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Microcap & Penny Stocks | Sanctuary Woods recent sale, should you own the stock?

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To: TOM E WALTERS who wrote (255)	7/2/1997 6:29:00 PM
From: Bart Sampson	of 341

Sanctuary Woods Posts Fiscal 1997 Results Tuesday, July 01, 1997 08:52 AM ET SAN MATEO, Calif. -- Sanctuary Woods Multimedia Corporation (OTC Bulletin Board: SWMC) today reported a net loss of $3,677,011 or $3.30 per share on sales of $4,749,351 for the fiscal year ended March 31, 1997 as compared to a net loss of $18,698,441 or $22.16 per share for the year ended December 31, 1995 on revenues of $10,981,097. "The Company's fiscal 1997 results are not comparable to fiscal 1995 results because in fiscal 1997 the Company discontinued the distribution of entertainment products. In addition, in fiscal 1995, the Company wrote down numerous assets and took extraordinarily high reserves to account for product returns and price markdowns related mostly to its discontinued entertainment business," said Charlotte Walker, President. In fiscal 1997, the Company re-structured its balance sheet and reorganized operations into the US including the sale of its studio in Victoria, British Columbia and the closure of its Toronto office. Expenses related to the re-structuring and reorganization were approximately $1.1 million. The Company also incurred $329,000 in bad debt losses partly resulting from bankruptcy filings by two of the industry's major distributors. "Market conditions remain very challenging, however we believe that our continued focus on the Head Coach(TM) and Franklin(TM) line of educational products and our efforts to open new sales channels, including the internet, will position us for growth in 1997-1998," added Ms. Walker. About Sanctuary Woods Founded in 1988, San Mateo-based Sanctuary Woods Multimedia is the innovative developer of the Head Coach(TM) line of sports-based educational software titles derived from unique licensing agreements with NFL(TM) Properties, the National Football League Players Incorporated and Major League Baseball Properties. Current titles include Major League Math(TM), Major League Reading(TM), NFL(TM) Math and NFL(TM) Reading. Major League Math Second Edition was recently awarded Newsweek Magazine's "Editor's Choice" award. The company also manufacturers the popular Franklin series which includes Franklin Learns Math, Franklin's Reading World and Franklin's Activity Center. All are based on the popular Franklin storybook character. Sanctuary Woods can be reached at 800-943-3664 or visit the company's Web site located at ah-hah.com. NOTE: Sanctuary Woods is a registered trademark and Head Coach is a trademark of Sanctuary Woods Multimedia. Franklin is a trademark of Kids Can Press Ltd. Major League Math and Major League Reading are trademarks of Major League Baseball Properties, Inc. NFL is a trademark of National Football League Properties. /CONTACT: analysts, Charlotte Walker of Sanctuary Woods, 415-286-6000, or cwalker@sanctuary.com; or media, Lauren Finkelman, 800-287-2279, or lauren@sspr.com, or Melissa Rabin, 800-287-2279, or melissa@sspr.com, both of S&S Public Relations, Inc., for Sanctuary Woods/

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To: TOM E WALTERS who wrote (259)	7/8/1997 4:10:00 PM
From: Jamie Westock	of 341

No question that SW's been sick for a long time. But, I think the future, relative to the past, is looking up. There have been significant structural changes to the company, and the addition of the Virgin titles and purchase of Theatrix. For the quarters Apr-Jun and Jul-Sep, I don't see much happening until the Theatrix acquisition is completed. Since Theatrix is private, we don't know what it'll add in terms of revenues and profits, but there are several attractive things about it. First is the creative talent, track record and titles; 2nd is the distribution channel (much more extensive than SW's); 3rd is the additional cash (2M from Kingdon and whatever it had on hand from last year's capital injection) it brings in. I'm hoping that by the end of the year we see marked improvement in the overall business, and with it an increase in the stock value.

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To: Jamie Westock who wrote (260)	7/8/1997 4:47:00 PM
From: Bart Sampson	of 341

As far as the Theatrix acquisition goes, they are certainly a talented group of people but I don't think that they'll have as great an impact on production as you're hoping. An acquisition of a private company like this is a big shake-up and quite a few good "keepers" are lost in the ensuing shuffle. Usually, this attrition occurs because "new" managment doesn't have their finger on the pulse of the "old" company and people get ticked off and discouraged enough that they want to leave, and since "new" management doesn't know the value of their employees they allow these people to go. And, I don't know how much Theatrix's distribution connections will help; it didn't help Theatrix too much. The Theatrix deal is definitely a good deal for SW if, and this is a really big IF, Charlotte manages to utilize the Theatrix people to their maximum potential. As far as the Virgin titles go, if you go back a whole bunch of weeks and check out my post regarding this subject. Virgin dumped their whole interactive division after posting gigantic losses, so those titles didn't sell well with a huge marketing and sales budget. It's tough to say how well SW will do with those same titles with a fraction of the sales, marketing and distribution budget. Bart.

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To: Bart Sampson who wrote (261)	7/9/1997 1:52:00 PM
From: Jamie Westock	of 341

When SW announced the Theatrix acquistion, I was scratching my head as to how SW managed to pull it off. We don't know yet what Theatrix's business performance has been; I'm very curious about this as I'm sure everyone else is. It appears that Theatrix's motives to merge with SW were to become public and gain bulk as an educational s/w co. In glancing through the latest financials, the chief creative talent at Theatrix, Joyce Hakansson, has entered into an employment contract so at least it appears that she'll be around after the merger's completed. Also, in the press release announcing the merger it was noted that SW intends to keep the Theatrix group "independent" with its own offices, etc. I think CW is sharp enough to understand that the most valuable asset she bought was the creative talent. In the same financials it also details the Virgin agreement. It looks like a real win/win relationship. SW pays royalties, less CGS, on titles it sells. I didn't see any up front prepayments. So, SW does well as long as the titles move. If they don't, the only cost to SW is the opportunity cost lost on the efforts spent promoting the line.

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