Impart Media Group Inc fkaa IMMG

[rocky822]

Impart Media Group Releases Operational Update



Company Exceeds 2006 Q4 Revenue Forecast with Estimated $2.34 Million, 2006
Revenues Total $6.65 Million; Forecasting 2007 Revenues of $18 to $21
Million

SEATTLE, Feb. 6 /PRNewswire-FirstCall/ -- Impart Media Group, Inc. (OTC
Bulletin Board: IMMG), a provider of end-to-end networked digital media
solutions for the enhanced delivery of information, merchandising, brand
marketing, and advertising, announced today an operational update to its
shareholders including business strategy. In addition, the company has
announced preliminary unaudited revenue results for the Fourth Quarter of
$2.34 Million, representing a 42% increase over Third Quarter revenues.
Joe F. Martinez, Chairman & CEO and Principal Financial Officer of
Impart Media Group, issued a letter to shareholders to provide an
operational overview and progress report.
________________________

Dear fellow shareholders:
At the last Operational Update in October 2006, I outlined several
objectives for our company:
* Immediately focus our company and streamline our business in preparation
for a significant and successful 2007.
* Reduce operating costs by eliminating all non-core business absorbed in
recent mergers and acquisitions.
* Replace our CAPEX network-owned revenue model with the implementation of
the strategic 'ImPartner' program.
* Prioritize and expedite all sales efforts to targeted key customers,
with major rollout potential, and integrate multi-tier, product
variations of Impart IQ(TM).
* Capitalize on the E&M (Impart Media Advertising) direct response
advertising business unit potential by year-end.
* Accelerate progress to cash flow positive as soon as possible.
I am very happy to announce that we have accomplished most of those
objectives in the past three months:
* We made tremendous strides in our finance department with the hiring of
Stephen Wilson. Under his leadership, we have streamlined our financial
reporting process and the full integration of our E&M Advertising
(Impart Media Advertising) subsidiary into our core business. Our
comprehensive reporting and audit procedures are in place and we have
eliminated all of the legacy legal issues and accounting challenges that
Impart inherited by its recent acquisitions.
* Business units that were no longer core to our revamped business mission
were closed.
* We repositioned our CAPEX business model by strategically aligning
ourselves with a name brand, out-of-home space partner that will provide
the capital requirements for equipment capital expenditures and fulfils
the advertising placement needs. Impart will continue to provide the
content and management of the systems that are installed. We plan to
announce this partnership in March, when the proper client and partner
approvals are in place and we expand our airport deployment efforts.
* The company's top-to-bottom product offerings were augmented with the
addition of the Impart IQ mini(TM), which was designed with small,
integrated touch screen display form factor, Debian Linux or Microsoft
Windows embedded operating system options, solid state flash storage,
network or standalone configurations -- and an expedited development and
manufacturing cycle, with aggressive cost and pricing economies.
* We experienced a very enthusiastic market acceptance of the Impart IQ
mini(TM). Microsoft Corporation is utilizing the Impart IQ mini(TM) for
a merchandising application showcasing their Zune, Vista, and Office
2007 product roll outs with mass market retailers, globally in 2007.
* We also continued to expand our comprehensive product line with
important features and technical functionality, via the platform
additions of Impart IQ Interactive(TM), Impart IQ Live(TM), and Impart
IQ Streams(TM).
* The company continues to deliver complete turnkey systems, equipment and
subscription services to clients such as RediClinic, MediPlay, AT&T,
Bell Canada, Dole Foods, and others as we expand their digital media
networks.
* Significantly, I am pleased to announce that the company surpassed the
1,000 mark of sold units for the Impart IQ(TM) platform by year-end 2006
-- a significant milestone considering the Impart IQ(TM) product line
did not start shipping in quantity until June 2006.
* Our E&M (IMA) business unit experienced its best quarter in twenty years
in Q4 2006, with an array of new clients and increased margin
performance, tied to well-received creative campaigns in direct response
advertising.
From a financial perspective, we would have been cash flow positive in
early Q1 2007, however, due to product shipment and installation delays (a
result of UL approvals and customer deployment strategies), we now
anticipate to become cash flow positive in Q2 2007. Becoming cash flow
positive is predicated on product delivery schedules to Europe, client's
real-estate negotiations and other factors, however as we expand, we also
diversify our client pipeline.
Significantly, based on our impressive business turnaround in Q4 2006,
the company will not require additional equity funding, but will rely on
less dilutive credit lines and small strategic investments. This approach,
along with our strategic relationships in place or in the process of
formation, will assist the company with our capital requirements for the
foreseeable future.
So even though 2006 was a very challenging and business transitional
year, we feel that our management team made considerable progress and we
now look forward in 2007 to showcasing exciting product innovation,
increased market penetration, and major revenue growth.
Our objectives for 2007 are:

