Server: Netscape-Communications/1.1 Date: Thursday, 18-Dec-97 00:13:16 GMT Last-modified: Tuesday, 02-Dec-97 20:54:49 GMT Content-length: 32855 Content-type: text/html Go-Video, Inc. (Investor Information) Investor Information

Go-Video

Go-Video, Inc., is a high-end consumer electronics sales and marketing company with a proven flair for development of market-leading products, as attested by its 15 patents. Founded in 1984, the company is building on its core product line of Dual Deck™ videocassette recorders to move aggressively into new markets in the U.S. and abroad. The company is now developing premium-quality rear-projection home theater systems and digital direct-view televisions and is also developing and distributing video security products for commercial and consumer markets.


Market

Solid Opportunity

The VCR market continues to offer solid opportunity for Go-Video's Dual Deck™ product line. For 1996 the Electronic Industries Association estimates a steady U.S. market of about $2.8 billion with more than 13 million VCRs sold annually at an average retail price of $250 ($215 wholesale). Go-Video's market share is about .5 percent at an average retail price of about $650 ($440 wholesale). The company believes it can make substantial increases in market share.

Potential Tenfold Increase

Go-Video recently launched a new lower-priced Dual-Deck™ VCR, placing the Dual-Deck technology within reach of more consumers than ever. Expected to sell for $399 in most retail locations, the product sets up a potential tenfold increase of the target market available to the company. About 20 percent of all VCRs are purchased at retail for $300 to $399.

Strengthened Competitive Position

Last year Go-Video negotiated a manufacturing agreement for the Dual Deck™ line with a second supplier, Shintom Co., Ltd., of Japan. The pact has enabled Go-Video to improve margins and achieve lower price points, which are expected to further increase market share. The average retail price of Dual-Deck™ products is about $100 lower than in 1995. Samsung continues to manufacture a significant amount of product for the company.

Strong Distributor Network

Go-Video's proven ability to leverage its distributor network for key products is respected throughout the consumer electronics industry. The network includes many of the major consumer electronics retailers in North America, such as Circuit City, Sears, Montgomery Ward Electric Avenue, Nobody Beats the Wiz, The Good Guys, Thorne America, Sharper Image and Sun T.V.


Products

Dual-Deck™ VCR

Six U.S. patents protect Go-Video's dual deck technology, at present the heart of the company. The result is a solidly entrenched VCR that does what no other sold in this country can do. A Go-Video Dual Deck™ is the only VCR that can copy any videotape with the press of a button, play a tape while recording a television program and record two programs simultaneously. Since its introduction six years age, the Dual-Deck™ VCR has established a new category in consumer electronics.

Video Security Systems

Go-Video is becoming a strong competitor in the rapidly expanding video security and surveillance market, which doubled from $180 million in 1994 to $360 million in 1995. The company offers a complete line of wireless and wired products to commercial and retail markets. Go-Video derived 7 percent of its revenue from security products in the first quarter of the current fiscal year..

Home Theater

Go-Video is attacking the high-end home theater market through product offerings in rear-projection and digital direct view television. Go-Video and Prolux Corporation of San Juan Capistrano, Calif., are developing a new generation of projection televisions aimed at the home-theater and mid- to high-end consumer products markets. The project combines the patented Prolux LightCast® technology with proprietary video electronics and software from Go-Video. Products are expected to be available in late 1997.

High-end Digital Television

Go-Video has identified a niche in the U.S. television market for a new high-performance brand that bears competitive offerings by Sony, Mitsubishi and ProScan. The company and Loewe Opta GmbH of Kronach, Germany, have formed an exclusive marketing and product-development alliance to introduce a line of digital direct-view televisions to upscale American consumers. Premium prices at retail would yield premium margins. Introduction is expected to coincide with the launch of the projection-television product.


Outlook

Tight Cost Control

Go-Video expects to continue to capitalize on its patented technology, engineering and broad distribution network to increase market share. The company's strategy for Dual Deck™ VCRs is to maximize profitability while continually seeking ways to slash costs. In the second quarter of the current fiscal year, Go-Video trimmed operating expenses almost $400,000 despite substantial outlays on product development and advertising.

Great Growth Potential

The alliances with Prolux and Loewe Opta offer outstanding prospects for premium margins. Management believes the quality of high-end television products has suffered as prices have eroded. The result, in Go-Video's opinion, is a niche it believes it can profitably exploit.

Summing Up

Go-Video has developed from a one-product, one market company to a diversified video technology firm with great profit potential in multiple markets. The company is now positioned to bring consistent and substantially improved earnings to the bottom line. Management expects results to promote an overall increase in shareholder value.


