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| AMWW.OB > SEC Filings for AMWW.OB > Form 10-Q on 14-Aug-2009 | All Recent SEC Filings |
14-Aug-2009
Quarterly Report
Forward Looking Statements
This report contains certain forward-looking statements as defined by the Securities Act of 1933 and the Securities Exchange Act of 1934. AIMS™ Worldwide, Inc., cautions readers that expressions of future goals and similar expressions reflecting something other than historical fact are intended to identify forward-looking statements. Words such as "May," "Will," "Expect," "Believe," "Anticipate," "Intend," and comparable terminology are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those currently anticipated or discussed in this report. Factors that may affect our results include, but are not limited to, market acceptance of our products and technologies, our ability to secure financing, potential competition from other companies with greater technical and marketing resources, and other factors described in our filings with the Securities and Exchange Commission.
General
We incorporated in the State of Nevada on March 7, 1996, under the name B & R Ventures, Inc. On March 28, 1999, we acquired all of the common stock of Enjoy The Game, Inc., a Missouri corporation, and changed our name to EtG Corporation. At that time we began operating as a media and merchandising company to promote the positive aspects of athletic competition. EtG Corporation conducted its operations through its subsidiary, Enjoy the Game, Inc., which had been incorporated in the state of Missouri on May 28, 1998. Enjoy the Game, Inc. failed to achieve profitable operations, and on November 15, 2002, we sold the subsidiary back to its president.
On December 17, 2002, we acquired AIMS Worldwide, Inc., incorporated in Nevada on October 7, 2002, as Accurate Integrated Marketing Solutions Worldwide, Inc., to act as the successor to AIMS™ Group, LLC which was organized in Virginia in November 2001. As a result of this acquisition, we changed our name to AIMS Worldwide, Inc.
Our principal executive offices are at 10400 Eaton Place, #203, Fairfax, VA 22030. Our telephone number is 703/621-3875 and our fax number is 703/621-3870. Our URL is www.aimsworldwide.com
Our Business
AIMS Worldwide, Inc. ("AIMS™ or "AIMS"), is a vertically integrated marketing communications consultancy providing organizations with its AIMSolutions branded focused marketing solutions at the lowest possible cost. AIMS™ (Accurate Integrated Marketing Solutions) increases the accuracy of the strategic and tactical direction of its client's marketing program, improves results and reduces the cost, by refocusing "mass marketing" to a more strategic "One-2-One™" relationship with the ideal customer. To further differentiate from the rest of the market, AIMS™ places intense focus on the Return on Marketing Investment, or "ROMI™." The Company's goal is to provide clients with a measurable return by first conducting an audit of the client's existing marketing strategy in order to deliver an increased return on their investment. AIMS™ is accelerating its growth by targeting and acquiring a group of core competency media and marketing communications services companies.
Our Company structure consists of seven major business units ("MBUs"):
AIMSolutions Consulting, Advertising Services, Strategy and Planning, Public
Affairs, Public Relations, Digital Marketing and Media Properties. To this end
we have entered into strategic partnerships, acquired certain operating units,
and are in the process of acquiring additional core competency companies to
achieve our desired organization.
AIMSolutions Consulting Group focuses on the use and application of the AIMS™ ROMI™ scientific process to provide marketing research, analysis, and reports from which to initiate strategies, plans, measurement tools, and manage AIMS™ marketing programs for its clients.
AIMS™ Advertising Services Group and strategic partner KassUehling, Inc., focus on full service advertising, creative design, advertising production, direct response and strategic media planning for its clients.
AIMS™ Strategy and Planning Group, through its operating units Harrell Woodcock Linkletter, Street Fighter Marketing, Bill Main & Associates, and BrandStand Group, Inc., provides marketing research, strategy, planning, consulting, and training programs that provide cost effective methods and techniques to clients in advertising their services and products, plus effective selling and telemarketing skills.
AIMS™ Public Affairs Group, via its subsidiary IKON Public Affairs Group, LLC, concentrates on bringing the best and latest information and ideas from around the United States concerning candidates, public issues, public policy, legislation, state and local ballot measures. This group provides solutions to finding information on issues and organizations concerning local, state and national governments.
AIMS™ Public Relations Group will concentrate on creating public relations, publicity, promotions, and special events through various media, networking, and promotions for its clients.
