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iTeknik Holding Corporation Releases Letter to Shareholders
WEST PALM BEACH, FL--(Marketwired - Jun 12, 2017) - iTeknik Holding Corporation (OTC PINK: ITKH) today released a letter to shareholders from its Chairman, Fred Wicks.
iTeknik Holding Corporation has seen many challenges and undergone some dramatic changes over the past few years. In this letter to our shareholders I wanted to take the time to review with you where we have been, where we are now, where we plan to go.
Where we have been:
Over the last few years, we realized that our primary operating company, Send Global Corporation, suffered from eroding margins due to a tremendous increase in competition in the telecom industry as well as major changes in the availability and cost of the products we sold. This downward trend was accelerating and we could see the day that we would no longer be a "player" in this space. Because of these competitive factors, we entered into an agreement in September 2015 with one of our former officers to begin the process of divesting ourselves of Send Global. We initially sold 49% of the business in a share exchange with this former officer. Then in June of 2016 we divested our controlling interest by offering a portion of our stock to an unaffiliated third party for services rendered, and we became a minority shareholder. Since then Send Global Corporation has ceased operations and we have written down this minority interest to zero on our books and records.
Our new direction:
The telecom industry had been very volatile and constantly changing for some time. So we decided to search for opportunities that could provide for growth, in a different high tech space. We looked for companies that would also benefit from our technology and business know how. We decided to focus our search in a number of high tech sectors. One of those areas included businesses in digital media, advertising and marketing, especially fully integrated agencies.
Using the relationships that we had developed over the years, we discovered an opportunity with TCA Global Master Credit Fund, L.P. ("TCA"). TCA had recently foreclosed on the business of a fully integrated Advertising Agency and they were looking for a buyer to purchase the assets of that business. Based on the projections supplied by TCA, as well as the fact we would be able to hire some of the professionals who worked for the former Agency, it looked like an attractive opportunity. TCA offered us a $15 million dollar revolving line of credit with an initial advance of $5 million from which we paid TCA for the assets and increased our working capital. We closed this transaction on December 30, 2016 and placed the assets into our Big Rhino Agency, subsidiary.
Where we are now:
From the outset we encountered issues with this new venture which led to our decision to initiate litigation against TCA. Our suit alleges among other things, that TCA withheld more than $300,000 of our reserve capital at closing, and misrepresented the financial projections of the former agency. In addition the suit alleges that TCA didn't pay certain liabilities of the former company that we were obligated to pay in order to continue the new business. While there are no guarantees in litigation, we filed this action because we believe that we will get a better result for our shareholders. Our dispute with TCA has not impacted the operations of Big Rhino. And though we have disputed the amount owed to TCA in our litigation, we have taken a conservative approach by posting our financials to include the accrual of the full interest charges that are claimed by TCA.
Becoming a fully reporting Company on the OTC QB.
We have engaged a PCAOB accredited firm, L&L CPAs, of Charlotte, North Carolina to audit our financials so we can move up to the OTC Markets QB tier. We expect this project to be completed sometime after the end of our 2017 Fiscal Year which ends on June 30, 2017. We believe that this move will benefit our shareholders by building confidence in our financial reporting and allow us access to better priced capital in order to make acquisitions in the future.
Prospects for our subsidiary, Big Rhino Agency
Our exceptional team at Big Rhino has been working hard to increase sales and turn a profit. Considering that the company only started operations on January 1, 2017, their efforts have been outstanding. On May 22nd 2017 we reported our results from our first quarter of operations. The results are very encouraging. For the quarter ended March 31, 2017 we had Gross Revenues of $499,264 and Net Income of $74,534. Big Rhino Management has been working hard to acquire new accounts and we expect revenues to continue to grow. We also expect income to increase for the following reasons. 1) We are currently experiencing higher than normal expenses as we ramp up to handle the new influx of business, 2) we have one-time costs associated with becoming a fully reporting Company and, 3) we have ongoing litigation costs which will eventually cease.
Another very encouraging sign is that Big Rhino Agency is expanding its reach into non-automotive sectors. When we acquired the assets that became Big Rhino, almost all of its revenue was derived from automotive dealers. The advertising needs of these clients are seasonal with the quarter just ended being the least advertised time of the year. The late spring-to-fall seasons are the busiest months for automotive clients and we should see this effect on future financials. In addition, we have begun to diversify with clients outside of automotive, including new medical accounts. With the great base of automotive clients and the new non-automotive business, we expect to smooth out revenue over the course of the year.
With Big Rhino as a base and solid audited financials we will begin to look to make other acquisitions in the advertising, marketing and digital space as well as other complementary businesses. In addition, we will work hard on lowering our debt. We are confident that we have the ingredients to build something special and deliver more value for shareholders.
As founder and Chairman of iTeknik Holding Corporation, I want to take this opportunity to especially thank those shareholders who have been with us for many years. I have met some of you personally and talked with many more on the phone. Your Company has overcome many obstacles and now is moving in an exciting new direction. One thing remains constant. Your management team has always focused on increasing shareholder value. As I have told you in the past, we too are shareholders. We believe that by staying true to our strategic plan and working hard we will build a substantial company with revenue and earnings growth. So I want to thank those of you have stayed with us for so long through our turbulent times. I truly appreciate your loyalty and I promise that we will work hard to achieve our goals.
iTeknik Holding Corporation (OTC PINK: ITKH) trades on the OTC Pink tier of the OTC Market For quotes and market information on the company, visit otcmarkets.com.
About iTeknik Holding Corporation:
iTeknik Holding Corporation's strategy (OTC PINK: ITKH) is to acquire fundamentally sound companies that are market accepted, scalable and demonstrate a quantifiable value proposition. Our focus is in companies that have strong market presence, brand awareness and talented and dedicated management teams. We seek companies with the potential to achieve exceptional performance over time in the Marketing, Advertising and Digital Media space and related technologies. iTeknik lends its operational support, management approach and financial resources to these companies to achieve improvements in revenue and earnings growth as well as positioning in the marketplace. iTeknik Holdings currently operates one wholly owned subsidiary, Big Rhino Corporation.
About Big Rhino Corporation:
Big Rhino Corporation is a wholly owned subsidiary of iTeknik Holding Corporation and is a full-service advertising and digital media agency. Big Rhino excels in providing on-strategy, fast, precise and creative marketing solutions that get our clients BIG results. We maintain a nimble in-house creative team with a unique talent for delivering the highest quality creative that we believe is faster than anyone else. When combined with our completely integrated digital, interactive and media teams, our clients have access to a strategic and responsive advertising machine. For more information check us out at www.bigrhino.agency
Safe Harbor: This document contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, the ability of the Company to successfully implement its turnaround strategy, changes in costs of raw materials, labor, and employee benefits, as well as general market conditions, competition and pricing. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in this letter will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as representation by the Company or any other person that the objectives and plans of the Company will be achieved. In assessing forward-looking statements included herein, readers are urged to carefully read those statements. When used in the Annual Report on Form 10-K, the words "estimate," "anticipate," "expect," "believe," and similar expressions are intended to be forward-looking statements.