Watchit Media, Inc. Teleconference November 8, 2006
November 09 2006 - 12:04PM
PR Newswire (US)
Company Presents But Teleconference Company References Wrong Pass
Code to Callers LAS VEGAS, Nov. 9 /PRNewswire-FirstCall/ -- Watchit
Media, Inc. (OTC:WMDA) today announced Company CEO James Lavelle
conducted a teleconference to discuss Watchit's business, operating
and financial activities, results and outlook as planned at 1:00pm.
The teleconference company issued the company and callers two
different pass codes resulting in callers being directed to one
line while the presentation was conducted on another. The correct
teleconference number is 1-800-677-9138 passcode 1108. About
Watchit Media, Inc. Watchit Media, Inc. is a leader in producing
digital media and advertising on private television networks
(narrowcasting) that match the unique interests, lifestyles and
buying behavior of captive audiences and one-to-one consumer
digital device users. In addition our wholly owned subsidiary
Watchit Entertainment, Inc. produces, licenses and distributes
proprietary television programming and video content across
private, cable and Internet television networks world-wide. Contact
Information James Lavelle Chairman and CEO Watchit Media, Inc. 3485
W. Harmon Avenue Las Vegas, Nevada 89103 Office: 702.740.1751
WATCHIT MEDIA, INC. TELECONFERNCE NOVEMBER 8, 2006 Hello, I'm Jim
Lavelle Chairman and CEO of Watchit Media, Inc. The purpose of this
call is to provide you with an update on Watchit's business,
operating and financial activities and results over the past two
quarters. SAFE HARBOR STATEMENT Except for historical information
contained herein, the information contained in this presentation
will include forward-looking statements that involve certain risks
and uncertainties concerning Watchit Media, Inc.'s business, its
business prospects, Watchit Media, Inc.'s expected strategic and
operational plans and other information that could cause actual
results to differ materially from statements made in this
presentation. All forward-looking statements included in this
presentation are based upon information available to Watchit Media,
Inc. as of the date hereof, and Watchit Media, Inc. assumes no
obligation to update any such forward-looking statements. Please
refer to the discussion of risk factors and other factors included
in Watchit's most recent Report on Form 10-Q, Report on Form 10-K
for the year ended December 31, 2005, and other filings made with
the Securities and Exchange Commission for more information on the
potential factors that could affect Watchit Media, Inc.'s business
and financial results. I'd like to thank Watchit's employees for
their hard work and dedication to helping move the company ahead
today and for helping us to position our Company for the future.
THE BUSINESS The business continues to evolve as we respond to
opportunities in our rapidly changing market. Over the past two
quarters, which are the June and September quarters 2006, we have
been growing our narrowcasting business which includes digital
signage networks. At the same time we have greatly expanded our
overall market opportunity through our subsidiary Watchit
Entertainment, Inc. As a result we now have our video content
running on private television networks, on digital interactive
cable television and on Internet broadcast television. Why is
Watchit adding other networks and digital distribution platforms to
its traditional business of narrowcasting brand advertising and
promotional messaging on private television networks in gaming and
hospitality? Well, growth in spending in the digital signage space
and narrowcasting has been slower than expected. One of the reasons
for this is because advertisers have been slower to use digital
signage than has been predicted over the past several years. At the
same time, the business and financial models have not been proven.
While there have been some successes, there have been many
failures. The capital cost of a digital signage network is
considerable. The capital cost of a digital signage network with
scale is even more costly. If the purpose of the network is to run
advertising, then, unless the network reaches lots and lots of
eyeballs, advertisers won't consider using it. This has been the
cause of most of the failures. I just want to repeat what I said a
minute ago. We see continuing growth in our narrowcasting business
and it is an important part of Watchit's future. Hotels and casinos
typically already have television systems when we get involved with
them so the capital cost for us and them is modest. Another issue
affecting the market is, today, there isn't a consistent
measurement (like CPM in broadcast and cable television) that
advertisers can depend on to determine their ROI and ad
performance. Companies like Nielsen and Arbitron are in the process
of figuring this out but it isn't expected to be resolved for some
time. The Out-of-Home Advertising Bureau has been formed by leaders
in this space to build awareness of the benefits of digital signage
on the so-called Madison Avenue advertisers. Their influence will
eventually make a difference. But it will take awhile for all of
this to evolve. I have witnessed this first hand. As one of the
early movers of the Out-of-Home Advertising Bureau initiative I
pushed for organizing an association of firms that collectively
could raise this awareness. More recently I've attended two
conferences that confirmed my views ... one was the Digital Signage
Investor Conference in New York City in early October and the other
was the Digital Hollywood Conference in Santa Monica two weeks ago.
