United States of America Totius Media has been focussed on its flag ship site located at Number 4 Times Square. To refresh, this involves the installation of approximately 1,200 square metres of LumaPanel screens for the top of the Conde Naste Building, the ONLY building in New York that has approval for roof-top signage of this magnitude. The site was originally sourced and negotiated by Lumacom under a “no rent” advertising revenue share deal direct with the building owner, The Durst Organization – a major NY property owner which Lumacom and Totius will develop further Lumacom sites owned by them. Since the appointment of Totius, their specialised team has renegotiated the arrangement with Durst to that of a straight lease deal on terms providing more favourable financial benefits to the Joint Venture and in turn, Lumacom. Totius has also focussed its efforts through the appointment of its specialist advertising sales Executive; Mr Donn Bennett (previously marketing manager for Sony Jumbotron) on “A-grade” advertisers for this flag ship site. Currently, negotiations are centred on 5 very high profile and highly prized international companies for the advertising rights atop of #4 Times Square. The Lumacom/Totius Joint Venture is very confident in selecting one of these very shortly. It is important to stress at this point, that the company has already obtained interest from other advertisers for the site but focus has been to secure these A-grade advertisers for the all important strategic reason that this iconic site will represent a major spring board for the rest of the United States and indeed internationally. A number of sites in addition to the Durst owned Conde Naste building have now been identified and in the process of negotiation, including others as nearby as Times Square and stretching across the US to Hollywood, California. Upon the finalisation of the advertising contract and installation of 4 LumaPanel signs on Conde Naste, we expect the “spread” of installations to grow similarly to that occurring now in Europe after the official launch of the Maremagnum screen in Barcelona. I would like to address at this stage an all important matter which in fact has also been the subject of a number of comments the Company has received from Shareholders over the last few months in relation to the finalisation and announcement of deals…. in particular, 4 Times Square. You have already heard that the process of securing the site through to finalising the advertising and installing the sign is time consuming. But let me say that in the case of the Conde Naste building there have also been some practical delays, as a new communications tower has recently been erected on the top of this building to replace those destroyed in the 9/11 attack on the World Trade Centre. However, Totius Media and Lumacom have utilised this time to develop and execute a sophisticated marketing campaign to upgrade this project from 1 sign to 4, and to secure the very best advertisers for this site. Notwithstanding this program, your Directors are conscious of the risk associated with any new venture, and has developed a risk management strategy to minimise this new venture risk. Investment of the company’s capital will only be made when advertisers have been secured for sites. This minimises the revenue risk associated with the site and the risk that expenditure of capital and operating expenses are committed to before assured revenue has been secured. Whilst in some cases, this may delay in the installation of signs, it preserves the company’s capital for low risk short payback projects. It is also very important that all Shareholders understand that the very nature and identity of the advertisers secured for what we describe as “initial” and “spectacular” sites (typically, Times Square) is as important as securing the site itself. By this I refer to the fact that the securing of an A-Grade advertiser, such as the Pepsi and Cokes of the advertising world is of great priority to Lumacom in establishing its LumaSigns as an outdoor advertising medium as an international and high profile one. We have indeed been in a position to progress and conclude advertising deals on Times Square, for instance, with US local companies where the commercial arrangement is within expectations for the site, but have made the all important strategic decision to pursue the “blue-chip” advertiser. This is not to say that we have not positioned these other local advertisers for this or other signs should our primary targets prove unsuccessful….of course we have, but we are very focussed on the big players 4 L and we are confident that we will secure these and be in a position to announce them shortly. All Shareholders need to be patient in that deals such as #4 Times Square are multi-million dollar deals in their own right and, in addition to the fact that a spectacular site such as #4 provides no better launch pad for the rest of the world, we will pursue the best advertiser, as well as the best deal. This takes time and we are extremely confident and committed to achieving this.
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