Undervalued Dog selects GNNX:
Genesis Media Group, Inc. (OTC BB: GNNX)
Recent Price: $1.375/share
Daily Average Volume: 102 K
97 EPS: $0.34/share
97 PE: 4.0
Estimated 1998 EPS:$0.93/share
Forward PE: 1.48
Book Value: $2.15/share
Div/Shr: None
Yield: None
52-week Range: $0.125-4.00/share
Outstanding Shares: 21.59 M
Floating Shares: 4.535M
Market Cap: $29.69M
1997 revenues: $ 5.3 M
Estimated 1998 revenues: $280 M
Net profit margin: 12%
SEC failings: Yes
BUSINESS SUMMARY AND CORPORATION BACKGROUND: The company is in the business of Media Advertising, Media Placement, Telecommunications, film production, music recording, and Networking. Genesis has structured the Company into a number of divisions to take advantage of its current opportunities. They are 1) Digital Production, 2) Dealer Distributor/Thomson Broadcast Systems, 3) Music Library, 3) The Auto-Plus/Dealer Direct Program, 4) Telecommunications Marketing, 5). James Dean Project.
DIGITAL PRODUCTION: Genesis has a state-of-the-art switchable component Digital Editing and Digital Multi-Camera production studio. The studio features 12-Bit digital cameras, a 4:2:2 digital component switcher, digital component beta-cam recorders, and D2 composite digital recorders. Its insert air-conditioned stage features complete digital multi-camera equipment. Genesis capabilities include complete digital production and post-production, as well as analog services. This studio enables Genesis to produce film, video, and music projects.
DEALER DISTRIBUTOR: Genesis is a dealer-distributor for Thomson Broadcast Systems. Thomson is a worldwide organization with subsidiaries in Asia, Europe and the U.S. as well as distributors and agents around the world. The company headquarters are located near Paris with two production sites in Brittany, France. Thomson addresses the digital image chain from end to end: image capture, processing, compression, transmission, and broadcasting. This is an exciting time, not only because of Thomson's strategic commitment to digital technologies, but new applications such as digital television, MPEG2 compression and multi-service fiber networks. There is a unique synergy that now exists across Thomson's product and systems divisions. With the worldwide resources of Thomson multi-media, they are the 4th largest consumer electronics group in the world. From creating the next generation of broadcast equipment, to implementing today's most advanced digital solutions, Thomson Broad!
cast System shares two essential values: passionate commitment to what they do, and a vision of the future that is resolutely digital.
MUSIC LIBRARY: Genesis has a music library which includes such artists as, Frank Sinatra, Ray Charles, Johnny Cash, Willie Nelson, Chuck Berry, Rod Stewart, and many more. This library can be used to re-score music sound tracts for major motion pictures and television productions.
THE AUTO PLUS/DEALER DIRECT PROGRAM: The Auto Plus/Dealer Direct Program is a second chance credit financing program. With Morton Downey Jr. as its national spokesperson, Genesis is organizing a national television and radio campaign that will generate 60,000 qualified auto buyer leads per month, distributed via the Web. These leads will match the desires of the buyer with the inventory of Dealers. A buyer will place an inquiry through Genesis system. The buyer, by making this one phone call, has now made multi-dealers aware of his or her needs, thus offering the buyer a selection and price favorable to his or her needs. Multi-dealers review the buyer's specific requests, and match them with their inventory. Upon purchase, buyer will receive an unsecured Mastercard with a 500 dollar credit limit. The program provides numerous benefits to the participating dealers. The Dealers are able to receive thousands of qualified leads that match their inventory, reducing the co!
st of buying leads in bulk. The Dealer gets the use of the "Buy-a-Car, Get-a-Mastercard" endorsement, in conjunction with major finance companies that have the funds available for impaired credit buyers. Dealers also receive national television and radio advertising, up to 600 commercials per month through the use of co-op advertising proceeds. There is also ability for other national sponsors to benefit such as oil and tire companies.
TELECOMMUNICATIONS MARKETING: Genesis provides wholesale long distance service to different countries such as China and India, and is in the process of developing its own fiber network to the country of Mexico. These and other contracts will enable Genesis to proceed with its current plan of operation.
