Technology Stocks : MSGI Security Solutions, (MSGI)

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From: Paul Lee11/5/2008 9:45:49 AM
   of 26
CEO's Letter to MSGI Security Solutions Shareholders
Wednesday November 5, 9:00 am ET

NEW YORK, Nov. 5 /PRNewswire-FirstCall/ -- MSGI Security Solutions, Inc. (OTC Bulletin Board: MSGIE - News) today released a letter to its shareholders from the CEO and Chairman of the Company.
Dear MSGI Shareholder,

The current state of the financial markets and economy has just about everyone concerned. In light of this, I would like to take this opportunity to highlight recent events at MSGI Security Solutions and to explain our future strategy.

As an international provider of proprietary security solutions to commercial and government organizations, MSGI's global operations insulate us to a degree from the localized problems in various markets. Beyond that, though, our customers understand that our solutions are vital to their successful operations, and it isn't an exaggeration that our solutions are vital to their survival. As a result, demand for MSGI's services has held up well, and we anticipate that it will continue to do so. The private sector's appetite for security solutions is unchecked, and with the new administration coming to Washington in January, we expect demand on the government side to rise.

The cornerstone of our business plan is what we call LSAD, Land-Sea-Air Defense. We plan to utilize innovative, patented mobile technology to provide protection and risk mitigation for valuable assets, critical infrastructure and high-ranking government executives. This network of wireless applications will eventually expand to form an unprecedented global security platform, LSAD. We will be able to protect anything, anywhere, at anytime.

Earlier this year we purchased a significant minority investment in Current Technology Corporation (CRTCF.OB) expanding our mission critical wireless product offerings. Its Celevoke subsidiary has developed a proprietary GPS asset-tracking platform. This platform utilizes the integrated use of telecommunications and informatics to enable users to remotely monitor, track, control and protect a variety of asset classes, such as automobiles, and other motorized vehicles, shipping containers, covert vehicles used for law enforcement, and even people. Celevoke hosts a variety of marquee relationships including Travelers Group, GE Capital, 20th Century Fox Federal Credit Union, CrimeStopper and many others. Our investment of $2 million in Current Technology is now worth $4 million. Current Technology's South American subsidiary: StarOne Telematica, SA is capitalizing on recent Brazilian legislation which will be phased in over the next two years mandating that every new vehicle in that country must have a GPS tracking system on board.

The strategic objective in our business plan is to grow annual revenues to the $100 million level, which would give MSGI the critical mass to unlock even greater possibilities. Certain government bodies and private organizations require their vendors and contractors to have ample capital and financial strength to execute a contract. Achieving this corporate milestone, therefore, is our focus, and we will do whatever it takes to make this happen.

Elsewhere, we signed a new contract with Hankook Semiconductor, a division of Samsung Electronics, to manufacture and supply advanced technology displays and other electronic products for commercial security purposes for Daewoo International. Under the terms of the new contract, we will subcontract to Hankook the right to manufacture certain Hi-definition display systems, which will be supplied to Daewoo for its existing customers. We have similarly entered into an agreement to supply Daewoo with products based upon specifications from its customers. Profit margin expectations for the revenue generated by this agreement will be made available after the conclusion of the first relevant quarter, which we expect will be for the period ended December 31, 2008.

Like most businesses, MSGI's plans have been delayed by the credit market's recent difficulties. On October 30th, we received a first in a series of two revolving irrevocable commercial letters of credit from Shinhan Bank Seoul Korea in conjunction with Wells Fargo Bank, NA. The first letter of credit for one million dollars is in the process of being funded and a second letter of credit for an additional three million dollars has just been approved.

Beginning mid-November, the LOCs will revolve month to month such that MSGI will have access to one million dollars on a weekly basis for the purpose of acquiring hardware and inventory from various suppliers in Korea. With this LOC in hand, MSGI now can fulfill existing purchase orders from clients both in the United States and abroad. Each letter of credit generally stays open for approximately 60 days to allow for adequate processing time of orders. The first such letter of credit was issued on October 22, 2008.

These revolving LOCs will provide MSGI with the necessary purchasing power to deliver on open contracts and importantly give us the ability for the first time to make weekly deliveries to our clients without the added expense of maintaining onsite inventory. We will now be able to start working through our significant backlog of orders and plan to provide progress reports to our shareholders on a regular basis.

In closing, I would like to take this opportunity to thank our shareholders for your support and to thank our hardworking staff, as they create the foundation of a strong and profitable company.

Jeremy Barbera

Chairman and CEO

MSGI Security Solutions, Inc.
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