CMG Holdings Group, Inc. Announces 2011 Results and Provides Corporate Update

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MIAMI, FL--(Marketwire -05/17/12)- CMG Holdings Group, Inc. (CMGO) (CMGO.PK) (CMGO.PK) www.cmgholdingsinc.com, a full service marketing communications holding company operating across the sectors of digital media, alternative advertising, social media, event marketing and commercial rights, today is providing the following updates regarding the company's financials, the corporate spin-off, the elimination of corporate debt, the expansion to align its business around growth opportunities.

FINANCIAL HIGHLIGHT SUMMARY FROM 2011 ANNUAL REPORT

  • Revenues of $7,231,069 for fiscal year ended December 31, 2011 compared to revenues of $4,972,093 for fiscal year ended December 31, 2010.
  • Revenue increase of 45% for fiscal year ended December 31, 2011 compared to fiscal year ended December 31, 2010.
  • Cost of sales of revenues of $5,085,957 in fiscal year ended December 31, 2011 compared to cost of sales of revenues of $2,702,047 in fiscal year ended December 31, 2010.
  • Operating expenses of $4,994,199 in fiscal year ended December 31, 2011 compared to operating expenses of $5,674,094 in fiscal year ended December 31, 2010.
  • Net Loss from Operations of $6,722,609 in fiscal year ended December 31, 2011 compared to net loss from operations of $3,702,381 in fiscal year ended December 31, 2010.
  • Excluding the impairment of inventory expenses, Net Loss from Operations of $3,482,107 in fiscal year ended December 31, 2011 compared to net loss from operations of $3,702,381 in fiscal year ended December 31, 2010.
  • Net Loss $7,787,877 in fiscal year ended December 31, 2011 compared to net loss of $4,191,682 in fiscal year ended December 31, 2010.

"Fiscal 2011 was a transformative year for CMG Holdings Group, Inc." said Jim Ennis, the Company's Chief Operating Officer. "Through the execution of organic growth initiatives, our revenues for fiscal year ended December 31, 2011 increased by $2,258,976 or 45% compared to the same period for prior year. Our consolidated expenses from operations decreased for fiscal year ended December 31, 2011 by $679,895 or 13% compared to the same period for prior year. Excluding the impairment of inventory expenses, our net loss from operations decreased by $220,274 in our fiscal year ended December 31, 2011 compared to the same period for prior year."

"During Fiscal 2012 we plan to further expand our digital media offering and as we progress through the remainder of this year, the benefits from this expansion strategy should become more evident, particularly those involving initial startup expenses for sales and services expansion that began during the third and fourth quarter of fiscal 2012. In addition, as our digital media platform gains further traction, we anticipate an additional revenue streams to reflect a growing proportion of digital media budgets from corporate clients that will enhance the capabilities of XA, The Experiential Agency, Inc. (XA) www.experientialagency.com."

Earlier this year, the company also announced plans to further align its business around the explosive growth categories of Digital Media and Digital Marketing solutions. "We are also moving forward with acquisition and investment plans in order to capitalize on Digital Media and Digital Marketing, two growing market areas" said Jim Ennis. "In Digital Media, our company plans to expand in content authoring solutions, enabling customers to create, distribute and monetize digital content. In Digital Marketing, our company intends to be the leader in solutions to manage and optimize digital marketing and advertising. The multi-billion-dollar digital media sector is poised to grow at an incredible pace in the next decade as technological advances make digital media and marketing practical and affordable platforms for large and small businesses."

"On April 13, 2012, our company has also amended its Master Agreement with Audioeye Acquisition Corporation regarding the spin-off and share exchange of Audioeye, Inc. and signed an Option, Note Purchase and Note Modification Agreement for the Purchase and Modification of Convertible between AudioEye Acquisition Corporation, CMGO Investors LLC related to the Company's amendment of its June 22, 2011 Master agreement with AudioEye Acquisition Corporation. We believe that this agreement will enhance value for Audioeye, Inc., our company as well as our shareholders, in the form of a dividend, which is 5% of the capital stock of AudioEye" said Jim Ennis. "We are working to expedite and closing this transaction as soon as possible."