These conferences were well attended and provided important
information on where this market is today and where it's going in
the future. In addition to lower than expected advertising
spending, investors have also been cautious about financing deals
in the digital signage market. At this point one cannot look at the
Google / YouTube acquisition as an indication of what's to come.
But one thing is clear. The dramatic volume of user generated
content reflects a growing trend in communication that says "I want
video content when I want it, how I want it, where I want it and I
want to be able to share it and transport it across many digital
platforms." So where does digital signage fit into the category of
digital media generally? To the extent digital signage represents a
platform for communicating brand advertising and messaging, digital
signage employs technology that provides ways to quickly change
content to extend messaging more effectively to an audience. So
rather than having a static photograph on a sign that seldom
changes, digital signage can be changed as often or infrequently as
we like and may be either static or motion media. In Watchit's
case, we create and produce digital signage in the form of motion
media in the gaming and hospitality space. And we're producing this
digital video content for our clients all the time. In simple
terms, our clients have realized the power of using high-impact
visually stimulating content to fill their video screens has a
direct influence on their customer's behavior. It causes their
captive audience to spend more money. The video screens we present
our content on illuminate and merchandise different sections of a
hotel and casino entertainment facility. For example we have one
client site where we produce video content and operate 17 sets of
video screens all on the same gaming floor all at the same time.
Each of the 17 sets of video screens represents different
merchandising sections of the gaming floor. Using our ManageIt
Enterprise 2.0 broadband TV network platform our client can show
the same content on each of the 17 sets of video screens or present
17 different brand ads and promotional messages across the gaming
floor. The content may be changed immediately using a browser at
any time or all the time. This kind of flexibility is now
available. Furthermore we can 'transport' content across a variety
of platforms because it is in digital form. It is important to
remember here that what I've just described to you is one of our
client environments where we run their own brand advertising and
messaging in their own internal television network. This has been
Watchit's core business for over 12 years. We're now going to these
clients (and other large hospitality chains) and proposing the
presentation of Watchit Entertainment Television Network to run on
their private television system. WETN operates via our ManageIt
Enterprise Internet platform using television systems that already
exist so the capital cost is modest. We currently present our brand
advertising and promotional messaging on over 120,000 screens at
112 locations running 270 separate channels. We have exclusive one
and two year renewable contracts with all of our clients that pays
us for their broadband connection to us, the production of their
video content and the scheduling of that content on their video
screens using our proprietary scheduling software. This is monthly
recurring revenue for Watchit. In the past, very little of our
revenue has been generated on third-party advertising. So, for us,
the third party advertising revenue we expect to generate on
Watchit In Las Vegas and on WETN will fuel our growth in the years
ahead but we will continue to benefit from the annuity represented
by our contracts with our clients. This is the reason why third
party advertising will be a growth driver in the future. We already
have the network in place to drive 'customized' third party
advertising to all of our current clients. Now let's look at our
recent move into digital interactive cable television and Internet
broadcast television a little more closely. An important part of
Watchit's strategy has been to aggregate our own video content and
license the video content of others. This video content must have
several things in common. First, the content must have value
(translated: a high level of interest) to a targeted niche
audience. Second, Watchit must have a network in place where this
content can be presented and distributed across a number of video
platforms. Third, this distribution network must provide third
party advertisers a way of reaching these targeted niche audiences
and give us and them the ability to establish one to one
relationships with the viewers. In addition advertisers must
benefit from the presentation of our video content across all of
our platforms for a given program or network. And fourth the
entertainment experience must be transportable by the viewer to
their most preferred content platforms so that it may be
manipulated and shared. Traditional broadcast and cable television
cannot offer what I've just described. And as digital media
continues to evolve and the measurement of advertising performance
is sorted out on digital media platforms, more and more advertisers
will view digital media as viable and necessary. Now back to the
subject of our video content library. Among other content, over the
past year we have accumulated over 200 hours of programming
centered on the lifestyle of Las Vegas. Watchit is headquartered in
Las Vegas and 46 of our gaming and hospitality clients are in Las
Vegas. We know the City of Las Vegas well. The Las Vegas brand has
universal recognition and allure. The glamour, glitz, and glitter
of The City's nightclubs, parties, restaurants, spas and world
class resorts is unparalleled anywhere else in the world. Along
with our partner Total Vegas Television and Mr. Robin Leach we have
the video content to show the world The City of Las Vegas and all
its excitement. In September 2006 we signed an Agreement with Time
Warner Cable, one of the largest cable television companies in the
world, to present our "Watchit In Las Vegas" television programming
on their new digital interactive cable television channel "777".
