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Form 10-Q for COTELLIGENT INC
12-Aug-2005
Quarterly Report
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Except for statements of historical fact contained herein, any statements contained in this report may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. For example, words such as "may," "will," "should," "estimates," "predicts," "potential," "continue," "strategy," "believes," "anticipates," "plans," "expects," "intends" and similar expressions are intended to identify forward-looking statements. All such forward-looking statements are based upon current expectations that involve risks and uncertainties. Cotelligent's actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those discussed under "Risk Factors" in Cotelligent's Annual Report on Form 10-K for the fiscal year ended December 31, 2004 and other filings made with the Securities and Exchange Commission. The following discussion is qualified in its entirety by, and should be read in conjunction with, the more detailed information set forth in our financial statements and the notes thereto included elsewhere in this filing. All forward-looking statements included in this report are based upon information available to Cotelligent as of the date thereof, and Cotelligent assumes no obligation to update any of such forward-looking statements.
Cotelligent was formed in February 1993 to acquire, own and operate IT services businesses. Cotelligent was a non-operating entity until 1996 when it first began to acquire businesses. The Company historically operated on an April 1 to March 31, fiscal year. In July 2000, the Company changed its fiscal year to December 31, resulting in a nine-month transition period from April 1, 2000 through December 31, 2000. In 2004, the Company was organized into two reportable segments, IT services and narrowcasting (which became effective with the acquisition of OnSite Media, Inc. on March 2, 2004). The results of OnSite Media, Inc. have been included in the Company's results from its acquisition date. Prior to December 31, 2004, the Company entered into a plan to divest its IT services segment. Accordingly, the financial information on the Quarterly Report has been restated to present as discontinued operations the Company's IT services segment for all periods presented.
On a continuing operations basis, Cotelligent provides narrowcasting services which includes Internet protocol (IP) technologies and production services for video content, distribution, scripting and playback on digital display video channels and networks, as well as maintenance, support and contract services on software and hardware products it licenses. The Company provides these services primarily to gaming and hospitality businesses. Narrowcasting, maintenance and support services are provided under term contracts of which most are one year or longer. These contracts are renewable at the discretion of our clients.
The Company recognizes revenue for the subscription of maintenance, support and contract services on software and hardware products it licenses to its narrowcasting clients as the Company performs the services. Revenues earned for software license sales and service contracts are recorded based on the provisions of AICPA SOP 97-2, "Software Revenue Recognition," as amended, which shares the basic criteria described above. For each element in a software arrangement (e.g. license, maintenance, and services), the amount of revenue recognized is based upon vendor specific objective evidence of fair value using the residual method. Revenue for production services for video content, distribution, scripting and playback on digital display video channels and networks on either a time and materials basis, when services are provided or where pursuant to fixed-fee contract, the revenue is generally recognized as services are rendered on the percentage-of-completion method of accounting based on hours incurred to total estimated labor hours to complete. Revenues include reimbursable expenses charged to and collected from clients.
The Company's principal costs are professional compensation directly related to the performance of services and related expenses. Gross profits (revenues after professional compensation and related expenses) are primarily a function of the number of gaming and hospitality properties that subscribe to the narrowcasting services as well as the number of channels for different narrowcasting services each property elects to subscribe to and the level of video production service purchased by the client. Gross profits can be adversely impacted if clients do not renew contracts, if the Company is not effective in managing its service activities, or if fixed-fee engagements for production services are not properly priced.
Operating income can be adversely impacted by increased administrative staff compensation and expenses related to streamlining or expanding the Company's business, which may be incurred before revenues or economies of scale are generated from such investment.
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OVERVIEW OF 2005 AND 2004
In the years leading up to 2004, we strategically shifted from providing general IT services and solutions to a targeted approach to offering mobile workforce management and Web services. We changed our go-to-market strategy to better focus our resources and leverage our experience and solid client base in these areas. Our decision to do this was reinforced at the time by market research, financial research and our own research and analysis indicating that mobile workforce management and Web services were the next emerging growth markets. Our solutions utilized broadly accepted as well as cutting edge technologies. We spent considerable time on the development of these core competencies after divesting the majority of our IT staffing business in 2000. In addition, the Company carefully assessed and exited a number of solutions and service offerings that were not core to the principal service offerings outlined above.