The company also provided additional updates to the revised master agreement and option, note purchase note modification agreement for purchase and modification of convertible notes. Below is a summary of revised master agreement and option, note purchase note modification agreement for purchase and modification of convertible notes. For complete filing details of the Company's filings regarding these agreements, please refer to CMG Holdings Group, Inc.'s 8-K filed with the SEC on April 27, 2012 and May 3, 2012.

REVISED MASTER AGREEMENT

On April 13, 2012 the Company and AudioEye Acquisition Corporation amended their June 22, 2011 Master Agreement in order to separate the Spin-off and Share Exchange so as to allow the payment by AudioEye Acquisition Corporation of the outstanding the Company Senior Secured Notes and to cause the release of the Senior Notes to be effected as soon as practicable but no later than the closing of the Share Exchange. The Amendment also removes the requirement of shareholder approval as a prerequisite to the Share Exchange and Spin-off. On June 22, 2011 the Company entered into a Master Agreement subject to shareholder approval as may be required under applicable law and subject to closing conditions with AudioEye Acquisition Corporation., pursuant to which: (I) the shareholders of AudioEye Acquisition will acquire from the Company 80% of the capital stock of AudioEye and (II) the Company will distribute to its shareholders, in the form of a dividend, 5% of the capital stock of AudioEye. The Company, on March 31, 2010, entered into a share exchange agreement with the former stockholders of AudioEye, Inc. whereby AudioEye became a wholly owned subsidiary of the Company subject to the former stockholders retaining the right to receive cash from the exploitation of the technology of AudioEye. As part of the share exchange agreement, the Company secured has 13% Senior Secured Convertible Extendable Notes due with a current aggregate balance of $1,075,000.

OPTION, NOTE PURCHASE AND NOTE MODIFICATION AGREEMENT FOR PURCHASE AND MODIFICATION OF CONVERTIBLE NOTES

On April 13, 2012, the Company signed an Option, Note Purchase and Note Modification Agreement for the Purchase and Modification of Convertible between AudioEye Acquisition Corporation, CMGO Investors LLC related to the Company's amendment of its June 22, 2011 Master agreement with AudioEye Acquisition Corporation which was signed on April 13, 2012. The Option, Note Purchase, Modification and Escrow Agreement for the Purchase of the Convertible Notes are scheduled to close on or before May 31, 2012, time being of the essence, in accordance with the Amended Master Agreement, On April 13, 2012. The Company amended the June 22, 2011 Master agreement with AudioEye Acquisition Corporation pursuant to which the shareholders of AudioEye Acquisition Corporation will acquire 80% of the capital stock of AudioEye, Inc. from the Company, and the Company will distribute to its shareholders, in the form of a dividend, 5% of the capital stock of Audioeye, Inc. The parties have concluded that it is in the best interests of all shareholders to amend the Master Agreement to separate the Spin-off and Share Exchange and to cause the satisfaction and release of the Notes to be effective as soon as practicable but no later than the closing of the Share Exchange.

