BAY CITY, Mich. and TORONTO, Aug. 9, 2005 (PRIMEZONE) -- Sciax Corp. (Pink Sheets:SCXC) today released a letter to the shareholders from Mr. Giorgio Costonis, chief executive officer of Sciax Corp.
Dear Fellow Shareholders,
It is with great pleasure and excitement that I am writing to you today in my first shareholder letter since being appointed chief executive officer of Sciax Corp. Some of you have been investors in our company for a very long time. For your faith and perseverance, you have my deep appreciation. Some of you are relatively new investors in Sciax Corp. Thank you for your loyalty, dedication and interest.
My background and experience include a position at Corporate Development Services, a consulting company in the Boston area, where I was responsible for strategic business planning as the Vice President of Business Development for two years. I was exposed to music at a very young age by my mother, who was a classically trained pianist at the Julliard School of Music. In addition, I myself have produced and performed several published works of music as well and have shared the stage with well known performers such as Keith Sweat, Shai, and the Sugar Hill Gang in the past. In my estimation, this position at Sciax was tailor-made for me. This is also a very exciting time for Sciax Corp. and for me personally as we build a dynamic lifestyles and entertainment company targeting hip-hop, the fastest growing sector of the entertainment industry. What does this mean in terms of opportunity for us as an organization? Let me give you some of the size of this market:
The hip-hop industry today is celebrating 30 years of growth and is currently estimated to be a $10 billion a year industry worldwide. The hip-hop industry is the focus of the youth of today.
Here are some additional statistics for the U.S. marketplace:
-- In 2004, sales of hip-hop CD's alone topped $1.5 billion;
-- Annual sales of hip-hop clothing was $2.5 billion;
-- Related hip-hop merchandising and marketing reached $1.7 billion;
-- 42 percent of all songs in the weekly Billboard Top 20 charts
were hip-hop titles;
-- The number one entertainment programming globally on MTV and
BET is hip-hop.
The hip-hop industry is here to stay. Madison Avenue and corporate America know this is where the purchasing power is for their products. Turn on the television and you will see America's largest corporations, including Pepsi and McDonald's, utilizing superstars such as Sean 'Puffy' Combs to market their products. This is the most effective way of targeting the number-one consumer demographic in the world today -- 14-24-year-olds.
To our knowledge, we are the only public company in America that is focused on creating products for the hip-hop generation. This puts us in a very unique position to negotiate favorable deals for our company with entertainers, fragrance manufacturers and large distribution companies such as Universal Music Group.
Since Sciax first acquired RMD Entertainment, we have accomplished a lot, which we believe is slowly beginning to be reflected in our stock price. On June 10th, we announced a distribution agreement with Bungalo Records. Bungalo Records is exclusively distributed by Universal Records, the number-one music company in the world. Their market share is so superior that when Sony and BMG merged, the combined sales of both companies still couldn't surpass the Universal numbers. All of our releases in North America will be handled through Bungalo and Universal.
Second, we have agreed to engage the London-based Pickwick Group, and we have been received with open arms and on very favorable financial terms. Pickwick would handle most of our music and DVD distribution in the European marketplace. We are currently reviewing the long form agreement via our legal team and expect to announce the signing of the deal shortly.
Third, we have signed a Letter of Intent for a joint venture with Mena by Yoram Jivago to market their fragrance and fashion line. We believe that the fragrance industry offers us a tremendous opportunity in the future to leverage off the success of our music artists. In the fragrance industry, there is a great appeal to the artist and there is an obvious corporate attraction because of the profit margins seen in the industry. Whether it's Michael Jordan or J-Lo, superstars and their fragrance partners are taking advantage of the opportunities that are presented by the image of the superstars. A successful artist coupled with a hit fragrance offers unlimited potential for a company such as Sciax. We are in the final stages of our due diligence on this venture and anticipate completion within the next three weeks.
Fourth, we have recently announced a deal with Groove Mobile to distribute Sciax's entire music catalogue. This year, U.S. sales of ring-tones for cellular phones are expected to exceed $500 million while the European market is even larger than that. The media publication "The Economist" reported that the ring-tone market reached $3.5 billion in worldwide revenues, which represents about 10 percent of the overall music market. The ring-tone market offers Sciax a huge business opportunity. It also offers us a unique way to market and brand the popularity of our artists. Let me say this: The ring-tone market in the United States and Canada is only in its infancy. We intend to take full advantage of the opportunity that the ring-tone market is presenting at this time.
Finally, we announced that an agreement has been signed to release the new CD of multi-platinum recording artist 'Heavy D' through Bungalo Records. Bungalo Records is exclusively distributed by Universal Music and Video Distribution. Multi-platinum recording artist 'Heavy D' (now referred to as Hev) has completed a new album with tracks produced by Sean 'Puffy' Combs, Pharell of the Neptunes, and an appearance by Grammy-nominated artist Anthony Hamilton. 'Heavy D' left the rap world after 1999's "Heavy" to focus on his acting career, appearing in such films as "The Cider House Rules," "Larceny," and "Big Trouble."
We are still finalizing our plans regarding Sciax Defense. We have several options here and all decisions will be made with the benefit to shareholders being our top priority.
So in conclusion I offer this summary: We have identified a huge global market opportunity that produces over $10 billion dollars a year, we have produced the commodity to sell in those markets, and we have the best distribution partners in North America and Europe in our corner ready to deliver our product to retail outlets around the globe. We will be releasing two multi-platinum artists in the next year as well as our own emerging artist roster. My experienced staff and I are up to the challenge. We will do everything we can to ensure the success of Sciax. We are extremely confident of our success.
Sincerely, Giorgio Costonis Chief Executive Officer
About Sciax
RMD Entertainment Inc. Division: RMD has experienced good success on the international level with its dance hits and productions involving a variety of styles by many well-known artists. RMD has produced a wide variety of music including hip-hop, pop, world music, trance, breaks, tribal house, and underground house music. RMD's producers have collaborated with some of the most influential names in the music scene today, such as Sting, David Byrne of the Talking Heads, George Kranz, Freedom Williams of C & C Music Factory, Steve Winwood, Robin Scott, and Jazz Saxophone legend Bill Evans.
Sciax Defense Division: Sciax Defense is an emerging leader in defense imaging systems for law enforcement and military personnel engaged in counter-terrorism and other special security operations. Sciax America Inc. and Sciax Technology Inc. are wholly owned subsidiaries of Sciax Corp. (http://www.sciax.com). Wolf Pack, the company's tactical remote viewing system, is manufactured under license from Eomax Corp., and is used by law enforcement and military organizations in North America and Europe. Customers include military and law enforcement agencies of the U.S. and German governments, contraband interdiction units of Canada Customs, and LAPD-SWAT. (http://www.sciax.com/).
This release contains forward-looking statements with respect to the results of operations and business of Sciax Technology Inc., Sciax America Inc., RMD Entertainment Inc. and Sciax Corp., which involves risks and uncertainties. The company's actual future results could materially differ from those discussed. Risks and uncertainties of the company will be detailed from time to time in the company's periodic reports. The company intends that such statements about the company's future expectations, including future revenues and enforcement and defense imaging system earnings, entertainment product earnings, and all other forward looking statements be subject to the "safe harbor" provision of the Private Securities Litigation Reform Act of 1995.