* Reach cash flow positive by the end of second quarter.
* Meet or exceed our revenue forecast of $18 to $21 million by December
2007.
* Continue to strengthen our financial reporting capabilities to
accommodate the timely reporting requirements as the company grows in
complexity and ramps up revenue recognition from various markets.
* Accelerate mass deployment of our Impart IQ(TM) product line to our key
customers such as AT&T, Microsoft, RediClinic, Dole Foods, etc.
* Install and monetize Detroit and Dallas-Fort Worth airports, in concert
with our new strategic CAPEX partner to be announced soon.
* Enhance our recurring revenue model by increasing our creative and
content development department.
* Continue to integrate the E&M business unit into Impart, with the launch
of Impart IQ Ads(TM) in third quarter.
* Continue to seek 'ImPartner' relationships for market reach,
deliverables, and scalability and make strategic and accretive (to
earnings) acquisitions.
* Expand efforts internationally with product distribution and
representation efforts in mainland China, Mexico, Russia, and the UK.
* Continue to build the Impart Leadership Team, as the best in the Digital
Signage sector.
* Put in place a more formal and timely communications process with our
shareholders.
We feel strongly that if we focus on the core fundamentals of the
business and meet our revenue projections, continue to deliver the best
service in the industry to our clients, and maintain and nurture key
strategic relationships, the company, and its shareholders will be rewarded
with a stock price that begins to reflect our very promising future. We
fully realize that there are no short cuts to building revenue and net
income, it has to be accomplished on the basic fundamentals of hard work,
timing and execution. In doing so we continue to innovate with our
technology platforms, expand our market reach globally, and hire and retain
the best and brightest people in the industry.
In conclusion, let me quickly review the state of the digital signage
industry from my perspective. I have voiced in the past that the industry
has an identity crisis with no real handle on what the delivery of digital
media really means or how confusing it can be for clients as they evaluate
the multitude of options available. With over 24 years in the business, the
principals at Impart have seen the vast confusion. At the low end of the
spectrum we have a traditional AV (audio-visual) dealer that hangs a
display screen and considers himself a Digital Signage expert and a player
in the digital media business. On the other end are the "alphabet
broadcast" networks (ABC, CBS, and NBC) which are struggling to keep their
commercial advertisements viewable and relevant, as more and more people
opt-out by means of DVR's (Digital Video Recorders), DVD's,
Video-On-Demand, and the Internet -- bypassing most, if not all,
advertising. In the middle of the spectrum is the highly successful Google
that delivers targeted and relevant advertising on the Internet, using
their "Search Engine" as the means to attract eyeballs. Also in the fight
for advertising awareness and mass audiences is the out-of- home sector
(i.e. the bill board companies) with their CPM (cost per thousand ad
impressions) model, who, despite high PE (price earnings) multiples, are
fighting a battle of attrition with more and more visual road side
pollution obstacles and stagnating ad revenues due to boring static
content. To add video or digital content to road side billboard advertising
is not only expensive and technically challenging, it is also facing
challenges from safety experts and governmental regulators who are just now
beginning to cope with the safety concerns of cell phone usage, GPS visual
directional devices, and personal audio or video (i.e., iPod), along with
all the other distractions that are confronting and preoccupying the
attention of the driving public.
What does this all mean to Impart? We would call it the "perfect storm"
where traditional media is being completely disrupted and transformed by
technology, due to an inattentive & mobile audience, fluid demographics and
other psychosocial phenomena that are permanently changing the way brands
and merchandisers have traditionally sought to advertise or promote their
products. Adding "chaos theory" to the equation, some of these changes are
U.S.-centric, while other rules are somewhat varied in Europe, Asia, and
Africa (just now receiving the first semblance of media in the form of cell
phones, television, the Internet, and, in some cases, even radio). In some
areas of connectivity, many parts of the world are more advanced because of
their embrace of a single cell phone standard operating system and
government subsidized broadband connectivity, in contrast to the U.S. that
has numerous competing and market driven systems -- still -- what drives
advertising is media content, an area that the U.S. still dominates.
To fully understand why the Impart solution is different from all of
the other competitors that are in the delivery of some form of digital data
to a display screen in the out-of-home sector, one needs to first dissect
the business model. Some of the competing business models are software
packaged (i.e. CD), others are hardware component "box sellers", and a few
are offline, media based (e.g. DVD's and flash memory sticks/cards). So the
word "media" is confusing and that is exactly where the problem with many
business and revenue generating models exists. The purpose of this
operational review is not to make the reader technically expert in the
delivery of digital media, but to emphasize the primary differentiator as
to why we at Impart are confident in our future success and why the market
entrance of Cisco and Google only serve to validate what we have been
stating for many years.
The founders of Impart: Steve Corey, Laird Laabs, and Tom Muniz (who in
the early days led the burgeoning industry by defining the required
components of display, multimedia PC, and connectivity -- matched to
relevant, real-time and future web based content), recognized that with the
advent of the Internet, similar to the early days of radio and television,
an infrastructure needed to be built so that an IP-based network could
deliver content fast, accurately, reliably, and securely. The founders of
Impart utilized many variations of software being offered at the time and
developed a sophisticated network backend, adept operational processes, and
a scalable deliverables architecture that modularly integrates with a