JAMES DEAN PROJECT: Genesis is in the process of producing a feature length documentary on the life of James Dean. The project is designed to be distributed on home video, as a commercially sponsored TV program, as a stand-alone special for Pay-TV, or for release on 35mm as an exclusive engagement in highly selected theaters around the world. The running time for the project is estimated to be 93 minutes, so that it will have the flexibility of adapting to any film or video format. The working title as of this writing is: "The Diary of James Dean." The production will especially appeal to the estimated 165 million Dean fans worldwide, over 20 million domestically), spanning more than four decades and three generations. The production style of the project will combine elements of a documentary and a drama, weaving a story with photographs, film footage, exclusive interviews and a powerful dramatic portrayal of James Dean. Much of the production takes place on location in Ja!
mes Dean's hometown of Fairmount Indiana, on the family farm, and other locations where he worked, lived and developed his talent. An original soundtrack used as a backdrop will be embellished by selected well known songs which help tell the story of the world's greatest screen legend. Amazing and realistic dramatic portrayals will bring to life the "little-known" facts of the real character and personality of James Dean.
RECENT DEVELOPMENTS AND ANALYSIS: On March 18, 1998, GNNX announced the signing of an agreement with GMT Productions to complete editing and production from the Genesis Studios in Culver City, California, of the James Dean Diaries, a two hour showcase documentary of the very private diaries of James Dean. Alan Houge, President of GMT Productions is one of the very few people who have been allowed by the James Dean Family Estate to have access to the very private diaries. He is the only one to be allowed to produce a film of the life of James Dean, based on these diaries. The film is now past 60% completion. It is expected that the file will be finished by July 1 and GNNX has 50% ownership of this film. Other major film projects for GNNX include two other feature films with producer Willie Benoun, the first one being ''Cuba,'' a drama/adventure with Ms. Benoun as the producer and Don R. Logan as the executive producer, costing approximately $60,000,000.00. The second is a !
comedy, ''Baldie's,'' also produced by Ms. Benoun, and executive producer Mr. Logan, costing approximately $12,000,000.00. It is expected that these film project will generate EPS $0.40- 0.50 for GNNX in 1998.
In April, GNNX closed several telecommunication contracts. On April 16, a one year contract was closed with The Meyer Group Limited, a substantial California company. This media communications contract represents revenues exceeding $60 million. This contract has been completed with advance deposits received by Genesis Media Group. The terms of this contract are as follows: Payment is to be made in advance and weekly to Genesis Media Group. On April 22, GNNX entered into a definitive agreement to establish a telecommunications service network to the country of Mexico. The network is currently under construction and is anticipated to be active over the next 35 to 45 days. GNNX has acquired the capacity to provide a minimum of 600 million minutes of long distance service over a 12 month period. The various customers that have committed to the service will provide letters of credit equal to 2 weeks worth of billing on a revolving basis. Gross billings to Genesis will b!
e approximately $11 million per month. Genesis will realize the first billings in approximately 2 months. On April 24, GNNX closed a telecommunications contract to provide wholesale long distance service to the country of China. The initial capacity will be for 1 million minutes per month, for the next 12 months, with the possibility of increasing to 4 million minutes per month within the first 30 days of service. The gross billings received from this contract, to the company, will be between 500,000 and 2 million dollars per month, and between 6 to 24 million dollars annually. It is expected that these telecommunication contracts will generate EPS $0.30-0.40 for GNNX in 1998.
On June 1, GNNX filed its first 97' 10-K with the SEC. It is the first step that GNNX intends to become a fully reporting company. The 10-K can be read at freeedgar.com. The company is now working on 10-Q for its first quarter this year, and thereafter will be working on 10-Q for its second quarter. The company is planning to move its stock to NASDAQ national market. The company is working with its financial consultants and the SEC attorney. Also they will be lining up several securities and financial institutions and firms to support the stock when the stock is listed by NASDAQ. It is expected to finish the procedures and obtain NASDAQ listing by the end of March, 1999.
