PNEC NEWS -
Tuesday September 29, 9:56 am Eastern Time
Company Press Release
Planet Entertainment Announces
Closing of Northeast One Stop, Inc.
Acquisition
MIDDLETOWN, NJ--(BUSINESS WIRE)--September 29, 1998--Planet Entertainment Corp. (OTC:BB PNEC) announced today that the company closed the acquisition of Northeast One Stop, Inc. (''NEOS''). Effective September 1, 1998, all of the issued and outstanding common
stock of NEOS has been purchased by Planet Entertainment for $2,250,000 cash and a short term note totaling $750,000. In addition, Louis Delsignore was granted an employment agreement and stock options to continue with NEOS as Chairman and will be nominated to the Board of Directors of Planet Entertainment Corp., along with Ron Nicks and Bill Castle of NEOS.
For the fiscal year ended August 31, 1998, NEOS is expected to produce revenues of approximately $34 million with an expected EBIDA of $1.2 million dollars, an increase of approximately 48% from the previous fiscal year ended August 31, 1997, when the company recorded revenues of approximately $23 million and was marginally profitable. The increase is due in large part to NEOS's decision in 1997 to bring on board Ron Nicks as President/CEO along with Bill Castle who heads Summit Entertainment, NEOS' ''rack job'' division that sells to mass
merchandisers. Mr. Nicks stated ''based on current sales through September and anticipation of a strong fourth quarter new release schedule, we anticipate net sales to be up approximately 72% over last year at this time from $8.4 million dollars to $14.5 million for NEOS' first quarter. I further expect to end our current fiscal year next August at over $55 million in net sales which would be a 61% increase over the previous fiscal year.''
The primary business activity of NEOS is the wholesale distribution of recorded music and video products. Located in Latham, New York, NEOS was recently voted Medium Wholesaler of The Year at the 1998 National Association of Record Manufacturers (''NARM'') Convention. The
Company, established in 1982, operates sales offices in Michigan, Pennsylvania, Vermont, Maryland and New York, and currently employs approximately 140 full and part-time people. NEOS' ''One-stop'' division operates as a centralized order fulfillment center for small to medium sized retail stores, typically record stores, that obtain from it a wide-variety of recorded music and video. NEOS' ''Rack-job'' division distributes recorded music and video through entertainment
departments and kiosks in retail and mass merchandise stores. NEOS has gained the reputation as being one of the most reliable music distributors in the country. As industry innovators, NEOS uses a fully integrated, computer driven, automated carousel system allowing faster response time, instant access to over 120,000 titles and the lowest shipping error rate in the industry.
John S. Arnone, Planet Entertainment's President and CEO, stated ''with the acquisition of NEOS completed Planet is one step closer to becoming a serious player in the entertainment industry. This
acquisition gives Planet the opportunity to distribute its proprietary catalog of master recordings through one of the industries top computer driven, automated wholesalers, which will also allow Planet to become extremely competitive in the internet delivery environment. We are optimistic regarding future results based upon the fact we were able to retain management currently in place, founder and Chairman Louis Delsignore; President and CEO, Ron Nicks; and Bill Castle, Executive Vice President of Summit Entertainment the Company's rack division.''
Mr Arnone also stated ''We are currently aggressively investigating additional industry acquisitions that will compliment our internet delivery plan as well as our goal to be a premier content provider
to traditional retail outlets throughout the country''.
Planet Entertainment Corporation owns certain rights associated with the exploitation of approximately 15,000 original musical master recordings and is principally engaged in the acquisition, enhancement, licensing, and re-release of existing music catalogues, and the production of new artist, for sale in a variety of formats including compact disk (CD) and digital video disk (DVD). The company owns and operates a 48-track sound recording studio and sound restoration
lab near Philadelphia, Pennsylvania run by Joseph Venneri, one of the top restoration engineers in the industry.
The management of Planet Entertainment now believes it can be more price and service competitive in the marketplace than CD-Now, Inc. (NASDAQ: CDNW - news), N2K, Inc. (NASDAQ: NTKI - news), and KTEL Corporation (NASDAQ: KTEL - news) by potentially becoming one of
the most profitable Internet music delivery systems by now owning its own in-house fulfillment division as well as by producing its own proprietary product at low cost to be offered by both the Internet and traditional retailers. Planet compilation music product is now being distributed in the Far East by Nippon Columbia, New Millenium in the UK, and Shandell in South Africa.
Special Note Regarding Forward Looking Statements: A number of statements contained in this press release are forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995 that involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the applicable statements. These risks and uncertainties include but are not limited to: the Company's vulnerability to rapid industry change, technical obsolescence, limited customer base and reliance on relatively a small number of its customers, the possible impact of competitive products and pricing, uncertainties in the duration of the life cycle of its products, manufacturing difficulties, dependence on key personnel, market acceptance, reliance on a limited number of outside vendors, potential difficulties, managing growth, the ability to perform on existing and future agreements, the availability of financing, and other risks all, or any of which may have a material adverse impact on the company, its business, business prospects, and financial condition.
Contact:
Wallace Giakas, Chairman
John S. Arnone, President Chief Executive Officer
PLANET ENTERTAINMENT CORPORATION
732-530-8819
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