Agreement" attached hereto as Exhibit
A. If shares are issued, said shares shall be restricted only by
standard 144 rules and there shall be no other restrictions placed
on said shares. For a period from the date hereof until the
expiration of the Option Term (s) or extensions thereof, which
shall be May 31, 2012 (or July 31, 2012 if extended pursuant to
paragraph 4 (b) hereof), CMGO Investors LLC and CMG Holdings Group,
Inc. directly or indirectly, through any officer, director,
employee, agent or representative, will not (a) solicit, initiate,
encourage or accept offers or proposals from, or negotiate with any
person other than the AudioEye Acquisition Corporation for (i) the
sale of all or any assets of CMG Holdings Group, Inc. as they
pertain to Audio Eye, Inc. or (ii) the sale, transfer,
hypothecation or encumbrance of the Notes held by CMGO Investors
LLC as described herein; or (b) furnish to any person any
information with respect thereto. The closing of this transaction
shall take place on or before May 31, 2012 (or July 31, 2012 if
extended) time being of the essence. At the closing, AudioEye
Acquisition Corporation shall deliver the balance of the purchase
price to CMGO Investors, LLC, and CMGO Investors, LLC shall deliver
the original Notes and all other necessary Uniform Commercial Code
Forms 3 and other releases to CMG Holdings Group, Inc. such that,
subsequent to the closing, CMG Holdings Group, Inc. and its assets
shall be released from any and all obligations due pursuant to the
notes or any other instrument executed by CMG Holdings Group, Inc.
in favor of CMGO Investors, LLC. The Term and maturity dates of
each of the Notes, along with any interest payments or penalties
due thereon, shall individually be extended, without penalty, until
May 31, 2012. Upon the execution hereof by all Parties CMG Holdings
Group, Inc. shall deliver to CMGO Investors, LLC one million one
hundred thousand (1,100,000) shares of restricted common stock in
CMG Holdings Group, Inc. In the event that this transaction does
not close on or before May 31, 2012, and the terms hereof are
extended to July 31, 2012 as provided for in paragraph 4 of the
agreement, CMG Holdings Group, Inc. shall deliver to CMGO
Investors, LLC an additional one million (1,000,000) shares of
restricted common stock in CMG Holdings Group, Inc. Notwithstanding
any other provisions of this agreement, said stock shall be the
property of CMGO Investors, LLC hereunder and shall not be
refundable to CMG Holdings Group, Inc. under any circumstances.
Provided that AudioEye Acquisition Corporation has complied with
all terms and provisions of this agreement, the parties agree that
the terms and provisions of this agreement, the closing date hereof
and the maturity dates of the above referenced notes shall be
extended for an additional sixty (60) day period, at the request of
AudioEye Acquisition Corporation, provided that AudioEye
Acquisition Corporation shall deliver to CMGO Investors, LLC, to an
account of the CMG Investors LLC choice, the sum of $56,250.00. The
notes described shall not be transferrable, assignable or
hypothecated by CMG Investors LLC and they shall not otherwise
encumber, pledge or sell said notes or attempt to collect on or
enforce the notes. Provided that AudioEye Acquisition Corporation
has complied with all terms and provisions of this agreement, the
parties agree that the terms and provisions of this agreement, the
closing date hereof and the maturity dates of the above referenced
notes shall be extended for an additional sixty (60) day period, at
the request of AudioEye Acquisition Corporation, provided that
AudioEye Acquisition Corporation shall deliver to CMGO Investors
LLC, to an account of the CMGO Investors LLC's choice, the sum of
$56,250.00. In the event that this agreement is not consummated,
through the fault of CMGO Investors LLC or CMGO Investors LLC'S
failure or refusal to perform as provided for in this agreement,
said funds shall be returned to AudioEye Acquisition Corporation.
In the event that this transaction is consummated, said funds shall
be credited toward the cash Purchase Price payable by AudioEye
Acquisition Corporation hereunder.