While executing this strategy we believed we were focused on offering services that would help us increase revenue in the near term. From 2001 through the third quarter of 2003 the Company continued to invest heavily in a large scale sales, marketing and business development organization working to capture new business. In September 2002, the Company hired a marketing executive to develop and implement a more formalized and systematic marketing program for the Company because of the difficulty we were having in selling new business to new clients. Marketing programs re-designed and put in place by early 2003 offered promising results when measured against prior year sales opportunity pipeline and business backlog. By the second quarter of 2003, the Company gained more confidence in its marketing program and saw an unprecedented number of prospect and client proposals. Nevertheless, throughout 2003 we continued to be disappointed by prospects and clients either delaying decisions to initiate projects or pursuing lower cost off-shore technical resource to executing their projects. In spite of the Company's investments in its selling organization, we were not successful in signing new business with companies we had not done business with before. We did, however, continue to sign new contracts with existing clients.
In August of 2003, it became clear to us that a number of opportunities that only a few months before looked promising were not going to close. The Company performed an in-depth review of each opportunity and concluded that businesses were reticent to use discretionary expenditures to invest in mobile workforce and Web service technologies (or other new projects) given the fact that their current IT environments operated satisfactorily. In addition, fearful of continuing poor economic conditions and market pressures, we observed that many of the prospects that decided to pursue projects did so with larger, better capitalized firms than Cotelligent.
It became evident to us that the outlook for spending in IT services would continue to be uncertain without any clear indication of when a turnaround could be expected. Accordingly, in August 2003, the Company terminated the majority of its senior executive staff along with most of the sales and business development organization. At the same time we aggressively engaged our existing clients and committed ourselves to supporting their project requirements. In some cases we have been successful in securing longer term commitments. By scaling back expenses and focusing intensely on generating business from our long term clients we began to stabilize our revenue trend allowing us to move forward in our attempt to restore profitability and positive cash flow
Throughout the remainder of 2003, the Company continued to reduce headcount and looked closely at expense activity to scale back and streamline operating costs in line with revenue. The Philadelphia-based operation that supports Cotelligent's sales force automation application FastTrack achieved stable revenue over the past several years and our clients continued to give us high marks for performance and client service. In addition, the core team responsible for our custom software development activities is helping us to take advantage of recurring projects with existing clients. By keeping only the top sales account executives and account managers, we have lowered our selling cost and improved our client relationships and retention.
In April 2003, our Chief Executive Officer, James Lavelle, sent a letter to our stockholders indicating the Company's intention to engage in merger and acquisition activities in order to help improve Cotelligent's prospects for the future and increase our scale. As a matter of course since we started our Company in 1996 and successfully executed an aggressive merger and acquisition strategy through early 1999, we believed this strategy would help us improve our prospects. We researched and analyzed a variety of vertical markets that could provide new growth opportunities for us through merger or acquisition. In mid-2003 Cotelligent signed a letter of intent to acquire a field force automation firm. After 90 days of due diligence, we decided not to consummate the transaction.
In September 2003, Cotelligent engaged in a dialog with a Las Vegas based narrowcasting company, OnSite Media, Inc. The combination of Cotelligent's deep history in Internet, media and wireless technologies and OnSite's strength in driving video content to high growth venues in the gaming and hospitality industries looked promising. Cotelligent entered into a definitive agreement to acquire OnSite Media, Inc. on November 24, 2003, and closed the acquisition transaction on March 2, 2004. By integrating OnSite's business with Cotelligent's infrastructure, and by utilizing our public company know how to position us for the future, we have set about executing a strategy that we believe will allow us to play an important role in the convergence of Internet, video and mobile technology. This is a growing, fast paced market in which we believe the ability to integrate these technologies will help us to differentiate us from many other companies.
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Upon completion of the acquisition, OnSite Media was renamed Watchit Media USA, Inc., and is now a wholly-owned subsidiary of Cotelligent, Inc. The newly acquired business was immediately integrated into the Cotelligent infrastructure from March through October 2004. Our Board of Directors carefully followed and evaluated the financial and operating performance of our Company's two business segments. While the IT services and solutions business continued to struggle, Watchit Media performed well and experienced significant revenue growth, together with stabile to increasing gross margin performance. In addition, Watchit's near and longer term business opportunities appeared to indicate the strong possibility of future revenue growth.
In November 2004, we announced our plan to divest our entire IT services and solutions business and change our name to Watchit Media, Inc. allowing us to focus all of our attention on narrowcasting. On July 13, 2005, the Company's stockholders approved the sale of the IT services business located at Broomall, Pennsylvania pursuant to an Asset Purchase Agreement, dated as of April 1, 2005, as amended on June 27, 2005 (the "Asset Purchase Agreement") entered into between the Company and certain of its subsidiaries and FastTech Integrated Solutions, LLC, an affiliate of Beverly Hills, California-based private equity firm Skyview Capital, LLC. The transaction was completed on July 15, 2005. Pursuant to the Asset Purchase Agreement, aggregate consideration for the business included: cash at closing of $2,300, subject to closing date adjustments, and an earn-out of up to $1,450 if certain future revenue targets are attained over the three years following completion of the sale.