In exchange for the assignment and transfer of the above described notes to AudioEye Acquisition Corporation, AudioEye Acquisition Corporation shall pay to CMGO Investors LLC the sum of $1,500,000.00 which said purchase price being payable a follows; (A) Upon execution of this agreement, AudioEye Acquisition Corporation shall deliver to CMGO Investors LLC, to an account of the CMGO Investors LLC's choice, the sum of $112,500.00 as an Option Payment to secure AudioEye Acquisition Corporation's right to purchase the Notes described herein. In the event that this agreement is not consummated, through the fault of CMGO Investors LLC or CMGO Investors LLC'S failure or refusal to perform as provided for in this agreement, said funds shall be returned to AudioEye Acquisition Corporation. In the event that this transaction is consummated, said funds shall be credited toward the Purchase Price payable by AudioEye Acquisition Corporation hereunder. (B) On or before the "closing date" or such other time which shall be mutually agreed to by the parties. AudioEye Acquisition Corporation shall deliver to CMGO Investors LLC the sum of $1,387,500.00 in the form of cash, cashier's check or wire transfer in the total amount or, alternatively, $1,000,000 in the form of cash, cashier's check or wire transfer and, $387,500.00 in the form of 968,750 shares of restricted common stock in AudioEye Acquisition Corporation. Said shares shall be exchanged, on a one for one basis, for shares in Audioeye, Inc. subsequent to the successful completion of the Spin-Out and share exchange contemplated by the "Master Agreement" attached hereto as Exhibit A. If shares are issued, said shares shall be restricted only by standard 144 rules and there shall be no other restrictions placed on said shares. For a period from the date hereof until the expiration of the Option Term (s) or extensions thereof, which shall be May 31, 2012 (or July 31, 2012 if extended pursuant to paragraph 4 (b) hereof), CMGO Investors LLC and CMG Holdings Group, Inc. directly or indirectly, through any officer, director, employee, agent or representative, will not (a) solicit, initiate, encourage or accept offers or proposals from, or negotiate with any person other than the AudioEye Acquisition Corporation for (i) the sale of all or any assets of CMG Holdings Group, Inc. as they pertain to Audio Eye, Inc. or (ii) the sale, transfer, hypothecation or encumbrance of the Notes held by CMGO Investors LLC as described herein; or (b) furnish to any person any information with respect thereto. The closing of this transaction shall take place on or before May 31, 2012 (or July 31, 2012 if extended) time being of the essence. At the closing, AudioEye Acquisition Corporation shall deliver the balance of the purchase price to CMGO Investors, LLC, and CMGO Investors, LLC shall deliver the original Notes and all other necessary Uniform Commercial Code Forms 3 and other releases to CMG Holdings Group, Inc. such that, subsequent to the closing, CMG Holdings Group, Inc. and its assets shall be released from any and all obligations due pursuant to the notes or any other instrument executed by CMG Holdings Group, Inc. in favor of CMGO Investors, LLC. The Term and maturity dates of each of the Notes, along with any interest payments or penalties due thereon, shall individually be extended, without penalty, until May 31, 2012. Upon the execution hereof by all Parties CMG Holdings Group, Inc. shall deliver to CMGO Investors, LLC one million one hundred thousand (1,100,000) shares of restricted common stock in CMG Holdings Group, Inc. In the event that this transaction does not close on or before May 31, 2012, and the terms hereof are extended to July 31, 2012 as provided for in paragraph 4 of the agreement, CMG Holdings Group, Inc. shall deliver to CMGO Investors, LLC an additional one million (1,000,000) shares of restricted common stock in CMG Holdings Group, Inc. Notwithstanding any other provisions of this agreement, said stock shall be the property of CMGO Investors, LLC hereunder and shall not be refundable to CMG Holdings Group, Inc. under any circumstances. Provided that AudioEye Acquisition Corporation has complied with all terms and provisions of this agreement, the parties agree that the terms and provisions of this agreement, the closing date hereof and the maturity dates of the above referenced notes shall be extended for an additional sixty (60) day period, at the request of AudioEye Acquisition Corporation, provided that AudioEye Acquisition Corporation shall deliver to CMGO Investors, LLC, to an account of the CMG Investors LLC choice, the sum of $56,250.00. The notes described shall not be transferrable, assignable or hypothecated by CMG Investors LLC and they shall not otherwise encumber, pledge or sell said notes or attempt to collect on or enforce the notes. Provided that AudioEye Acquisition Corporation has complied with all terms and provisions of this agreement, the parties agree that the terms and provisions of this agreement, the closing date hereof and the maturity dates of the above referenced notes shall be extended for an additional sixty (60) day period, at the request of AudioEye Acquisition Corporation, provided that AudioEye Acquisition Corporation shall deliver to CMGO Investors LLC, to an account of the CMGO Investors LLC's choice, the sum of $56,250.00. In the event that this agreement is not consummated, through the fault of CMGO Investors LLC or CMGO Investors LLC'S failure or refusal to perform as provided for in this agreement, said funds shall be returned to AudioEye Acquisition Corporation. In the event that this transaction is consummated, said funds shall be credited toward the cash Purchase Price payable by AudioEye Acquisition Corporation hereunder.

