Current Report Filing (8-k)
November 19, 2014
To Shareholders of CMG Holdings Group, Inc:
XA, The Experiential Agency, Inc.
A forensic investigation conducted by current executives of XA and CMG has revealed an ongoing pattern of fraud at XA’s New York and Chicago offices that predated and extended through the tenure of former chairman, Ron Burkhardt.
The pattern of fraud uncovered was instituted and overseen by former CEO Joe Wagner, who ran XA with little or no oversight from former CMG board members from 2009 – 2012. Mr. Wagner resigned as CEO in early 2014, months after board members and consultants from CMG began to question why XA, a company with 7-8 million dollars in annual revenue, never made a significant profit. CMG board chairman Glenn Laken launched his own investigation in an attempt to answer that question and uncovered the following:
From the time CMG first acquired ownership of XA in 2009, and until their departure from the firm a few months ago, Darren Andereck, XA’s president, Joe Wagner, XA’s CEO and Jean Wilson XA’s COO all owned privately held competing companies designed to siphon business opportunity away from XA. These private affiliations were not disclosed to the board of CMG. These undisclosed entities also defrauded the parent company by becoming vendors to XA – charging XA nearly $650,000.00 in questionable receipts over last two years alone.
While still working for XA, Darren Andereck, Jean Wilson and Jeff Smith, XA’s Creative Director along with employees Jesse Loma and Mike Day conspired with Joe Wagner to strip XA’s business of all corporate clients, newly purchased computers, lockers filled with staging equipment around the country and ongoing projects worth over $1,000,000.00 in revenue. While the investigation is not complete, we have discovered that there are numerous instances of conversion of XA assets and funds, such as personal charges on company credit cards, payments for cell phones for family members, reimbursement for personal travel and other expenses which did not relate to XA in any way, in addition transactions between XA and parties owned by these former employees who did not disclose their interests in them. The Company and XA plan to complete the investigation, including recovering e-mails deleted by the former employees, and to vigorously pursue any and all amounts wrongfully taken from XA. On September 23, 2014, XA filed a lawsuit in the Supreme Court of the State of New York, County of New York against Hudson Gray, Joe Wagner’s new competing enterprise, along with its principals and former XA employees now working for Hudson Gray, alleging wrongdoing by the defendants in connection with soliciting XA’s clients and seeking against further contact with XA clients.
While XA has suffered client losses due to the wrongful acts by its former management and employees, XA’s new executive staff has worked diligently to develop a vibrant and transparent business model for the future by focusing on smaller jobs with higher profit margins. The new XA staff organized and managed public relations for the October 24th Lang-Lang Foundation Concert and Gala at the United Nations, and arranged for Sting’s surprise guest appearance there. New XA staffers have also booked the Legacy Awards and Influencer dinner at Chicago’s Art Institute in March. They’re currently negotiating with a well known charitable foundation to organize a star-studded movie premiere and A-list gala dinner scheduled to take place in Manhattan in early March, in addition to a number of other corporate and charitable projects and events. They’re also fielding RFP’s for up-fronts for this upcoming television season. XA employees in the Chicago office continue to represent some of the regions most high profile restaurants and hotel chains, including the popular Coco Pazzo Group, The Four Seasons Hotel Group and The Ritz Carlton.
The future is bright for the newly re-organized XA, which is now being run by a younger, hipper, experienced and professional staff. Without the fraudulent practices of the past gobbling up profits, XA will finally generate a meaningful financial benefit to CMG’s shareholders, and have the ability to grow into the thriving profit center it always had the potential to be. We look forward to sharing the continued successes of the new XA, and will use every legal avenue available to claw-back the stolen profits of the past.
Good Gaming, Inc.
Good Gaming Inc. successfully completed its first test tournament in October 2014. We identified several key areas for development as a result, and believe over 90% of all areas targeted for improvement will be addressed prior to when the next tournament takes place. We are currently in the final stages of negotiation with a major gaming publisher to create a mutually beneficial alliance for our tournament in December. This alliance will significantly speed up our global adoption cycle. While details are still forthcoming, Good Gaming is extremely excited about this potential alliance and its impact on the overall business going forward.