AIMS™ Digital Marketing Group, via its subsidiary Target America, Inc., focuses its activities on using and applying digital technologies for improving ROMI™ for AIMSolutions Consulting Group clients.
AIMS™ Media Group includes the Company's operating units AIMS™ Interactive, Inc., and ATB Media, Inc., which owns a 40% participating interest in Radio Station KCAA in Loma Linda/San Bernardino, California.
AIMSolutions during the past six years has been a research and development consulting practice refining its accurate integrated marketing solutions scientific processes to "go to market" and sell the marketing solution product to fee-paid clients. AIMSolutions has undertaken a number of client beta-tests in the on-going development of its vertically integrated marketing solution process. Beta-test clients have been in a number of applications industries including but not limited to public policy issues, political campaign marketing, consumer electronics, medical and health care, distribution services, consumer package goods, restaurant, food service, and hospitality, etc. The scope of these industry development activities has established a platform of knowledge, processes, and intellectual properties, sufficient as a proof-of-concept to introduce AIMSolutions. Based on the aforementioned, management believes that we have completed our research and development stage, and AIMSolutions is entering its going-concern revenue-driven consulting practice.
Trademarks and Licenses
We hold common law trademarks on AIMS™ and ROMI™, and One-2-One™. AIMS™ is a unique doctrine, process, intellectual property, delivery system and corporate development method integrated into what we believe is a powerful client/customer centric professional service model.
AIMS™ is an audio-logical-acronym for Accurate Integrated Marketing Solutions. AIMS™ is a proprietary marketing service, process, and delivery system designed to improve the aim, reduce the cost and focus the reach to target a market on a "one-to-one" basis. We believe AIMS™ and its consultancy brand AIMSolutions will achieve a client company's goals and objectives, maximizing the client's Return On Marketing Investment ("ROMI™").
AIMS™ is a marketing system and process that is designed to vertically integrate horizontal services into a focused "one-to-one" marketing program/campaign. One-2-One™ is also a trademark/service mark owned by AIMS. We believe this system can meet and exceed a client company's goals and objectives to expand their top line revenues, market and Customer Relationship Management ("CRM"™) at lower cost than legacy advertising and marketing communications programs.
Our website, www.aimsworldwide.com is the registered internet domain names owned and controlled by AIMS.
We also hold a technology license agreement with Advocast, Inc., a proprietary public issues digital marketing application service provider.
Operating Units
As part of its corporate development core competency acquisition strategy, AIMS Worldwide, Inc., owns the following operating units:
Harrell Woodcock Linkletter & Vincent, Inc.
On April 15, 2005, AIMS Worldwide, Inc. acquired Harrell Woodcock Linkletter & Vincent, Inc., a Florida corporation ("HWL&V"). HWL&V, a strategy, planning and marketing consulting group offering innovative new business and new market development services, is now named "Harrell, Woodcock, and Linkletter."
On April 19, 2004, we acquired ATB Media, Inc. ("ATB"). ATB was formed to acquire radio broadcast properties and/or invest in companies that had previously acquired radio broadcast properties in small and medium-sized markets and to use innovative techniques and low cost, engineering-driven strategies to upgrade these properties into successful radio stations by relocating such properties to larger markets, increasing authorized power and/or authorized hours of operation. ATB owns rights to receive income participation from one or more radio stations and other businesses.
ATB currently owns a 40% participating interest in Radio Station KCAA in Loma Linda/San Bernardino, California and owns rights to receive income participation from one or more radio stations if and when acquired. KCAA operates in a 24-hour broadcast cycle. On March 19, 2008, station management received approval from the FCC for a construction permit that would allow station management to expand the current facility to support daytime broadcasts at 10,000 watts.
AIMS™ and Broadcast Management Systems in Houston, the majority interest and operating owner of KCAA-AM Radio Station in Loma Lind/San Bernardino, California, are actively seeking a buyer for the station now that a 10,000 watt approval has been received from the FCC.
Streetfighter Marketing, Inc.
On October 24, 2006, the Company entered an agreement with the shareholders of Streetfighter Marketing, Inc. (d/b/a Street Fighter Marketing), whereby the Company acquired 100% of the issued and outstanding stock of Streetfighter.
Streetfighter Marketing, Inc., headquartered in Columbus, Ohio, specializes in speaking, motivation, and publishing, training businesses how to market, promote and increase sales on a shoestring budget. The Streetfighter client list includes AT&T, American Express, Walt Disney, Pizza Hut, Honda, Sony, Goodyear, Marvel Comics, The City of Dallas, the State of Arkansas, and the Country of India.