Companies or individuals who are interested in learning more about CMG Holdings Group, Inc. or our subsidiaries, please visit www.cmgholdingsinc.com, www.experientialagency.com, www.xasocial.com, www.audioeye.com or contact Jim Ennis at Jennis@CreativeManagementGroup.com.

About CMG Holdings Group, Inc. (CMGO):
CMG Holdings Group, Inc. is a full service marketing and communications holding company. CMGO's mission is to build a national platform of exceptional companies that deliver solutions in the areas of alternative advertising, social media marketing services, event management and commercial rights. CMGO is seeking to expand its national presence via its acquired companies, capitalizing on their intellectual properties, patents, sales and marketing, new product development and continued operations via economic recovery. CMGO owns and operates wholly-owned subsidiaries, XA, The Experiential Agency, Inc. and Audio Eye, Inc.

For more information, please visit: www.cmgholdingsinc.com

About XA, The Experiential Agency, Inc. (XA):
XA, The Experiential Agency, Inc. is a wholly-owned subsidiary of CMG Holdings Group Inc. and has offices in Chicago and New York from which it provides corporations and highly visible brands with comprehensive event marketing, design, public relations 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.

For more information please visit: www.experientialagency.com

About XA Social:
XA Social is part of the XA consolidated platform and excels in social media strategy; from a social media 101 seminar, to advising and monitoring, overall management and ROI. XA Social believes social media is not a fad, but rather an extension of good public relations that is here to stay. XA Social creates lasting connections between consumers and brands in order to engage in two way communication. XA Social helps clients build their brands through innovative and authentic social media tactics and aids in creating environments of conversation and engaging relevant consumers with brands through personal interactions.

For more information please visit: www.xasocial.com

About AudioEye, Inc. (AudioEye):
AudioEye, Inc., founded in 2003, is a wholly-owned subsidiary of CMG Holdings Group Inc. with offices in Tucson and Chicago. AudioEye has developed patented, Internet content publication and distribution software enabling conversion of any media into accessible formats and allowing for real time distribution to end users on any Internet connected device. Audio Eye is focused on creating better and more comprehensive access to Internet, print, broadcast and other media to all people regardless of their network connection, device, location, or any disabilities or disadvantages an individual may have. Audio Eye solutions include comprehensive E-Learning and E-Commerce systems as well as a variety of Internet publishing products and services that enable customers to create and deliver accessible, highly scalable web-based applications.

For more information please visit: www.audioeye.com

Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, when used in the preceding discussion, the words 'believes,' 'expects,' 'intends,' 'will,' 'anticipated,' or 'may,' and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Act and are subject to the safe harbor created by the Act. Except for historical information, all of the statements, expectations and assumptions contained in the foregoing are forward-looking statements that involve a number of risks and uncertainties. It is possible that the assumptions made by management are not necessarily the most likely and may not materialize. In addition, other important factors that could cause actual results to differ materially include the following: business conditions and the amount of growth in the company's industry and general economy; competitive factors; ability to attract and retain personnel; the price of the Company's stock; and the risk factors set forth from time to time in the Company's SEC reports, including but not limited to its annual report on Form 10-K; its quarterly reports on Forms 10-Q; and any reports on Form 8-K. CMG Holdings Group, Inc. (CMGO.PK) (CMGO.PK) takes no obligation to update or correct forward-looking statements and also takes no obligation to update or correct information prepared by third parties that is not paid for by the
Company.

Contact:

Jim Ennis
CMG Holdings Group Inc.
5601 Biscayne Boulevard
Miami, FL 33137
305-751-0588
Jennis@CreativeManagementGroup.com

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