Most Recent Financials


GO-VIDEO, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

Three Months
Ended September 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months
Ended September 30,

 

1997

1996

1997

1996

SALES

$ 12,325,084

$ 9,393,147

$ 22,084,390

$ 17,581,162

COST OF SALES

9,207,591

7,254,281

16,595,380

13,572,737

Gross Profit

3,117,493

2,138,866

5,489,010

4,008,425

OTHER OPERATING COSTS:

 

 

 

 

Sales and Marketing

1,238,393

972,480

2,108,491

1,774,527

Research and Development

157,622

122,537

517,126

267,206

General and Administrative Expenses

853,930

578,653

1,555,245

1,174,656

Total Other Operating Costs

2,249,945

1,673,670

4,180,862

3,216,389

Operating Income

867,548

465,196

1,308,148

792,036

Other (Expenses) Revenues:

 

 

 

 

Interest Income

2,334

9,702

4,259

11,855

Interest Expense

(168,720)

(182,586)

(278,007)

(324,637)

Other Income (Expense)

699

480

(8,594)

1,138

Total Other Expense

(165,687)

(172,404)

(282,342)

(311,644)

INCOME BEFORE PROVISION FOR INCOME TAXES

 

701,861

 

292,792

 

1,025,806

 

480,392

PROVISION FOR INCOME TAXES

10,000

0

15,000

0

NET INCOME

$ 691,861

$ 292,792

$ 1,010,806

$ 480,392

NET INCOME PER COMMON SHARE

$ 0.06

$ 0.03

$ 0.08

$ 0.04

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

12,107,305

11,331,012

11,984,439

11,331,012


GO-VIDEO, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

 

September 30, 1997

 

March 31,1997

ASSETS

 

 

CURRENT ASSETS:

 

 

Cash and cash equivalents

556,181

302,788

Receivables - less allowance for doubtful accounts of $130,000

8,386,707

7,125,385

Inventories

11,670,909

5,026,149

Prepaid expenses and other assets

271,886

35,353

Total Current Assets

20,885,683

12,489,675

EQUIPMENT AND IMPROVEMENTS:

 

 

Furniture, fixtures & equipment

585,114

563,246

Leasehold improvements

208,888

208,888

Office equipment

749,110

664,002

Tooling

1,344,260

1,296,260

Gross equipment and improvements

2,887,372

2,732,395

Less accumulated depreciation and amortization

1,966,672

1,595,705

Equipment and improvements - net

920,700

1,136,690

DUAL-DECK VCR PATENTS, net of amortization

64,288

67,626

GOODWILL, net of amortization

127,847

136,371

OTHER ASSETS, net of amortization

786,427

50,942

TOTAL

$ 22,784,945

$ 13,881,304

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

CURRENT LIABILITIES:

 

 

Accounts payable

$ 2,311,583

$ 1,226,644

Accrued expenses

1,251,703

1,378,863

Other current liabilities

1,363,877

724,240

Warranty reserve - current

158,000

173,000

Income tax payable

8,000

20,000

Line of credit

8,127,867

1,964,103

Total Current Liabilities

13,221,030

5,486,849

Long Term Liabilities

168,429

209,798

Mandatory Convertible Subordinated Debt

846,667

1,058,333

Total Liabilities

14,236,126

6,754,980

STOCKHOLDERS' EQUITY:

 

 

Common stock

12,253

11,837

Additional paid-in capital

19,949,694

19,583,419

Accumulated deficit

(11,458,128)

(12,468,932)

Total Stockholders' Equity

8,548,819

7,126,324

TOTAL

$ 22,784,945

$ 13,881,304


Executive Officers of Go-Video, Inc.

Roger B. Hackett Chief Executive Officer, President and Chief Operating Officer
Douglas P. Klein Chief Financial Officer, Vice President, Finance & Administration
Edward J. Brachocki Vice President, Marketing & Corporate Development
John R. Tweddale Vice President, Consumer Electronics Division
William C. Barthelemy Vice President, Security Products Division
Kevin P. Sullivan Vice President, Home Theater Division

Board of Directors

Roger B. Hackett
Chairman of the Board, Chief
Executive Officer and
President
Go-Video, Inc.
Thomas E. Linnen
Vice President & Chief Financial Officer
Hypercom Corporation
(P.O.S. Systems)
Carmine F. Adimando
President
Carmco Investments
(Corporate finance consulting)
Ralph F. Palaia
President, Innovative Marketing Group
(Consulting and distribution of
consumer electronic products)
Thomas F. Hartley, Jr.
President, Johnson and Higgins of
Arizona, Inc.
(Insurance brokerage and consulting)
William T. Walker, Jr.
Chairman and President, Walker
Associates
(Corporate finance consulting)

Annual Meeting

The Go-Video, Inc. Annual Meeting of Stockholders for fiscal 1998 will be scheduled for August 1998. The exact date and location of the meeting has not been set. The company's current fiscal year ends March 31, 1998.


Shareholder Information

Go-Video, Inc. common stock is listed on the American Stock Exchange under the symbol VCR. Go-Video's Report on Form 10-K for the fiscal year ended March 31, 1996, and copies of the Annual Report may be obtained without charge by writing to: Go-Video, Inc., 7835 East McClain Drive - Scottsdale, Arizona 85260 - Attn: Corporate Secretary - Telephone: 602-998-3400 - Fax: 602-951-4404 - E-mail: InvestorInfo@govideo.com

Transfer Agent and Registrar Independent Accountants Legal Counsel
American Securities Transfer, Inc.
1825 Lawrence Street
Suite 444
Denver, CO 80202-1817
Deloitte and Touche L.L.P.
2901 North Central Avenue
Suite 1200
Phoenix, AZ 85012
Snell and Wilmer L.L.P
One Arizona Center
Phoenix, AZ 85004

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