Bill Main and Associates
On May 16, 2007, the Company completed the purchase of Barbara Overhoff, Inc., d/b/a Bill Main and Associates, in Chico, Calif. Bill Main and Associates is a leading strategy, planning, publishing, and consulting firm in the restaurant, food service, and hospitality industry. A published author and noted speaker, Chairman Tucker W. "Bill" Main is a recognized authority in restaurant marketing, operations, and management. He is a former President of the California Restaurant Association. Their client roster includes Johnny Rockets, Hooters, Popeyes, Shakeys, Taco Johns, Famous Dave's, and Buffalo Wild Wings. Among distributor clients are SYSCO Food Services, Abbott Foods, Nabisco, Perdue, and US Foodservice.
BrandStand Group, Inc.
On June 26, 2009, AIMS Worldwide, Inc., entered into agreements whereby it acquired 100% of the outstanding stock of BrandStand Group, Inc. ("BrandStand" or "BGI") owned by founder Timothy C. Cusick. BrandStand is a branding, marketing and customer-generating service to the restaurant and retail industry; clients include national and regional accounts such as Silver Diner, Burger King, Schlotzsky's and Z-Pizza. Mr. Cusick continues in the employ of BGI post-closing on a full-time basis through November 30, 2009, as the chief executive officer. Thereafter, Mr. Cusick will provide part-time services to BGI.
Target America, Inc.
Acquired July 26, 2007, with a base in Fairfax, Virginia, and offices in Indianapolis and Chicago, Target America, Inc. was founded in 1995 under the laws of the Commonwealth of Virginia to meet the rapidly changing needs of not-for-profit charity and philanthropy fundraising professionals. The company is a constant innovator in the field of contributor and donor prospect research, developing and launching a completely online prospect screening service in 2003. Target America continues to upgrade and develop this tool, which now includes a wide range of services from automated Internet research and Target Tiger™, and internet search engine, to an integrated management system to serve not only the not-for profit community, but business, commerce database profiles, retail, and financial institutions as well.
On July 26, 2007, AIMS Worldwide, Inc., acquired 55% of IKON Public Affairs Group, LLC, a limited liability company formed under the of Delaware laws. Post-closing, IPAG, through its offices in Washington, D.C., and Denver, continues the business previously conducted by IKON Holdings, Inc., providing consulting services in connection with political campaigns and issue advocacy. Management of AIMS determined, while evaluating this potential acquisition, that the primary value to be acquired was the value of the customer list and services of the two principals, including the reputation and work product and methods of those individuals.
Competition
Marketing and Media services in its various forms are one of the most competitive segments of business, commerce and enterprise management. With its recent introduction, changes and dynamics caused by new online/ interactive digital communication technologies to the traditional/offline communications mediums (broadcast, satellite cast, print, post and telephone) the marketing landscape has become one of the most complex competitive and revolutionary tapestries in the world.
Our internal research indicates that an estimated worldwide $1 trillion plus is spent annually on the full range of marketing, marketing communications, marketing services, media, and delivery systems. This is a massive, diverse and fragmented service industry. As such, globally there can be little doubt as to the competition in the marketing services space in which the leading companies, agencies and firms are better established, positioned, branded, staffed and capitalized than our Company.
AIMS™ management has undertaken comprehensive industry research including evaluation of the full scope of marketing services including, but not limited to, advertising (Top 100), direct marketing (Top 20), sales promotion (Top 20), public relations (Top 20), market research (Top 25) and marketing support services (Top 200). Based on our analysis, AIMS™ believes that traditional media and marketing services, while with far greater financial and human resources than the company, do not currently offer the integrated solutions AIMS™ provides.
Regulation
Our business is not regulated by any governmental agency and approval from any governmental agency is not required for us to market or sell our products. However, some of our acquisitions may be subject to regulatory oversight. For example, the Federal Communications Commission regulates the radio property.
Employees
AIMS Worldwide, Inc., corporate headquarters has four employees, and, including our operating units, has a total of approximately thirty-two employees. We plan to hire additional personnel on an as-needed basis as our operations expand. As of June 30, 2009, we continued to have no formal employment agreements in place at the corporate level.