Companies or individuals who are interested in learning more
about CMG Holdings Group, Inc. or our subsidiaries, please visit
www.cmgholdingsinc.com, www.experientialagency.com,
www.xasocial.com, www.audioeye.com or contact Jim Ennis at
Jennis@CreativeManagementGroup.com.
About CMG Holdings Group, Inc. (CMGO): CMG
Holdings Group, Inc. is a full service marketing and communications
holding company. CMGO's mission is to build a national platform of
exceptional companies that deliver solutions in the areas of
alternative advertising, social media marketing services, event
management and commercial rights. CMGO is seeking to expand its
national presence via its acquired companies, capitalizing on their
intellectual properties, patents, sales and marketing, new product
development and continued operations via economic recovery. CMGO
owns and operates wholly-owned subsidiaries, XA, The Experiential
Agency, Inc. and Audio Eye, Inc.
For more information, please visit: www.cmgholdingsinc.com
About XA, The Experiential Agency, Inc.
(XA): XA, The Experiential Agency, Inc. is a wholly-owned
subsidiary of CMG Holdings Group Inc. and has offices in Chicago
and New York from which it provides corporations and highly visible
brands with comprehensive event marketing, design, public relations
and production services. The XA brand has a 20 year history and its
team has been the creative force behind prestigious, national
projects for such clients as NBC Universal, Unicef, Harrah's
Entertainment, Conde Nast, McDonalds, W Hotels, Emirates Airline
and Ritz Carlton.
For more information please visit:
www.experientialagency.com
About XA Social: XA Social is part of the
XA consolidated platform and excels in social media strategy; from
a social media 101 seminar, to advising and monitoring, overall
management and ROI. XA Social believes social media is not a fad,
but rather an extension of good public relations that is here to
stay. XA Social creates lasting connections between consumers and
brands in order to engage in two way communication. XA Social helps
clients build their brands through innovative and authentic social
media tactics and aids in creating environments of conversation and
engaging relevant consumers with brands through personal
interactions.
For more information please visit: www.xasocial.com
About AudioEye, Inc. (AudioEye): AudioEye,
Inc., founded in 2003, is a wholly-owned subsidiary of CMG Holdings
Group Inc. with offices in Tucson and Chicago. AudioEye has
developed patented, Internet content publication and distribution
software enabling conversion of any media into accessible formats
and allowing for real time distribution to end users on any
Internet connected device. Audio Eye is focused on creating better
and more comprehensive access to Internet, print, broadcast and
other media to all people regardless of their network connection,
device, location, or any disabilities or disadvantages an
individual may have. Audio Eye solutions include comprehensive
E-Learning and E-Commerce systems as well as a variety of Internet
publishing products and services that enable customers to create
and deliver accessible, highly scalable web-based applications.
For more information please visit: www.audioeye.com
Forward Looking Statements This press
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. In
particular, when used in the preceding discussion, the words
'believes,' 'expects,' 'intends,' 'will,' 'anticipated,' or 'may,'
and similar conditional expressions are intended to identify
forward-looking statements within the meaning of the Act and are
subject to the safe harbor created by the Act. Except for
historical information, all of the statements, expectations and
assumptions contained in the foregoing are forward-looking
statements that involve a number of risks and uncertainties. It is
possible that the assumptions made by management are not
necessarily the most likely and may not materialize. In addition,
other important factors that could cause actual results to differ
materially include the following: business conditions and the
amount of growth in the company's industry and general economy;
competitive factors; ability to attract and retain personnel; the
price of the Company's stock; and the risk factors set forth from
time to time in the Company's SEC reports, including but not
limited to its annual report on Form 10-K; its quarterly reports on
Forms 10-Q; and any reports on Form 8-K. CMG Holdings Group, Inc.
(OTCQB: CMGO) (PINKSHEETS: CMGO) takes no obligation to update or
correct forward-looking statements and also takes no obligation to
update or correct information prepared by third parties that is not
paid for by the Company.
Contact: Jim Ennis CMG Holdings Group Inc. 5601 Biscayne
Boulevard Miami, FL 33137 305-751-0588
Jennis@CreativeManagementGroup.com
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