Three Months Ended June 30, 2005 Compared to Three Months Ended June 30, 2004
The Company has two reportable segments: IT services and narrowcasting. Prior to December 31, 2004, the Company entered into a plan to divest its IT services segment. Accordingly, the financial information presented in this Quarterly Report has been prepared to present as discontinued operations the Company's IT services business. The Company's continuing operations consist of the narrowcasting segment. The Company commenced reporting revenues for its narrowcasting segment following the acquisition of On-Site Media, Inc. on March 2, 2004. As a result, on a continuing operations basis, the Company had no revenue, gross profit or selling, general and administrative expenses to report prior to March 2, 2004.
Revenues
Revenues increased $376 or 161%, to $609 in the three months ended June 30, 2005, from $233 in the three months ended June 30, 2004. The increase in revenues resulted from marketing efforts and a corresponding expansion of business.
Our narrowcasting clients retain us to manage a part of their television system infrastructure, produce video content pertinent to their brand, marketing communications and hotel property amenities, and present this content on their Private Video Networks. We have annual renewable contracts with our clients for managing the computer hardware that interfaces with their television systems and, in some cases, their information system infrastructure. Watchit Media charges a base monthly subscription fee for these services.
In addition, our clients pay us on a time and materials basis for the production of video content. In the gaming and hospitality industry, our clients tend to require frequent changes to the content we produce for them. Video content pertaining to their entertainment, casino games, cross promotions, and activities are among the dynamic video content we produce.
During the three months ended June 30, 2005, approximately 44% of revenues were subscription fee based whereas in the quarter end June 30, 2004 approximately 95% of revenues were subscription fee based.
Gross Profit
Gross profit increased $254 or 207%, to $377 in the three months ended June 30, 2005, from $123 in the three months ended June 30, 2004. The increase in gross profit resulted from marketing efforts and a corresponding expansion of business.
As a percentage of revenues, the gross margin increased to 62% in the three months ended June 30, 2005, from 53% in the three months ended June 30, 2004. The increase in gross margin was the result increased revenues related to the production of video content, which increased the utilization of technical staff.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $242 or 49%, to $740 in the three months ended June 30, 2005, from $498 in the three months ended June 30, 2004. The increase in selling, general and administrative expenses was the result of increased staff, marketing programs and development of new proprietary video programming not yet introduced to clients. In addition, corporate selling, general and administrative expense was allocated between the narrowcasting and IT services segment. The growth in narrowcasting revenues relative to IT services revenues resulted in an increase in the allocation of expenses to the narrowcasting segment.
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Other Income (Expense)
Other income (expense) consists of interest income and interest expense.
Interest expense, net of interest income, was $11 for the three months ended June 30, 2005 compared to interest income, net of interest expense of $3 for the three months ended June 30, 2004. The decrease in net interest income was the result of lower cash balances on hand coupled with interest expense on secured borrowings that commenced in October of 2004.
Income Tax Benefit
The Company recognized an income tax expense of $1 for the three months ended June 30, 2004 which represented state tax payments.
Loss from Discontinued Operations
Discontinued operations comprised operations associated with the IT services segment. Loss from discontinued operations was $279 for the three months ended June 30, 2005 compared to $528 for the three months ended June 30, 2004. The reduction in loss was the result of an improvement to the utilization of billable staff due to the elimination of a number of underutilized billable people and reductions in selling, general and administrative expenses.
Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004
Revenues
Revenues increased $554 or 179%, to $864 in the six months ended June 30, 2005, from $310 in the six months ended June 30, 2004. Effective with the acquisition of OnSite Media, Inc, March 2, 2004, the Company commenced reporting revenues under its narrowcasting segment. The increase in revenues resulted from marketing efforts and a corresponding expansion of business together with the full six months effect of including revenue resulting from the March 2, 2004 acquisition.
Our narrowcasting clients retain us to manage a part of their television system infrastructure, produce video content pertinent to their brand, marketing communications and hotel property amenities, and present this content on their Private Video Networks. We have annual renewable contracts with our clients for managing the computer hardware that interfaces with their television systems and, in some cases, their information system infrastructure. Watchit Media charges a base monthly subscription fee for these services.