universal multitude of products, services, and data interfaces essential in
the mass deployment of digital signage. For the most part, many of the
early digital signage networks did not scale adequately and efficiently and
were dependent on advertising for survival. Some networks were off target
in their messaging and audience, time wasting in their environment, pilot
or proof-of-concept sinkholes, and others ended up dying in the hands of
the Fortune 500 IT departments, who thought they could internally replicate
and deliver on the marketing promise of digital signage. Under the new
leadership and broad vision of Impart CTO Todd Weaver, complemented with
the application expertise of Lars Jensen, the Impart IQ(TM) product line
has innovatively evolved by taking the mystery and cost out of the "media
server". When you factor in the "iTunes and YouTube on steroids" potential
of Impart IQ Streams(TM) and Impart IQ Ads(TM), we believe the industry, as
we know it today, will be forever changed and will become one of the
largest media opportunities for the foreseeable future.
So does not the Impart IQ(TM) product line alone change the industry?
Not necessarily ... at the end of the day, if products don't work or if the
service is poor, success will not be the happy end result. I had the
opportunity in my prior career to have worked with IBM, ROLM, and N.E.T, --
all very sophisticated companies that were responsible for the delivery of
mission critical information to Fortune 500 companies, such as Rockwell
International, American Honda, American Airlines, Federal Express, and Bear
Stearns to name just a few. These companies relied on the products that I
sold to run their businesses. It is my contention that up to now digital
signage had not yet arrived to the mission critical stage, akin to a
mandatory, public utility service (i.e. water, electricity, phone, cable,
Internet etc.). However, as more advertising budgets are being diverted to
the out-of-home sector, digital signage networks and their consequent
content delivery are fast becoming business critical, if not mission
imperative. For example, if a one-minute ad does not run properly during
the Super Bowl, millions of dollars and the millions of captive viewing
audience are wasted and the broadcast network is required to "make good".
The same is true if a 250 screen, digital signage network running ads, goes
"dark" for any length of time due to service interruption. When it comes to
relevant, late breaking, or time sensitive content, in the case of our
airport kiosk deployments that are pending major expansion, if there is a
security breach at the airport, our system has the capability of alerting
every display screen (or targeting specific terminal screens) in the
airport of the security breach and guiding people into a safety zone or
diverting only those affected. If the alert happens to be a genuine threat
-- such as a bombing, biological/terrorist attack, fire, or even an Amber
Alert to signify that a child has gone missing -- one could effectively
make the case that digital signage is now indeed mission critical and a
utility service required. Why then would owners or deployers of digital
signage networks -- requiring these type of business critical communication
scenarios -- rely and take the risk of installing shrink-wrap software,
hardware "box seller", or sneaker net (offline) solutions, with
off-the-shelf commodity PCs, consumer grade displays, and cheap Internet
connectivity supported by a mix bag of vendors and service providers and
all pointing the finger at one another, when mission critical media
delivery has failed?
This is the case-in-point and foundation of market and business
differentiation for Impart. We take end-to-end responsibility, from the
design concept and communication goals of the network, fixture design in
POS (point-of-sale), POP (point-of-purchase) environments, kiosk
enclosure/fabrication, content development/management, network/site
monitoring, data/web server hosting, business grade connectivity
provisioning, installation, customer support, and onsite service dispatch.
We also collaborate with our certified "ImPartners" to fill any of the
voids that might be present in any network or media service delivery, such
as programming, creative design, and advertising placement. This is an
important statement, because from the presentation layer, which is the ad
or content placed on the display screen, through the media player, the
router, Internet connection, and all the way back to Impart's NOC (Network
Operation Center - with our proprietary data storage and data mining
system), we are responsible for the entire delivery, security, and
maintenance of the network, plus the creative development or repurposing of
the content. We are also responsible to the insertion of the ads (when our
Impart IQ Ads(TM) portal is activated in the next few months). We don't
farm it out, we do it all ourselves, as a turnkey solution provider. The
digital signage network or media property owner only makes one call.
This represents only a small facet of the ultimate reason why we are
looking forward to a very successful 2007. However, it is setting the stage
for even better things to come as deployment of out-of-home digital media
crosses over, en masse, to the millions of display screens that today we
call cell phones or mobile media. After many years of jump starts, the
Digital Signage sector is set to explode, as can be witnessed firsthand
with the significant evolution of Focus Media in China, now approaching a
$4.5 billion market capitalization, to the recent market announcements of
infrastructure giant, Cisco, and the omnipresent Google, with their
targeted advertising and search engine. Such companies are clearly
legitimizing the sector and we welcome their entry and even their
collective success in our space. Needless to say, these same companies will
create more opportunities for Impart by validating our pioneering industry
development efforts and attaching tangible valuation to our wealth of
market experience and industry knowledgebase. Impart intends to capitalize
on its near first-to-market leadership position -- that up to now has
increased its market share by word-of-mouth and reputation in the industry
-- by securing projects that only make financial and technical sense.
We appreciate our shareholders patience during this past year and look
forward to a very rewarding 2007.
Sincerely,

Joe F. Martinez
Chairman & CEO, Impart Media Group, Inc.



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