In the short period of time since its official launch, Good Gaming has further refined the infrastructure involved in keeping the content production branch of the business as efficient as possible. We’ve begun releasing new videos every Tuesday to assure our user base that content is up to date and to keep them excited from week to week. We are also preparing to institute a content calendar so users can preview future videos. By offering promotional giveaways on our Twitch channel, we gained further exposure and credibility with the gaming community and expanded our user base. The most recent Twitch promotion – a 12 hour live stream for Halloween with Good Gaming streamers playing survival, horror, and survival/horror games while giving away copies of the most recent horror game, “The Evil Within,” was a huge success. We have over 20 veteran gamers with thousands of hours of experience working as content contributors and streamers for the most popular and commonly played games, such as Battlefield, Call of Duty, World of Warcraft, and League of Legends.
On September 23, 2014, XA filed a lawsuit in the Supreme Court of the State of New York, County of New York against HG and its principals alleging wrongdoing by the defendants in connection with soliciting XA’s clients and seeking against further contact with XA clients. The Company conducted an internal investigation of actions taken by XA’s former employees during the quarter ended September 30, 2014. While the investigation is not complete, we have discovered that there are numerous instances of conversion of XA assets and funds, such as personal charges on company credit cards, payments for cell phones for family members, reimbursement for personal travel and other expenses which did not relate to XA in any way, and transactions between XA and parties owned by these former employees who did not disclose their interests in them. The Company and XA plan to complete the investigation, including recovering e-mails deleted by the former employees, and to vigorously pursue any and all amounts wrongfully taken from XA.
In October, 2014, Ronald Burkhardt, XA,s former Executive Chairman and a current member of the Company’s Board of Directors filed a lawsuit in the Supreme Court of the State of New York, County of New York, alleging breach of his employment contract and seeking approximately $695,000 in damages. The Company believes that Mr. Burkhardt’s claim is without merit and plans to vigorously defend the lawsuit.
Wed, 06 Aug 2014 16:30:22 GMT ~ Good Gaming Enters Closed Alpha Testing
[Marketwired] - Good Gaming Inc. , an online destination for gamers who want to become professionals, is a wholly owned subsidiary of CMGO. The state-of-the-art Good Gaming platform will give amateur gamers access to ...
read full: http://finance.yahoo.com/news/good-gaming-enters-closed-alpha-163022604.html
Mon, 21 Jul 2014 10:01:18 GMT ~ CMG HOLDINGS GROUP, INC. Files SEC form 8-K, Change in Directors or Principal Officers
read full: http://biz.yahoo.com/e/140721/cmgo8-k.html
Mon, 23 Jun 2014 15:23:00 GMT ~ CMGO's eSports Subsidiary, Good Gaming, Accelerates Original Timeline For New Unrivaled Web Platform
[Accesswire] - CHICAGO, IL / ACCESSWIRE / June 23, 2014 / CMG HOLDINGS, INC, Chairman, Glenn Laken proudly announced the positive progress of its subsidiary, GOOD GAMING's web platform and media/splash page. Mr Laken ...
read full: http://finance.yahoo.com/news/cmgos-esports-subsidiary-good-gaming-152300506.html
Sat, 24 May 2014 17:04:11 GMT ~ CMG HOLDINGS GROUP, INC. Financials
read full: http://finance.yahoo.com/q/is?s=cmgo
Thu, 15 May 2014 20:18:56 GMT ~ CMG HOLDINGS GROUP, INC. Files SEC form 10-Q, Quarterly Report
read full: http://biz.yahoo.com/e/140515/cmgo10-q.html
Update in Progress 2/11/14
Ok, Lets first start with this bit of news released Jan 6th, 2014
"CMG Holdings, Inc. (“CMG” or “the company”) proudly announces today that for the first time in the history of the company, it is debt free."
CMG Holdings Group inc. Quick Background Summary (FergusVI):
The company first caught my eye in February 2008. This is when Creative Management Group inc. was reverse merged into Pebble Beach Enterprises inc. There was a change in control, a name change to CMG Holdings Inc. This company was run by the old management, Alan Morell, Mike Vandetty, and Jim Ennis. The future looked bright and the OS was around 42M.
They quickly acquired the assets of Xa, The Experiential Agency in March, 2009. This was exciting because Xa was a proven revenue driver. The company has been around since 1989, through all markets. Xa proved to be their main revenue source, as the talent management and commercial rights segments produced very little income. Old management started issuing convertible notes, most likely to pay their large salaries of $675,000/yr.
