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MSGI Enters into Exclusive Commercial Security Contract with Apro Media for at Least $105 Million of Sub-Contracting Business over Seven Years
Thursday May 10, 8:00 am ET
NEW YORK--(BUSINESS WIRE)--MSGI Security Solutions, Inc. (OTCBB:MSGI - News) a leading provider of proprietary security products and services, announced today that the company has entered into an exclusive sub-contract and distribution agreement with Apro Media Corp for at least $105 million of sub-contracting business over seven years to provide commercial security services to a Fortune 100 defense contractor.
Under the terms of contract, MSGI will acquire components from Korea and deliver fully integrated security solutions at an average level of $15 million per year for the length of the seven-year engagement. MSGI will also immediately establish and operate a 24/7/365 customer support facility in the Northeastern United States. Apro will provide MSGI with a web-based interface to streamline the ordering process and create an opportunity for other commercial security clients to be acquired and serviced by MSGI. The contract calls for gross profit margins estimated to be between 26% and 35% including a profit sharing arrangement with Apro Media, which will initially take the form of unregistered MSGI common stock, followed by a combination of stock and cash and eventually just cash. Apro Media (www.aprocctv.com) has been offering innovative high-quality security products and services to global clientele since 1995. In the aggregate, assuming all the revenue targets are met over the next seven years, Apro Media would eventually acquire approximately 16 million shares of MSGI common stock.
MSGI was referred to Apro Media by Hyundai Syscomm, an MSGI strategic investor; as part of a general expansion into the Asian security market, however this contract does not constitute revenue under the existing Hyundai Syscomm warrant to acquire common stock of MSGI.
The contract requires working capital of at least $5 million due to considerable upfront expenses including a $2.5 million financial contribution by MSGI to Apro Media for the proprietary system development requirements of the Fortune 100 client and the formation of a staffed production and customer service facility and warehouse. MSGI has already entered into a non-binding Term Sheet with an existing investor to provide the necessary financing and the company expects to reach the definitive agreement stage with this investor in the very near term. There is no assurance that the financing will close, and therefore no assurance that this sub-contracting agreement will become effective. The first Apro Media purchase order is expected to be received by MSGI in May and will include monthly deliverables.
Ben Garst, Jr., Chairman of Apro Media commented, "we are proud to bring together the technological innovation of Apro and MSGI to form a Korean American Partnership that can serve the customer more efficiently. We view this new relationship as the foundation from which MSGI will relentlessly pursue the delivery of more efficient solutions to enhance public safety worldwide."
Jeremy Barbara, Chairman and CEO of MSGI commented, "our expansion into Korea last year has led MSGI to this new exclusive $105 million sub-contracting relationship for a Fortune 100 defense contractor. This event marks our formal migration into the commercial security industry supplementing our existing homeland security practice. MSGI will now offer end-to-end solutions for fully integrated security systems utilizing a hybrid of wired and wireless custom electronics. We will continue to serve the military and federal and state governments, while expanding to ports and critical infrastructures, industrial and commercial businesses and correctional facilities - all of which are extensive users of Apro custom electronics. We also hope to introduce new technologies from Korea into North America where we would enjoy a "first mover" advantage on behalf of our commercial and government clients."
This information is not and should not be deemed an offer to sell, or a solicitation of an offer to buy, any securities or any other instruments.
About MSGI Security Solutions, Inc.
MSGI Security Solutions, Inc. is a leading international provider of proprietary security solutions to commercial and government organizations. MSGI is developing a combination of innovative emerging businesses that leverage information and technology with a focus on encryption technologies for actionable surveillance and intelligence monitoring. The Company is headquartered in New York City where it serves the needs of counter-terrorism, public safety, and law enforcement in the United States, Europe, the Middle East and Asia. More information on MSGI is available on the company's website at www.msgisecurity.com. |