Time Warner is piloting "777" on their Oceanic Time Warner
subscription cable network now exclusively in 220,000 households in
the Hawaiian Islands. A few weeks ago in early October 2006 Watchit
announced that we signed another Agreement ... this Agreement is
with one of the largest Internet television broadcasters in the
world MediaZone. We will produce "Watchit In Las Vegas" on
MediaZone's global Internet broadcast platform. We will also
present events and shows centered in Las Vegas on pay-per-view as
part of the Watchit network. MediaZone has over 20,000,000 active
viewers monthly from around the world. On one recent premier
pay-per-view event, MediaZone sold passes in over 100 countries
around the world. We're in discussions with mobile entertainment
and video-on-demand networks at this time as well in an effort to
establish Watchit's distribution across a variety of digital media
platforms producing and presenting video content to targeted niche
markets. During the past six months Watchit has evolved from being
a digital signage company on private television networks to being
perhaps the only purely Las Vegas Lifestyle television network on
interactive digital cable television and on global Internet
broadcast television. Why is this important? It's important because
Watchit now has scale and for advertisers Watchit now has reach.
Watchit now has valuable video content that is of interest to
targeted niche audiences around the world that will reach every
corner of the globe. Because of this, Watchit can provide
advertisers with a value proposition in which, on one ad buy, they
have access to audiences matching their target criteria across
platforms. It is important because, the interactive nature of these
platforms gives us a way to enable a one-to-one relationship
between advertisers and our audience. One other fact that will
become more important as we grow, on the strength of MediaZone and
Time Warner Cable, Watchit will build a brand that will be
recognized globally. With "Watchit In Las Vegas" as our first
targeted niche television network our universe of possibilities
will expand dramatically. What is the benefit of all of this to
Watchit's stockholders? We expect to see significant growth in
third party advertising revenue from Q1 2007 into the future. We
expect ad revenue from 777 to be relatively modest in the early
stages however, if 777 is presented across the entire Time Warner
Cable network, our ad revenue could grow dramatically. We already
have most of the content we need to program a network lineup for
the foreseeable future. I expect our production costs will be
relatively low which should translate into near term profitability
for the Company. So to summarize, Watchit will continue to grow its
core digital signage and private television network business. It is
an important part of our strategy for the future. Watchit will also
license and produce high-impact niche market television programming
in digital format that can be ported across a variety of platforms.
We are aggressively aggregating content for this purpose. I'd like
to briefly discuss one more element of our strategy and that's
acquisitions. As many of you know, 13 years ago I founded a company
called Cotelligent, Inc. Under my leadership Cotelligent acquired
30 businesses between 1996 and 2004. From 1996 through 2000 we were
among the fastest growing and most profitable publicly traded
information technology services companies in the US. At the peak of
our growth Cotelligent was listed on the New York Stock Exchange
and had over 4,000 employees working out of 32 offices in five
countries. But when the middle market for IT services began to
evaporate in 2002, we began the process of reinventing ourselves.
The result has been the creation of Watchit. That said, we have
considerable experience in mergers and acquisitions. And
acquisitions are part of our strategy ... but only a part. I feel
the strength of our story is centered on internal growth with
acquisitions being a complement to that growth. So you will
probably see us making acquisitions in the future that fit into the
fabric of our core business but Watchit is neither a roll-up nor a
consolidation company. Of course we will also aggressively pursue
partnerships like those we have with Time Warner, MediaZone, Total
Vegas Television and others in the future. In fact we're working on
something now that may bring a rapidly growing financial news
network to Watchit. We like this particular financial news network
because it fits our criteria of targeted niche focused
entertainment, news and information that may be distributed across
a variety of digital platforms. More on that to come later. Today
we're a small company with a big future. Like all small companies
we have many challenges to overcome if we are to be successful.
I've had the experience of leading a company undergoing dynamic
growth before. And today, I have great confidence that the Team
we're building and the opportunities I'm describing in this
presentation should elevate our business and share price to much
higher levels again. Working together with our employees, our
clients, our board of directors and advisors, our strategic
alliances, our current investors and the financial community -- we
will overcome the challenges that face us today to build a strong
future. OPERATING ACTIVITIES Year-to-date we have completed the
development, production and presentation of our video content in 8
Harrah's properties in the US that were not previously Watchit
clients. We have also integrated our ManageIt Enterprise 2.0 IP
television network platform at these same properties. All projects
have been successful. We now produce new content daily to help
Harrah's merchandise different sections of their casino
entertainment facility with dynamic brand advertising and
messaging. We completed our most recent Harrah's project in
November. Watchit's headquarters is now officially in Las Vegas. We
finally completed the move in September and our offices are located
at 3485 West Harmon Avenue, Las Vegas, Nevada 89103. Our office
telephone number is 702.740.1700. With our move, our former CFO
John Dong is no longer with Watchit. He has been replaced on an
interim basis by Mr. John Kaspar a CPA living in the Las Vegas
area. John Kaspar is now working on finalizing our Q2 and Q3
financial statements in preparation for our auditor's review.