In March 2010, they closed on the AudioEye acquisition. They paid $30k cash, 1.5 Million in shares and deferred capital commitments of 2.5 million over a few years. Although the IP and patents AE possesed at the time were valuable, and had good independent valuations, history shows that they were ahead of the curve with this purchase and they had a hard time funding AE, as AE wasn't able to generate much revenue at that time. It was also difficult to finance a subsidiary, under the umbrella of the holding company, so with this, AE was eventually spun off and became an independent public company trading in the OTC under symbol AEYE. CMG at the time of spinoff was able to retire senior secured notes, give shareholders a dividend, and hold around 5M shares of AE on books, and they also had revenue sharing % of future AE sales and revenue.
There is a lot I'm leaving out, but essentially the company continued (Old Management) to issue more and more convertible notes. Along the way, many organized long shareholders were accumulating millions and millions of shares. Many from the toxic convertible sales. The long shareholders had had enough and took matters into their own hands and effected a change in control, and instituted new management and a new direction. Since then, new management has made some very shareholder friendly moves. Mainly, they took the company to debt free status as cited above from the Jan 6, 2014 8K. They also reduced the OS substantially, returned shares to the treasury and nullified other outstanding convertibles. They appointed powerhouse new management additions to the BOD of CMGO and to XA. They acquired Good Gaming llC, and are making an entrance into the ever growing Esports sector. Links to follow.
New management sold a portion of their AEYE shares back to AudioEye. With these proceeds, they paid off all debt and are debt free. No convertible notes. They still retained about 2.36Million shares of AEYE on the books.
Shareholders take back control of company!!!
CMGO's recent change in control summary. This is very rare in the OTC markets.
On November 26th 2012, groups of organized long shareholders sent written correspondence to the then
current management indicating they had 55% majority of the stock and wanted to ammend the corporate bylaws.
On December 13th, 2012, The Majority shareholders were successful in taking back control of the company and appointing a new board of directors and giving current management their departure notices.
On December 19th, The new Board of Directors added new management (Joseph Wagner COO) with industry experience, finalized on termination of old management, and instituted a lock up provision on old managements CMGO shares and AE shares, and retained 55% of UsaveCT and UsaveNJ subsidiaries.
On January 22, 2013, new management informs the shareholders of increased communication and updates, a new line of credit for XA, inc., expectations of dramatic increase in revenues (Revenues were already up in 2012 - 9 months ending Revenue 7.5Million). They also informed shareholdes that AE dividend shares are with TA and ready for distribution around Mid Feb 2013. Also informed us of possible corporate name change and ticker change to better reflect main revenue driver, XA, inc.
On August 5, 2013, new management informs the shareholders through an 8K that CMGO has come to an agreement that brings closure to the termination of old management in regards to shares and debt held by the aforementioned resulting in a 11.5% reduction in the company's Outstanding Float and the elimination of an $85,000 note plus two years interest at 20%. There will be a reversal of the $85K note on the company's books.
CMGO Security Details
a/o Feb 12, 2014
a/o Feb 03, 2014
a/o Feb 03, 2014
a/o Feb 03, 2014
Shareholders of Record
a/o Feb 03, 2014
Feb 26, 2013
Oct 26, 2012
Feb 19, 2013
Dividend () *
Feb 11, 2008
Mar 04, 2008
Dividend (0.00) *
Feb 11, 2008
Mar 04, 2008
Glenn Laken, 60, member of the Board, Chairman of the Board and Chief Executive Officer ("CEO")
David Kovacs Board of Directors
Jan 14th, 2014 http://www.sec.gov/Archives/edgar/data/1346655/000117892414000006/f8k1_form-cmgo.htm
A veteran of the investment banking and private equity sectors for over 10 years, Mr. Kovacs is currently the head of Investment Banking and Private Equity for Fitch Learning. Mr. Kovacs is also the Managing Director of Private Equity for Strategic Acquisitions, a $2 billion real estate investment firm. Prior to his current roles, Mr. Kovacs focused on private equity as a Managing Director at The Hinduju Group, one of the largest diversified groups in the world with over $50 billion under management. Mr. Kovacs also worked in various capacities at Citigroup and Blackstone Group in their investment banking and private equity divisions.
With the addition of Mr. Kovacs to the Board, CMG has acquired one of the most respected and brilliant minds in the world of investment and private equity. As a student at Columbia University and City University (NY), Mr. Kovacs completed his undergraduate degree at age 18, finishing the required coursework in two years and earning a triple major in Finance, Economics and Biochemistry.