In addition, our clients pay us on a time and materials basis for the production of video content. In the gaming and hospitality industry, our clients tend to require frequent changes to the content we produce for them. Video content pertaining to their entertainment, casino games, cross promotions, and activities are among the dynamic video content we produce.
During the six months ended June 30, 2005, approximately 59% of revenues were subscription fee based whereas in the quarter end June 30, 2004, approximately 95% of revenues were subscription fee based.
Gross Profit
Gross profit increased $348 or 204%, to $519 in the six months ended June 30, 2005, from $171 in the six months ended June 30, 2004. Effective with the acquisition of OnSite Media, Inc, March 2, 2004, the Company commenced reporting revenues under its narrowcasting segment. The increase in gross profit resulted from marketing efforts and a corresponding expansion of business. together with the full six months effect of including revenue resulting from the March 2, 2004 acquisition.
As a percentage of revenues, the gross margin increased to 60% in the six months ended June 30, 2005, from 55% in the six months ended June 30, 2004. The increase in gross margin was the result of increased revenues related to the production of video content, which increased the utilization of technical staff.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $464 or 59%, to $1,244 in the six months ended June 30, 2005, from $780 in the six months ended June 30, 2004. The increase in selling, general and administrative expenses was the result of increased staff, marketing programs and development of new proprietary video programming not yet introduced to clients. In addition, corporate selling, general and administrative expense was allocated between the narrowcasting and IT services segment. The growth in narrowcasting revenues relative to IT services revenues resulted in an increase in the allocation of expenses to the narrowcasting segment.
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Other Income (Expense)
Other income (expense) consists of interest income and interest expense.
Interest expense, net of interest income, was $19 for the six months ended June 30, 2005 compared to interest income, net of interest expense of $87 for the six months ended June 30, 2004. The decrease in net interest income was the result of lower cash balances on hand coupled with interest expense on secured borrowings that commenced in October of 2004.
Income Tax Benefit
The Company recognized an income tax benefit of $67 for the six months ended June 30, 2005 which resulted from the reversal of an accrual for income tax contingencies of $69, offset by state tax payments of $2.
The Company recognized an income tax expense of $4 for the six months ended June 30, 2004 which represented state tax payments.
Loss from Discontinued Operations
Discontinued operations comprised operations associated with the IT services segment. Loss from discontinued operations was $951 for the six months ended June 30, 2005 compared to $1,915 for the six months ended June 30, 2004. The reduction in loss was the result of improvements to the utilization of billable staff due to the elimination of a number of underutilized billable people and reductions in selling, general and administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
In recent years, the Company has financed its operations principally through its own cash resources.
Cash provided by operating activities was $69 for the six months ended June 30, 2005, compared to cash used in operating activities of $236 for the six months ended June 30, 2004. In the six months ended June 30, 2005, the primary sources of cash provided by operating activities were $690 increase in accounts payable, $72 reduction in accounts receivable and $121 of depreciation and amortization, offset by $651 net loss from continuing operations and $63 of income taxes. In the six months ended June 30, 2004 the primary sources of cash used in operating activities were the $526 loss from continuing operations, $148 decrease in prepaid expenses and other current assets and a $44 decrease in other assets offset by $406 increase in accounts payable, and $68 increase in income taxes.
Cash used by investing activities was $47 for the six months ended June 30, 2005, compared to $409 used for the six months ended June 30, 2004. In the six months ended June 30, 2005, $47 was used to acquire property and equipment. In the six months ended June 30, 2004 the primary sources from investing activities was $200 of payments received on a note from the acquirer of a previously sold business offset by $542 used to purchase a business and $67 used to acquire property and equipment.
Cash provided by financing activities was $692 in the six months ended June 30, 2005, compared to cash used for financing activities of $195 for the six months ended June 30, 2004. In the six months ended June 30, 2005, $420 of the cash provided by financing activities was from the issuance of common stock and warrants and $329 was from advances against secured borrowings, offset by $57 used for cost incurred in connection with the issuance of common stock and warrants. In the six months ended June 30, 2004, $195 was used for costs incurred in connection with the issuance of common stock and warrants.
The primary sources of liquidity for the Company going forward are the collection of its accounts receivable and existing cash balances at June 30, 2005. Total receivables were 38 and 33 days of quarterly revenue at June 30, 2005 and December 31, 2004, respectively.