Although we had previously announced we expected to have our SEC
Form 10-Q for Q2 completed by now, following our move a few weeks
ago, we realized there was more work to be done before the auditors
could begin. We have continued to streamline our operating
activities and have reduced our operating costs considerably over
the past four quarters. By having all of our operating activities
situated under one roof we will be able to better manage our
business now and in the future. FINANCIAL REVIEW Here are some
preliminary results for Q2 and Q3. This is mostly income statement
data. We are working to finalize our balance sheets for Q2 and Q3
presently. These results have not yet been audited or reviewed by
the Company's public accountants. Second quarter 2006 revenue was
$661k compared with $546k in Q1 and $609k for the same period 2005.
Gross margin for Q2 2006 was 43% compared with 44% in Q1 and 61%
for the same period 2005. Lower gross margins reflects an increase
in third-party software and equipment we bundle with our ManageIt
Enterprise 2.0 solution and integrate with our client's internal
systems. Excluding this software and equipment our gross margin
should normally run around 63%. Sales, general and administrative
expenses for the second quarter came in at $909k compared with
$1,204 million for the prior quarter and $740k for the same period
in 2005. The 2005 SG&A number did not include the burden of
salaries and operating overhead at the corporate level at the time
so the $740k reported is without any allocated expenses. Lower
SG&A comparing Q2 2006 to Q1 2006 is due to the fact we have
been reducing headcount and operating costs. Operating loss for Q2
was $635 compared with $991 for the prior period and $627k for the
same period in 2005. On a fully diluted share basis the EPS loss
was approximately $0.006 compared with $0.017 in the prior period
and $0.03 for the same period in 2005. For third quarter 2006
Watchit recorded its highest revenue in the history of the company
at $1.1 million compared with $640k in Q2 and $379k for the same
period 2005. It's important to note that this our fourth quarter of
period-over-period revenue growth. Gross margin for Q3 2006 was 58%
compared with 43% in Q2 and 41% for the same period 2005. Lower
gross margin reflects the increase in third-party software and
equipment we bundle with our ManageIt Enterprise 2.0 solution and
integrate with our client's internal systems. Sales, general and
administrative expenses for the third quarter came in at $966k
compared with $909k for the prior quarter and $1,035 million for
the same period in 2005. Operating loss for Q3 was $351k compared
with $622k for the prior period and $1,231 million for the same
period in 2005. On a fully diluted share basis the EPS loss was
$0.006 compared with $0.01 in the prior period. For the same period
in 2005 our EPS was positively affected by the sale of our IT
services business and was reported at $0.04 per share. It is also
important to note that for the month of August 2006 Watchit
recorded operating profit of approximately $47k. We've worked very
hard over the years to return our company to sustainable
profitability. Our performance in Q3 is an indication that the
measures we've taken are beginning to pay off. But there is no
question, we still have a long way to go. We continue to be
challenged by the ebbs and flows of cash. As a small rapidly
growing company we're constantly stretching our human resources and
our cash resources to achieve our goals. Based on the information
I've offered you in this presentation I believe we're making
important progress. I have been actively seeking additional
financing for the company this year. In May we announced we had
secured approximately $1.0 million in new financing for the
business. We have been reticent to raise more money with the stock
at these depressed levels given the dilution. We have received
several term sheets from hedge funds but the terms were onerous and
we decided to wait for better terms. However we knew we could not
expect to be offered better terms until we could show significant
improvement in financial and operating performance quarter over
quarter. We also know this must be sustainable ... and we believe
we will demonstrate sustainable growth and profitability during
2007. From the outside I know Watchit looks very troubled now. As
you can see from our results we're actually doing pretty well. As
soon as our auditors complete their review of Q2 and Q3 we will
petition to re-list on the Bulletin Board. I believe we will be
accepted. Immediately after the first of the year I will be out
actively promoting our story and our stock. I was successful
promoting Cotelligent's growth story to the investor community
between from 1996 through 2000 and I expect to be successful
promoting Watchit's growth story to the investor community in the
future. I am totally committed to building this company and
achieving sustainable financial performance which I expect will
support a growing trend in the appreciation of our stock price and
our market capitalization. Our company has a great future. These
have been tough times for us but we've got a Team here at Watchit
that's demonstrated real character and commitment during these
tough times. We all think we've got something very special going at
Watchit. And, someday soon we think the world will think so too ...
as the saying goes, great things come from small beginnings! Thank
you for your interest in Watchit Media, Inc. DATASOURCE: Watchit
Media, Inc. CONTACT: James Lavelle, Chairman and CEO of Watchit
Media, Inc., +1-702-740-1751,
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