The wealth of experience and breadth of knowledge that Mr. Kovacs brings to the Board will be invaluable as the Board seeks to enhance current strategies as well as devise new ones to help the company move forward with its current and future initiatives.
With his experience in mature and emerging markets as a training specialist in venture capital, investment banking, and private equity, Mr. Kovacs is also a highly coveted speaker. Mr. Kovacs has lectured at over 100 universities, including the majority of Ivy League schools. He was a lead instructor for the Securities & Exchange Commission and has given talks to industry leaders such as Barclays, JP Morgan, RBC, Morgan Stanley, Deutsche Bank and the Abu Dhabi Investment Authority.
CMG Holdings Group, Inc. is a marketing communications holding company focused on the acquisition and operation of organizations in the alternative advertising, digital media, experiential and interactive marketing, entertainment, Internet content publication and distribution technology sectors. Our Company was formed by a core group of executives who have held senior level positions with several of the largest companies in the entertainment and marketing management industry. Our Company delivers customized marketing solutions at to optimize profitability by concentrating our resources in those segments of the marketing communications and entertainment industry. Our Company operates in the sectors of experiential marketing, event marketing, Internet content publication and distribution software, commercial rights, and talent management.
Experiential marketing includes production and promotion, event designs, sponsorship evaluation, negotiation and activation, talent buying, show production, stage and set designs, data analysis and management. We also offer branding and design including graphic, industrial and package designs across traditional and new media and public relations, social media, media development and relations and interactive marketing platforms to provides our clients with a custom private digital media networks to design and develop individual broadcasting digital media channels for our clients’ to sell, promote and enhance their digital media video contents through mobile, online and social mediums.
Event Management includes marquis hospitality, sponsorships and licensing, broadcast production, and implementation of events including hospitality services to the most discriminating of clients in sports sectors including golf, tennis, equine and motor sports pairing corporate sponsors and premier events and leveraging that experience to ensure our clients receive the highest return on their investment and level of brand exposure. Our Company is dedicated to pursuing intellectual property rights of entertainment properties and offering these events through long-term entertainment hospitality packages for corporate sponsors’ and manage and implement on-site operations and logistical concerns. Our broadcast and production services secures, and negotiates electronic production, broadcast and syndication opportunities for our clients via network, cable television, radio and digital media.
Internet content publication and distribution software includes the offering of embedded audio navigation and Internet content publication and distribution software that enables conversion of any media into accessible formats and allows for real time distribution to end users on any Internet connected device. Our Company also offers a more comprehensive access to devices, Internet, print, broadcast and other media to all people regardless of their network connection, device, location, or disabilities. Our solutions include comprehensive E-Learning and E-Commerce systems, Internet publishing products and services that enable customers to create and deliver highly scalable web-based applications. We provide technology solutions that facilitate information accessibility via the web, mobile phones, and other devices for all people, with a special emphasis on those that have physical, learning, or visual impairment, as well Internet novices such as seniors, non-English readers, and children. Our subsidiary division, Audioeye Inc. owns the “Method and Apparatus for Website Navigation by the Visually Impaired” and “Method and System for Audible Website Navigation” patent portfolios which protect the rights to its proprietary technology. Our Company believes this technology is an indispensable component of the Internet accessibility industry as it exists today. Our focus is to create more comprehensive access to devices, internet, print, broadcast and other media through our technology solutions including comprehensive E-Learning and E-Commerce systems that enable interaction between brands and consumers.
XA, The Experiential Agency, Inc., a wholly owned subsidiary of CMGO, has offices in New York from which it provides corporations and highly visible brands with comprehensive event marketing, design and production services. The XA brand has a 20 year history and its team has been the creative force behind prestigious, national projects for such clients as NBC Universal, Unicef, Harrah's Entertainment, Conde Nast, McDonalds, W Hotels, Emirates Airline and Ritz Carlton.
At XA, we help our clients build their brands through innovative, authentic social media and PR tactics. We create environments of conversation and engagement to targeted consumers specific to that brand. We realize that each brand is unique and has their own set of consumers and goals. That is why at XA we handcraft a strategy that we then implement tailored towards you and your brand.
Our experience in public relations, as well as social media and digital marketing, helps us create unique and memorable exposure for our clients of all types and sizes.
Good Gaming, Inc.