During the past and in 2004, management has taken action in response to the continued softness in IT services in order to preserve cash, including but not limited to significant reductions in headcount, outsourcing certain administrative functions, changing benefit plan insurance carriers, relocating the headquarters office resulting in lower lease obligations, acquiring a business in an industry with more near term growth prospects than IT services, securing a line of credit agreement against its accounts receivable and announcing the plan to divest its IT services segment. Between February 1, 2005 and April 27, 2005, the Company entered into Stock and
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Warrant Purchase Agreements with certain accredited investors pursuant to which the Company sold shares of Common Stock and warrants to purchase additional shares of Common Stock resulting in a cash infusion to the Company of approximately $355. In addition, on July 15, 2005 the Company sold its remaining IT services business to FastTech Integrated Solutions LLC, an affiliate of Beverly Hills, California-based private equity firm Skyview Capital, LLC, resulting in cash of approximately $2,300. Management has carefully forecasted its results of operations and financial position through June 30, 2006, and has determined that the remaining cash on hand, together with cash available from the line of credit, proceeds from the sales of Common Stock to accredited investors, proceeds from the sale of the IT services segment, will provide adequate cash to fund its anticipated working capital needs. In the event circumstances arise that are not factored into the forecast, management will take further action to streamline operations and seek financing alternatives.
Watchit Media, Inc. Reports Financial Results; Company Reports Sequential Revenue Growth and Record Revenue
Business Wire via COMTEX
Aug 15, 2005 8:00:21 AM
SAN FRANCISCO, Aug 15, 2005 (BUSINESS WIRE) --
Watchit Media, Inc. (OTCBB:CGZT) today announced its second quarter 2005 financial results as included on the filing of Form 10Q to the SEC.
For the three months ended June 30, 2005 the Company reported revenues of $609,000, a 161% growth over the same period in 2004. During the June quarter, approximately 44% of revenue was derived from subscription fees the Company is paid under one year and two year renewable contracts with its clients. Gross profit for the same periods increased 207% to $377,000. As a percentage of revenue, gross margin increased from 53% for the same period in 2004 to 62% in 2005.
For the six months ended June 30, 2005, the Company reported revenues of $864,000, a 179% growth over the same period in 2004. During the six month period, approximately 59% of revenue was derived from subscription fees the Company is paid under one year and two year renewable contracts with its clients. Gross profit for the six month period increased 204% to $519,000. As a percentage of revenue, gross margin increased from 55% for six month period in 2004 to 60% in 2005.
"Since launching Watchit in March 2004, we have reported quarterly increases in revenue in five out of six quarters. Our Q2 2005 and six months 2005 revenue and gross profit performance is attributable to the growing demand for customized television programming on Private Video Networks (TM)" stated James Lavelle, Watchit's Chairman and CEO. "We're pleased with our progress. The extent and magnitude of our improvement in revenue and gross margin confirms the opportunity that exists in the emerging narrowcasting sector. Although there is much more to be done before we achieve a scale that brings our stockholders the superior returns they are looking for, we are enthusiastic and energized by our continuing growth."
The Company also announced it will be conducting a teleconference to provide an update on its business activities. The teleconference will be recorded and available on Wednesday August 17, 2005 after 1:00 p.m. PST by calling 1-800-677-9138 pass code 08179.
About Watchit Media, Inc.
Watchit Media, Inc. is the leader in producing high-impact television programming for Private Video Networks TM that matches the unique interests and lifestyles of captive audiences. Using digital photography, computer editing and Internet Protocol technology, Watchit produces, schedules and presents its video content via broadband to gaming and hospitality venues across the United States. Watchit's brand marketing and proprietary television programming reaches over 25,000,000 viewers per year.
Visit the Watchit Media, Inc. website at www.watchitmedia.com.
SOURCE: Watchit Media, Inc.
Watchit Media, Inc. Ken Maul, 702-260-1000 www.ken.maul@watchitmedia.com
Copyright Business Wire 2005
Watchit Media, Inc. Launches Watchit Visitor Television Network; WVTN Presents City Visitors In Hospitality Environments With Point-of Interest Television Content and Embedded Lifestyle Advertising
Business Wire via COMTEX
Aug 10, 2005 8:00:23 AM
LAS VEGAS, Aug 10, 2005 (BUSINESS WIRE) --
Watchit Media, Inc. (OTCBB: CGZT) today announced the launch of Watchit Visitor Television Network (WVTN), a unique television channel to the gaming and hospitality market. The Company has initiated WVTN in the Las Vegas hospitality market. Like Watchit's other television programming for Private Video Networks(TM), WVTN will be presented in both standard and high-definition television formats.
