Guitammer Builds Theater Footprint & Broadcast Deals in 2013

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Whitefish, MT / March 19, 2014 / Imagine being able to physically feel the roar of an engine while watching a motorsports race on television or feeling the force from an explosion during an action movie. These sensations are quickly becoming a reality thanks to Guitammer Co.'s (GTMM) innovative low-frequency transducers that convert sound into tactile sensations. The ButtKicker brand technology has been installed across more than 100 cinemas with over 13,000 seats worldwide and has been growing in popularity among cinephiles and gamers in the at-home market.

On March 14, 2014, the company announced its fiscal fourth quarter and 2013 year-end financial results along with its operational progress and milestones for the year. In this article, we'll take a look at where the company is headed next quarter and what investors can expect in 2014.

Growing Cinema Presence

Guitammer's technology was added to over 4,000 "4D" cinema seats throughout the United States, China, and Hong Kong, during 2013. These cinemas generate immediate revenue for the company and expose thousands of people each day to its technology. As management rolls out its broadcast television strategy, which we discuss below, the exposure in cinemas could prove invaluable to widespread consumer adoption.



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In the U.S., management nearly doubled its theater footprint after signing an agreement with a top-4 theater operator testing a new concept theater. ButtKicker technology has already been installed in approximately 1,100 seats across five theaters in key U.S. markets, and could be established in many more if the theaters prove as popular as initial results suggest. As with 3D technologies developed by companies like RealD (RLD), ButtKicker adoption could grow quite rapidly as cinemas compete with each other to offer the latest technologies to enhance the viewer experience.

The enhancement of viewer experiences has already been quantified in objective exit-surveys conducted on moviegoers. On March 10, 2014, the company announced the results of a survey that indicated 83% of moviegoers would pay $2-4 more; 45% said they would pay more than $8; 67% said they would drive an extra 4-7 miles; 42% said they would drive more than 10 miles; and, 80% agreed that the technology greatly improves their opinion of the theater.

Internationally, the company more than doubled its theater footprint in China and Hong Kong as the region continues to embrace the unique technology, although it experienced a slowdown in European sales - particularly in France - as the region continues to struggle with an economic recovery.

Broadcast Television Debut

On September 14, 2013, Guitammer debuted its tactile-enabled broadcast technology with the National Hot Rod Association ("NHRA") on Disney Company’s (DIS) ESPN2 telecasts. Consumers with ButtKicker products could actually feel the roaring of engines and impacts from crashes when viewing live television. By licensing the technology needed to encode tactile sensations into a broadcast, management aims to develop a Dolby Laboratories Inc. (DLB) like solution that could generate high-margin recurring revenue.



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Broadcast television represents an enormous market, particularly when it comes to live sporting events. Many sportscasts could benefit from the addition of a tactile 4D data stream. As an example, NFL broadcasts on FOX alone averaged 21.2 million viewers per game in 2013, which represents an 8% increase over last year's viewership of 19.7 million, making it the most watched NFL season ever. Tactile broadcasting could help increase viewership and make certain networks more competitive than others among consumers. With the NFL making over $10 billion per year, there's certainly a vested interest in making the experience as enjoyable as possible.

As consumer adoption rises, hardware companies may also be interested in licensing the company's tactile sensing technology in order to capitalize on the rising demand. For example, Dolby Digital licenses its technology to third-party speaker manufacturers.

Potential Investment Opportunity


Guitammer experienced a pivotal year in 2013 as it expanded its theater footprint and launched its broadcast initiative. In addition, management managed to shore up its balance sheet with $1.25 million in new equity capital from private placements and a $70,000 improvement in its working capital deficit. Gross margins also increased from 40% to 42%, indicating that it retained pricing power, despite lower overall revenue due largely to the slowdown in Europe.

"In 2013, our strategy of building awareness of our scalable and disruptive broadcast technology supported by cinema sales took several important steps forward and we look for that trend to continue in 2014," said Guitammer President & CEO Mark A. Luden.

In 2014, investors should look for more widespread adoption of its broadcasting technology among sporting networks, as well as an increased U.S. theater footprint stemming from its partnership with a top four cinema operator. These two factors would likely help boost both its licensing revenue and its consumer sales as the technology becomes more ubiquitous.

For more information, see the following resources:

- Company Website
- Recent SEC Filings

Click here to receive free email updates on Guitammer Co. progress: http://www.tdmfinancial.com/emailassets/gtmm/gtmm_landing.php

Disclosure:

Except for the historical information presented herein, matters discussed in this release contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Emerging Growth LLC is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. For making specific investment decisions, readers should seek their own advice. Emerging Growth LLC may be compensated for its services in the form of cash-based compensation or equity securities in the companies it writes about, or a combination of the two. For full disclosure please visit: http://secfilings.com/Disclaimer.aspx
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