SOURCE: Magic Lantern Group

May 18, 2005 08:00 ET

Magic Lantern Group Quarterly Report Delayed; Company Moves Forward With Strategic Restructuring Plan

Intends to Sell Legacy Distribution Business

NEW YORK, NY -- (MARKET WIRE) -- May 18, 2005 -- Magic Lantern Group, Inc. (AMEX: GML) ("MLG"), a leading international distributor of educational content and third-generation, digital content and e-delivery solutions, announced that the Company did not file its Quarterly Report on Form 10-Q with the U.S. Securities and Exchange Commission on a timely basis on Monday, May 16, 2005. The report could not be completed without unreasonable effort or expense because the Company has experienced significant reductions in support staff as part of its ongoing restructuring efforts. MLG intends to file the report shortly, but not within the statutorily provided grace period granted under Rule 12b-25 promulgated under the Securities Exchange Act of 1934, as amended.

MLG continues to move forward with its restructuring plan. MLG has announced that in addition to its ongoing streamlining of operations it is aggressively pursuing the sale of its legacy distribution business and in the process of soliciting offers for its purchase. The legacy distribution business recorded revenues of CAD$3 million and gross profit of CAD$2 million in 2004.

As previously announced, MLG began its restructuring program earlier this year. Recently, MLG retained the services of the international investment banking firm of Corporate Finance Associates to direct the divestiture of the legacy distribution business, which sells hard copy (VHS and DVD) educational titles to more than 9,500 schools and libraries primarily in Canada and select world markets. MLG plans to use the proceeds of the sale to focus on its direct-to-consumer digital product offerings, TutorBuddy™ for in-home use and Magic Lantern InSite™, customized for educational and corporate institutions. Both products operate from a scalable, subscription-based revenue model, and are currently in use by 10,000 users each month in North America.

Douglas Nix, Managing Partner of Corporate Finance Associates, stated, "The outstanding brand name and market recognition of Magic Lantern Communications has attracted a high level of interest from several well-qualified buyers."

President and CEO of MLG Bob Goddard stated, "Year-to-date, we have significantly streamlined our operations by eliminating non-essential employees, cutting costs and reducing overhead in the core distribution business, including the previous sale in 2003 of our dubbing operation which was not in our strategic focus. Our future direction lies in the returns that can be generated by focusing on expanding our digital asset indexing, archiving, streaming and management solutions business as our primary driver of near-term growth. We intend to use the proceeds from the sale of our legacy business to fuel the expansion of our digital business. To support these efforts, we have entered into preliminary discussions with a global distribution partner who we believe can leverage its existing distribution network to bring TutorBuddy and Magic Lantern InSite to global markets to positively impact the size and value of our subscription base."

About Magic Lantern InSite™ and TutorBuddy™

Magic Lantern InSite™ and TutorBuddy™ utilize third-generation content management, digital video encoding and indexing solutions based on MLG's proprietary VideoBase® indexing tools built by its subsidiary, Sonoptic Technologies. These digital video libraries enable teachers and students to search, play and control an expansive collection of nearly 2,000 program titles and more than 14,000 "video objects," indexed portions of video offerings independently accessible for streaming directly into resource centers and classroom desktop screens and projectors.

InSite and its U.S. sister platform "The Learning Source" are currently marketed to, and deployed in, schools and school districts across a number of Canadian provinces and U.S. states to a growing number of student users; currently about 10,000 student users monthly.

About Magic Lantern Group, Inc.

Magic Lantern Group, Inc. operates several strategic subsidiaries and divisions, including the global distribution of videos and DVDs from more than 300 world-renowned producers, its core business for nearly 30 years. Key divisions are Sonoptic Technologies, a pioneer in commercial digital video encoding and online digital video utility and leading provider of third-generation digital technology solutions and the recently launched Magic Vision Digital Media, Inc., a provider of digital on-demand/on-line desktop delivery for sports entertainment, health care, human resource, and corporate governance and compliance industries. For more information, visit: http://www.magiclanterngroup.com.

Any statements in this Press Release about future expectations, plans and prospects for the Company constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The company has tried, whenever possible, to identify these forward-looking statements using words such as "anticipates," "believes," "could," "estimates," "expects," "plans," "intends," "potential" and similar expressions. These statements, and specific references to potential proceeds from the sale of the legacy business, potential arrangements with prospective distribution partners and increased size, scope and value of our subscription base, reflect the company's current beliefs and are based upon currently available information. Accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors, including those risks identified in our Annual Report on Form 10-K, which could cause the company's actual results, performance or achievements to differ materially from those expressed in or implied by such statements. Revenue projections contained in this release are subject to the successful execution of e-commerce websites. The company undertakes no obligation to update or advise in the event of any change, addition or alteration to the information catered in this press release including such forward-looking statements.

Contact Information

  • Contact Information:
    For Investor Relations, contact:
    Gary Geraci
    National Financial Network
    617-723-2373
    email: garyg@nfnonline.com
    http://www.nfnonline.com/gml/

    At the Company, contact:
    Lorraine Villa
    Executive Assistant to the CEO
    lvilla@magiclantern.ca
    1-800-263-1717 ext. 2450

    At Corporate Finance Associates, contact:
    Douglas Nix
    Managing Partner
    905-845-4340 ext. 211