WVTN will highlight local and regional historical sites, geographical points-of-interest and related visitor destinations. This content will be complimented with third party advertising and the hospitality venue's own advertising. This advertising will vary depending on the demographic and other lifestyle characteristics of the guests frequenting the hospitality venue.
"One of the advantages of Watchit's approach to Private Video Networks(TM) is our ability to focus very targeted advertising on the discrete attributes of select captive audiences," said James Lavelle, Watchit's Chairman and CEO.
"Visitor television in the hospitality sector has been around for a number of years, however, the quality of the presentation and the relevancy of the content is relatively poor. WVTN is elevating visitor television to a much higher level quality and, at the same time, presenting advertising that connects the guest more closely with their own lifestyle choices." Mr. Lavelle went on to say, "Most importantly, the hospitality venue has the opportunity to advertise their brand and amenities directly to their guests on WVTN resulting in elevating brand and brand loyalty to a higher level."
Watchit Visitor Television Network is one of a variety of Private Venue Programs(TM) produced by Watchit Media presenting relevant programming and targeted advertising to captive audiences in gaming and hospitality environments.
About Watchit Media, Inc.
Watchit Media, Inc. is the leader in producing high-impact television programming for Private Video Networks(TM) that matches the unique interests and lifestyles of captive audiences. Using digital photography, computer editing and Internet Protocol technology, Watchit produces, schedules and presents its video content via broadband to gaming and hospitality venues across the United States. Watchit's brand marketing and proprietary television programming reaches over 25,000,000 viewers per year.
SOURCE: Watchit Media, Inc.
Watchit Media, Inc. Doug Boxx, 702-260-1000 doug.boxx@watchitmedia.com
Copyright Business Wire 2005
Cotelligent, Inc. Sells IT Sales Force Automation Software and Services Solutions Business; Company To Change Name To Watchit Media, Inc. and Pursue Future In Dynamic Narrowcasting Market
Business Wire via COMTEX
Jul 20, 2005 7:00:05 AM
SAN FRANCISCO, Jul 20, 2005 (BUSINESS WIRE) --
Cotelligent, Inc. (OTCBB:CGZT) today announced it has sold its sales force automation software and services solutions business to Fastech Integrated Solutions, LLC, an affiliate of Beverly Hills based private investment firm, Skyview Capital, LLC. The transaction, which closed Friday July 15, 2005, provided Cotelligent with $2.3 million in cash at closing and the potential to earn up to an additional $1.45 million over the next three years.
"We are applying the proceeds from the sale of the sales force automation business to build our presence in the rapidly growing narrowcasting market under the Watchit Media, Inc. brand," said James Lavelle, Cotelligent's Chairman and CEO. "With a clear focus on Watchit's future, we expect to expand our presence in gaming, hospitality, commercial and residential environments with high impact, television programming on Private Video Networks(TM) that match the unique interests and lifestyles of captive audiences."
The divestiture required approval of Cotelligent's stockholders. A special meeting of the stockholders was held on Wednesday July 13, 2005. 15,849,909 shares, or approximately 56%, of Cotelligent's issued and outstanding shares of common stock, were voted at the special meeting with 15,538,079 shares, or approximately 98% of the shares voted at the meeting (approximately 54% of the shares outstanding and entitled to vote), voted in favor of the divestiture, 293,790 shares, or approximately 2% of the shares voted at the meeting (approximately 1% of the shares outstanding and entitled to vote), voted against the divestiture and 18,040 shares which abstained from voting.
About Watchit Media, Inc.
Watchit Media, Inc. is a leader in producing high-impact television programming on Private Video Networks(TM) that match the unique interests and lifestyles of captive audiences. Using digital photography, computer editing and Internet Protocol technology, Watchit produces, schedules and presents its video content via broadband to gaming and hospitality venues across the United States. Watchit's brand marketing and proprietary television content reaches over 22,000,000 viewers per year.
Safe Harbor Statement
Except for historical information contained herein, the information contained in this news release includes forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from such statements. All forward-looking statements included in this release are based upon information available to Cotelligent, Inc. as of the date hereof, and Cotelligent, Inc. assumes no obligation to update any such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: the Company's expected financial performance, as well as the Company's strategic and operational plans that could cause actual results to differ materially from such statements. Please refer to the discussion of risk factors and other factors included in the Company's most recent Report on Form 10Q, Report on Form 10K for the year ended December 31, 2004 and other filings made with the Securities and Exchange Commission.
SOURCE: Watchit Media, Inc.