On June 4, GNNX announced that it will release a collector's edition Frank Sinatra recording. The recordings Genesis will release are some of Sinatra's early ballads. They are from the early Sinatra era, most of which were never recorded in studio sessions, and never released on any label, but in fact from live radio broadcasts. Due to its age and original sound recording the music has been digitally re-mastered with today's technology to enhance the sound quality. The album will be available on cassette and compact disc, and will be titled ''Sinatra, The Early Years.'' It is scheduled for release on June 15, 1998. Genesis will explore many distribution and marketing avenues. First and foremost, Genesis will offer this Sinatra selection via the Internet on the company's own web site at gnnx.com. The Company will also approach other Internet channels such as CD NOW, a large retail music web site. Genesis will sell directly to the retail market through small, i!
ndependent record stores where the demographics for such a selection may be more likely to reach the Sinatra audience. Direct mail has been a growing industry, whereas people do not have to leave their homes to shop anymore. Such catalogs as AARP (American Association of Retired Persons) will be ideal for this product, as well as Parade magazine. The release of "Sinatra, The Early Years" has caught some media attention. For example, on this morning's edition of NEW YORK DAILY NEWS, which can be read at mostnewyork.com, an article entitled "Sinatra, Old and New" reported that Frank Sinatra's death won't stop a California company from releasing a new CD by Ol' Blue Eyes. Genesis Media Group expects to have "Sinatra: The Early Years" on the music store shelves later this month. "We bought the rights to a number of old radio shows, studio outtakes and other Sinatra performances back in the '80s," said Genesis' Carl Conte. "Most of the!
stuff is from the '40s. We've done a lot of work cleaning up the recordings, and I have to say they sound fantastic." GNNX is also working on several other albums. The releases of these albums will generate significant revenues for GNNX. It is expected that the distribution of these albums will generate EPS $0.10-0.20 for GNNX in 1998.
On April 29, GNNX announced the signing of a national advertising/sales and marketing contract with Glassmaster Industries USA Inc., which is on the Toronto Exchange, with the trading symbol: GMTR. Genesis will create and produce commercials, videos and advertising materials for Glassmaster, as well as Web hosting and design, with an advertising network via the World Wide Web. Genesis will also provide air-time media placement for advertising and distribution. This is all possible through the use of Genesis's state of the art high tech Digital editing and production equipment. This contract between Genesis Media Group Inc., and Glassmaster Industries USA Inc., is a performance based contract with revenues to be realized by Genesis estimated to be a minimum of l million dollars for the first 12 months of the contract, plus earned commissions on gross sales.
In addition to these ongoing businesses, GNNX is also making substantial progress in other two divisions: DEALER DISTRIBUTOR/THOMSON BROADCAST SYSTEMS AND THE AUTO PLUS/DEALER DIRECT PROGRAM. These new business developments and contracts are expected to be announced by the company very soon. It is not clear how these businesses will add the bottom line of the company. But the word that has been used to describe these new developments and contracts is "significant".
GNNX has diversified businesses that will allow the company to grow explosively. The shares are being traded under book value with the trailing PE at 4. Hence, the stock is extremely undervalued. Technical analysis indicates that GNNX shares temporarily peaked at $4.00 last April, as its Relative Strength generated a bearish overbought reading. Since then, its trading is best described as quietly basing. GNNX is getting ready for the next move now. Its Relative Strength remains oversold despite any real decline. Its On Balance Volume implies its shares are under heavy accumulation, adding to its positive technical picture. There is important technical support in the $1.10 area. With these recent developments, GNNX shares are ready to move up with huge upside potential and very limited downside potential. We advice readers to accumulate the shares. The target price for GNNX shares is in the range of $4-5/share in the short term (1-6 months) and in the range of $8-10/s!
hare in the long term (6-12 months) if the stock is still traded on OTC BB. It can go higher with its solid fundamentals if the company successfully obtain NASDAQ listing and gain support from securities and financial institutions and firms.
Contact:
Don Logan, CEO
Genesis Media Group, Inc.
5721 Buckingham Parkway, Stage 6, 2nd Floor,
Los Angels, CA 90230
Phone: (310) 665-0221
Fax: (310) 665-0148
Company Website: gnnx.com
PR Firm: Dutch Assosciates Inc.
Lou Victor, Executive Vice President
Phone: (718)850-5966
Website: dutchassociates.com |