Description of Property
Our executive offices are located at 10400 Eaton Place, Suite 203, Fairfax, Virginia 22030. Our operating units which have separate offices are located as follows: Bill Main and Associates has one office located in Chico, California; BrandStand Group, Inc., is located in Lewisberry, Penn.; IKON Public Affairs Group has two main offices, one located in Arlington, Virginia, and the other in Denver; Streetfighter Marketing, Inc., has one office located in Gahanna, Ohio; and Target America has its base office in Fairfax, Virginia.
Three Month Periods Ended June 30, 2009 and 2008
We had $1,363,034 in revenue for the three months ended June 30, 2009, compared with $1,453,920 in revenue for the same three month period of 2008. Cost of sales was $480,791 for the second three-month period of 2009 compared to cost of sales of $53,679 for the same three month period of 2008.
Our general and administrative expenses were $1,159,219 for three months ended June 30, 2009, compared to general and administrative expense of $1,685,654 for the same period in 2008.
Our operating loss for the three months ended June 30, 2009, was $276,976 compared to $286,043 for the same period in 2008.
Six Month Periods Ended June 30, 2009 and 2008
We had $2,304,523 in revenue for the six months ended June 30, 2009, compared with $2,697,503 in revenue for the same six month period of 2008. Cost of sales was $665,553 compared to cost of sales of $85,524 for the same six month period of 2008.
Our operating loss for the six months ended June 30, 2009, was $812,357 compared to $842,911 for the same period in 2008.
Regarding our first six months 2009 operations comments from operating units management include the following:
Bill Main and Associates management reports that reduced revenue in the first six months of 2009 as compared to the first six months of 2008 can be attributed to a permanent reduction in staff which effectively eliminated proactive marketing efforts, a downturn in the economy which seriously impacted marketing consulting, workshops, and speaking budgets for the existing client base.
IKON's performance in the first two quarter of 2008 and 2009 are substantially similar, with slightly higher revenues in 2009 but slightly higher expenses, as well, attributable to the move of the headquarters office.
Streetfighter Marketing, Inc. management indicated that though they had a decrease in speaking engagements in the latter half of 2008 and into 2009 due to sudden downturn in business meetings and conferences, they have seen increased interest in the projects and consulting due to a need for clients to market with fewer dollars. In recent months there has been an increase in speaker booking with a little pressure on fee levels. Though gross sales are down from the previous year, primary due to economic conditions, management senses that clients are now feeling more comfortable allocating resources for Streetfighter services and expects their number of engagements to slowly increase as the economy improves and as their development team becomes more aggressive in their efforts.
Target America management reports that they have been able to maintain a positive bottom line in the first half of 2009 in spite of the economic crisis that many of their nonprofit clients are experiencing due to the wide economic downturn affecting charitable giving. Adjustments to expenses were implemented in the fourth quarter of 2008 in anticipation of a possible decline in 2009 revenues, and management prepared for the potential decrease.
Target America experienced their highest individual month sales in March of
2008. March 2009 sales were 50% lower in the recessed economy. The major reason
for the drastic change is that nonprofit organizations had major budget cuts
starting in 2009 to adjust to decreased 2008 donations. Management says that
"recent nonprofit giving statistics/reports showed philanthropic giving dropped
more than at any other time in half a century and most resembles the mid '70s.
The 2008 findings show giving dropped 5.7 % compared to the previous low decline
in 1974 with a 5.4% drop. Nonprofits financial investments were effected with
the market decline. The organizations have responded to the economic decrease by
. . .an overall decrease in spending." Although Target America's new nonprofit
sales were not what were expected, client renewal sales as well as expense
controls are allowing Target America to maintain its presence in the nonprofit
market.
At corporate headquarters management continues to work to decrease overhead costs to help work toward better operating margins in 2009; and, at the same time, management is seeking new revenue platforms and initiatives to overcome slight revenue declines in the first half of the year.
Corporate management anticipates that revenues in the third and fourth quarters 2009 will be higher than that first half of the year due to regularly occurring seasonal trends for IKON Public Affairs Group, LLC. Management also expects gains due to the acquisition of BrandStand Group, Inc.
BrandStand Group, Inc., Acquisition
On June 26, 2009, AIMS Worldwide, Inc., entered into agreements whereby it acquired 100% of the outstanding stock of BrandStand Group, Inc. ("BGI") for a total of $1,120,000. The acquisition was completed in two transactions.