Cotelligent, Inc. Curt Parker, 415-477-9900
Copyright Business Wire 2005
Cotelligent Appoints Wall Street Veteran Paul D. Frankel to Board of Directors
Business Wire via COMTEX
Apr 27, 2005 2:12:01 PM
SAN FRANCISCO, Apr 27, 2005 (BUSINESS WIRE) --
Cotelligent, Inc. (OTCBB: CGZT) announced today that Paul D. Frankel has joined its Board of Directors. Mr. Frankel is currently a Partner and Managing Director at Van Der Moolen Specialists USA, the fourth largest specialist firm on the New York Stock Exchange (NYSE), trading more than 400 listed securities. Mr. Frankel has been a member of the NYSE since 1979. In June 2000, Mr. Frankel merged his specialist firm along with his partners, Fagenson, Frankel and Streicher LLC with Van Der Moolen.
"Mr. Frankel is a very experienced financial executive who understands the public markets and also understands the responsibilities of a public company Director," said James Lavelle, Cotelligent's Chairman and CEO. "We're looking forward to having the benefit of Paul's judgment, knowledge and experience on our company's Board of Directors."
Prior to becoming a member of the NYSE, Mr. Frankel was a Partner and Director of the John Weber Gallery in New York City. He was also owner of Paul David Press, an art publishing house that published works by Sol LeWitt, Robert Mangold, Chryssa, Yaacov Agam and Robert Indiana.
Mr. Frankel currently serves on the Board of Directors of the Jacob Burns Film Center, an independent film and literacy educational center located in Westchester County New York. He is also on the Board of Variety, The Children's Charity and a number of other civic, social and community organizations in New York.
About Cotelligent, Inc.
Cotelligent, Inc. (www.cotelligent.com) creates customized business solutions that enhance existing applications, integrate disparate systems and extend our client's current environment with mobile and Web technologies. Cotelligent develops solutions on a proven foundation of reusable design components and patterns that give clients greater flexibility and agility for future requirements. We create solutions that precisely fit each of our client's needs and improve productivity with the shortest possible implementation time. Our exclusive architecture, consultative and collaborative approach has helped our clients reduce costs and implementation time by as much at 50%. Cotelligent clients include automotive, distribution and consumer package goods industry leaders.
About Watchit Media, Inc.
Watchit Media, Inc. is a leader in producing and delivering high-impact dynamic digital television programs through their Private Video Network(TM) that entertain, inform, educate and influence its audiences. The internet technology infrastructure of Watchit Media coupled with more than 12 years industry experience gives our customers a highly reliable, cost-effective, powerful visual experience that differentiates Watchit. In addition, the easy-to-use, Web-based applications of Watchit Media, such as Manageit(TM), Makeit(TM) and Scheduleit(TM), allow clients to create, manage, update and schedule their own advertising in a matter of minutes, then, via IP and broadband, produce the content directly to their Private Video Network.
SOURCE: Cotelligent, Inc.
Company Contact: Watchit Media, Inc. Amelia Kegley, 702-740-1719 or 702-419-2868 akegley@watchitmedia.com
Copyright Business Wire 2005
Watchit Media Signs 17 Additional Hotels to Narrowcast NAB; Watchit Media, Inc. Will Narrowcast to over 33,000 Rooms in Las Vegas
via COMTEX
April 18, 2005
LAS VEGAS, Apr 18, 2005 (BUSINESS WIRE) --
Cotelligent, Inc. (OTCBB: CGZT - News) announced today their wholly-owned subsidiary, Watchit Media, Inc. began narrowcasting segments of the NAB 2005 Convention to 33,000 rooms in Las Vegas, last Thursday, April 14th as attendees began coming into town. Today is the opening of the exhibit floor featuring nearly 1,400 exhibitors. Watchit Convention Network and its same-day coverage of NAB 2005 was featured in an article last Friday regarding their narrowcasting coverage and their business model in general (article below).
"We present our video content to approximately 70,000 hotel rooms nationwide where we provide unique in-room television programming to help our hotel client build brand and at the same time enhance their guests' experience," said Douglas Boxx, Vice President, Sales and Marketing for Watchit. "Now we have taken narrowcasting to the next logical step, providing convention attendees meaningful, compelling, content about their conference, in the comfort of their hotel room."
"I am proud to see our launch of Watchit Convention Network(TM) (WCN) has been so well received. WCN is one of a variety of new television channels and programs we will be introducing this year. I foresee a time in the not-so-distant future when Watchit Convention Network will be the cornerstone of convention communication to the hospitality industry," said James Lavelle, CEO of Watchit Media.
