| To IO Report Members:
The Investment Opportunity Report is pleased to provide our members
with this Special Situation Alert on ValCom, Inc. (OTCBB: VCMI) VCMI
represents a very dynamic story that we’ve been following since late
last year, when Valencia Entertainment took control of the former
company, SBI Communications, Inc. through a reverse merger. The new
company is making tremendous headway, and early investors in the
company should enjoy holding this little gem for years to come.
IMPORTANT NOTE: ValCom, Inc. closed trading today under the old
symbol, SBID. The name change and symbol change reflective of the
recent positive fundamental developments generated by this
interesting media/entertainment play are slated to go into effect
with Wednesday’s market opening. We view this as great timing for
our members.
As we will continue to reiterate time and again, the key to success
in small cap investing is finding companies with strong management
that have great growth potential that can also be bought at a
reasonable value. Such value can help weather even the roughest of
market “storms.”
Mr. Vince Vellardita, President and CEO of ValCom, is the leader of
the newly formed public entity identified by the new ticker symbol,
VCMI. Mr. Vellardita is a deeply dedicated, experienced, and
successful entrepreneur, with over twenty years of industry
experience. Mr. Vellardita began his career as a music producer, but
before long he garnered a reputation for developing cost effective
media production facilities, including satellite networks, for large
media companies nationwide.
He started the business as Valencia Entertainment five years ago
with a modest bit of his own cash, and a clear vision. His burning
desire was to design, build and operate a facility capable of
bringing together all the components necessary to complete a
television or film production, all at a single location.
Over the past five years, Mr. Vellardita has established ValCom's
first location as just such a premier production facility. The
Company is located in none other than Valencia, CA and operates its
Studio Division on 12 acres of land with eight stages that provide
about 175,000 square feet of space for set design, construction and
filming. (The Company also owns and operates an additional 80,000
square foot production facility located outside Atlanta, GA.)
The stage buildings and production offices are fully air
conditioned, and the facility boasts complete audio and video
control rooms, and in-house lighting and grip packages. The Company
provides their clients with 24/7 Security service and offers
reserved parking for up to 475 vehicles. The popular CBS hit series
“JAG,'' and the Fox Family kid’s series, “Power Rangers'' are just
two of the shows whose productions are hosted there.
Their ongoing success has made the Valencia facility an attractive
site for an increasing base of business. VCMI clients include such
venerable household names as Warner Brothers, Paramount, Universal,
MGM, Sony, and 20th Century Fox. Network television producers ABC,
CBS, and NBC, and cable stalwarts HBO, Showtime, and MTV are
additional headliners on the Company’s growing client list.
On December 22, VCMI announced the signing of a letter of intent for
a firm-commitment underwriting for $10M. Given current market
conditions, this announcement really caught took us by surprise.
Six days later, the newly formed Company made its first standout
move, announcing the strategic acquisition of Half-Day Video, Inc.
of Burbank, CA.
Half-Day Video has provided production equipment rentals to the
television and motion picture industries for ten years, and the
acquisition provides VCMI with a successful turnkey operation. In
addition to the production equipment inventory, VCMI also acquired
the office building and warehouse facility, both previously owned by
Half-Day.
The need to provide rental equipment service to a growing number of
“middle-tier” clients made Half-Day a perfect acquisition, and the
transition has been relatively seamless, as Half-Day’s employee
roster has remained virtually intact under ValCom.
Half-Day Video’s existing client list includes The Academy Awards,
The Emmy Awards, Entertainment Tonight, MTV, The Oscar Awards,
General Hospital, and other major entertainment and production
companies. The Studio Division now has the added capability of
providing in whole or in part, any of the necessary production
hardware a client might need, further enhancing their overall
service.
The Half-Day acquisition should add about $1 million in annual
revenue. More importantly, it adds over a million in real estate and
equipment value to the VCMI balance sheet, and was completed for
just $1.3 million in cash and stock. With the completion of the
Half-Day acquisition and a firm financing commitment under its belt,
the Company turned its attention to several of their own television
production projects.
At the January meeting of the National Association of Television
Production Executives (NAPTE) in Las Vegas, the Company’s Television
Division scored big with several of their own projects. A Frankie
Avalon musical variety special titled “Let’s Do It Again” will begin
pre-production in the next several weeks, and is expected to air in
90% of U.S. homes sometime in the fourth quarter this year.
The Television Division’s series “PCH” also received an excellent
reception. Developed from the movie by the same name, the series
stars Casper Van Diem, Denise Richards, Jack Scalia, Elliot Gould
and Sally Kellerman. “PCH' is expected to clear over 40% of the US
market by April 1, 2001 and the Company anticipates clearing an
additional 30% by June 1.
This success will make the program available to 70% of the US
market, with foreign pre-sales of $7 million, giving VCMI the green
light to start production by late fall of 2001. VCMI also retains
the syndication rights to all programs developed internally, which
only serves to increase revenue and shareholder value as additional
projects are successfully rolled out.
Ever the dynamo, Mr. Vellardita was at it again last month. On
February 15th, ValCom announced the signing of a letter of intent to
acquire Tri-Crown Productions and several of its affiliates. The
acquisition is subject to each company performing their own due
diligence, and signing a definitive merger agreement, and is
expected to close mid-year.
Tri-Crown Productions presently enjoys annual revenues of
approximately $15 million and holds assets that include a
postproduction facility with equipment and a library of television
shows and documentaries. The company has a well-established 14-year
history within the entertainment industry, and has produced weekly
series and specials for ABC, NBC, CBS, FOX, FOX Sports, FOX Family,
Warner Bros., Telemundo, Universal, Sony and Disney. Tri-Crown's
library continues to grow with programs shot on location around the
world.
VCMI believes the deal will enable Tri-Crown to be a formidable
partner in creation, production and distribution. The deal will
contribute a strong increase in revenues, further increasing VCMI's
shareholder value. By the time of closing, Mr. Vellardita
anticipates the acquisition will contribute revenues of
approximately $25 million for 2001 and projects about $150 million
in revenue spread over the next five years.
The real bottom line for those members looking for value is that the
Company’s balance sheet contains assets of over $20 million, prior
to the Tri-Crown acquisition! We believe the story on VCMI will only
get better over time, especially with the demand for entertainment
content as high as its ever been. If, like us, you’re looking for
low-priced speculative stocks high on value, VCMI represents just
such an opportunity.
At today’s prices, we believe it’s time to get after VCMI. |
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