Transaction #1 of 2
In the first transaction, the Company entered into a stock purchase agreement for the acquisition of 32% of Brandstand's outstanding stock in exchange for a promissory note to stock owners Thomas W. Cady and James P. Gregory in the amount of $400,000. The note yields 8% interest per annum and payments are due quarterly in the amount of $105,050 with the first payment due September 26, 2009, and quarterly thereafter with the balance due on or before June 26, 2010 (the "Note").
The note is secured by a pledge and security agreement under which the Company pledged 100% of the issued and outstanding shares in BGI (the "Pledge Agreement") to Thomas W. Cady and James Gregory.
Mr. Cady's 100,000 shares are included in AIMS stock certificate #2037. Mr. Gregory's 100,000 shares are included in AIMS stock certificate #2036.
Transaction #2 of 2
In the second transaction, the Company contributed a $50,000 deposit on March 16, 2009, followed on June 26, 2009, with $400,000 in cash and 1,600,000 shares of AIMS common stock to its newly formed, wholly-owned subsidiary, AIMS MS 1 Corporation ("AIMS MS 1"), a Pennsylvania corporation. The Company and AIMS MS 1 entered into an acquisition agreement and an agreement and plan of merger with BGI, pursuant to which AIMS MS 1 merged with BGI, with BGI the surviving corporation. Timothy C. Cusick, owner of the remaining 68% of the outstanding shares in BGI exchanged these shares for 1,500,000 shares of AIMS common stock and $350,000.00 in cash. Mr. Cusick's shares are held via AIMS Worldwide, Inc. restricted common stock certificate #2032 dated June 23, 2009.
The Company exchanged its 32% of the shares in BGI and 100% of its shares in AIMS MS 1 for 1,000 shares of BGI. Post-closing, the Company owns 1,000 shares of BGI common stock. These shares constitute 100% of the issued and outstanding shares in BGI. 100,000 shares of AIMS common stock was retained by BGI to use as incentive compensation to key employees. These additional shares were distributed via AIMS Worldwide, Inc., restricted stock certificate #2033 dated June 23, 2009, in the name of BrandStand Group, Inc.
In addition to the Note described in Transaction #1 above, AIMS borrowed $350,000 to finance the acquisition:
$ 200,000 from James Gregory (via Chris Findlater / FG Investments)
100,000 from Thomas W. Cady
36,500 from Barbara Nappy
13,500 from Chris Petersen
$ 350,000
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at 18% interest per annum payable interest only on a quarterly basis beginning September 26, 2009 with the full balance due on June 26, 2010.
An origination fee and cost reimbursement in the amount of $35,000 is due at maturity (unless extended in which case it is due on the extended maturity date):
for Chris Findlater Promissory Note $ 20,000
for Thomas W. Cady Promissory Note 10,000
for Barbara Nappy Promissory Note 3,650
for Chris Petersen Promissory Note 1,350
$ 35,000
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A guarantee fee and cost reimbursement in the amount of $35,000 has been paid via AIMS Worldwide, Inc., restricted common stock via certificate nos. 2036, 2037, and 2038:
James P. Gregory received 100,000 shares of AIMS common stock in exchange for his guaranty (via Mr. Findlater) of a portion of the loans; Mr. Gregory's shares are included in AIMS stock certificate #2036.
Thomas W. Cady received 50,000 shares of AIMS common stock for providing a portion of the loans; Mr. Cady's shares are included in AIMS stock certificate #2037.
Chris Petersen received 25,000 shares of AIMS common stock for providing a portion of the loans; Mr. Petersen's shares are included in AIMS stock certificate #2038.
Mr. Cady received Warrant No. A-5 for 100,000 shares
Mr. Gregory, in the name of Chris Findlater, received Warrant No. A-4 for 200,000 shares
Mr. Petersen received Warrant No. A-6 for 50,000 shares
The Company has the right to extend the maturity date of the loans for six months. If it elects to do so the lenders will receive an additional warrant to purchase 175,000 shares of AIMS common stock at $0.352 and an additional origination fee and cost reimbursement in the amount of $17,500 due and payable on the extended maturity date.
Timothy C. Cusick will continue in the employ of BGI post-closing on a full-time basis through November 30, 2009, as the chief executive officer. Thereafter, Mr. Cusick will provide part-time services to BGI.
Calculation of Goodwill . . . |
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