NARROWING THE FIELD
LV company rolling out technology that targets convention audience
By JENNIFER ROBISON
REVIEW-JOURNAL
As members of the National Association of Broadcasters converge on Las Vegas next week to discuss reaching wider audiences with new technology and programming, a local company will roll out a new medium designed to segment audiences into ever-smaller units.
Watchit Media of Las Vegas will debut its narrowcast Watchit Convention Network at the convention, which runs Saturday to Thursday. Attendees staying in 32,000 rooms at 22 hotels on the Strip and downtown will see WCN narrowcasts consisting of hour-long updates twice a day from the convention floor.
Participating hotels include the Aladdin, Bally's, the Flamingo, the Las Vegas Hilton and Paris Las Vegas.
"An attendee getting ready in the morning can see highlights of the previous day or an introduction to the coming day," said Douglas Boxx, vice president of sales and marketing for Watchit Media. "At the end of each day, new content will give people more detailed information on events that happened at the show. Attendees will be more engaged."
This is the first time Watchit's private video networks have carried convention events.
Previously, the company confined its network narrowcasting to in-house ads that pitched hotel amenities from in-room televisions and plasma screens outside restaurants, on slot machines and on electronic billboards.
During the convention, each WCN update will include 45 minutes of NAB-provided content and 15 minutes of ads from exhibitors, hotels and third-party vendors. Digital technology will allow each hotel to narrowcast into its rooms an ad package promoting only its restaurants and shows. That targeting offers a more effective marketing vehicle than traditional media such as broadcast and cable, Boxx said.
"Do hotels want guests in their rooms watching reruns of 'Seinfeld' and 'Friends,' or do they want them down on the casino floor? An in-room, private video network can engage guests in everything on the property," Boxx said. "Ultimately, narrowcasting is a marketing tool. We can speak to in-room guests with very specific needs."
Nancy Archer, director of publicity for Boyd Gaming Corp.'s downtown region, said Boyd's Fremont, California and Main Street Station hotels will show WCN's coverage of the convention.
"WCN is an enhancement for our guests," Archer said. "They'll be looking for convention information, and at the same time, we will be able to market our properties with ads featuring our restaurants, casinos and any promotions we're running. WCN is an added reinforcement to get our marketing message across, and it maximizes the guest's experience while staying in the room."
Archer said Boyd's downtown properties will focus on marketing restaurants and gaming -- particularly daily casino promotions and tournaments -- via WCN.
Boxx said Watchit charges a monthly fee to produce content for clients who have private video networks in rooms, on the casino floors and on electronic billboards. WCN, however, is free to clients with Watchit's private networks; revenue will come instead from ads airing during the NAB convention, which will draw nearly 100,000 attendees.
Exhibitors and third-party vendors can buy 30-second ads on WCN beginning at around $100 per spot. Client hotels can run ads for free.
Boxx said that Watchit is testing a narrowcasting product in one Las Vegas hotel that will send different programming to every room based on an individual guest's needs. Widespread application is about a year away.
Watchit's burgeoning narrowcasting business mirrors the company's internal growth. When Cotelligent, a San Francisco-based technology holding company, bought Watchit in November 2003, Watchit had nine employees, 18 clients and $800,000 in annual sales.
Today, it has 31 employees, 61 clients and about $1.3 million in annual sales. Boxx predicted "double-digit" growth for Watchit in coming years as the media business expands to major markets such as New York and Chicago.
He cited a study from CAP Ventures, a Massachusetts consulting company, that predicted the narrowcasting industry's annual revenue would grow to $2 billion in 2006, up from $338 million in 2002.
Though he declined to name specific trade shows, Boxx said Watchit is talking to "major" organizers in the garment and automotive industries about bringing WCN to upcoming conventions in Las Vegas.
About Watchit Media, Inc.
Watchit Media, Inc. is a leader in producing and delivering high-impact dynamic digital television programs through their Private Video Network(TM) that entertain, inform, educate and influence its audiences. The internet technology infrastructure of Watchit Media coupled with more than 12 years industry experience gives our customers a highly reliable, cost-effective, powerful visual experience that differentiates Watchit. In addition, the easy-to-use, Web-based applications of Watchit Media, such as Makeit(TM) and Scheduleit(TM), allow clients to create, manage, update and schedule their own advertising in a matter of minutes, then, via IP and broadband, produce the content directly to their Private Video Network.
SOURCE: Watchit Media, Inc.
Watchit Media, Inc. Amelia Kegley, 702-740-1719 Cell, 702-419-2868 akegley@watchitmedia.com
Copyright Business Wire 2005
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