From annual report..
Dear shareholders,
2010 was a year of change at Yangaroo. As you may know, I joined the team in Q3 (June) 2010 and the Yangaroo
team and I have been hard at work on our profitable growth strategy ever since.
The introduction of DMDS 5.0 and the addition of SD and HD video distribution capabilities gave us the
opportunity to expand our value proposition to our existing customer base and it also provided us the ability to
move into the much larger video advertising content distribution market.
We invested Q3 and Q4 of 2010 in building our capabilities and skill sets to enable us to build our distribution
footprint with television networks, cable operators and television stations in the U.S. This distribution footprint
gives us the network destinations that become attractive to content owners seeking to distribute their content faster,
more efficiently and less expensively. We have seen a rapid adoption of DMDS at most of the larger high value
destinations we targeted. Our destination network build out is at the tipping point and we expect to profit from this
in 2011.
Our efforts were rewarded as revenue for the fourth quarter of 2010 was 44% higher than the revenue for the same
period of 2009 and revenue for the fiscal year of 2010 was 3% higher than the revenue in fiscal 2009. The increase
in revenue is a result of greater use of DMDS for music video delivery by the major labels and the independent
sector. Revenue is expected to continue to increase as billable US music audio and video deliveries grow,
independent sector usage increases, and billable advertising delivery volumes rise.
Total operating expenses for the year ended December 31, 2010 increased by 16% compared to the same period in
fiscal 2009, primarily due to recruiting costs and management changes, the addition of a new advertising division
and debenture interest. In the fourth quarter of 2010, management continued its cost cutting initiative through
reducing costs and increasing productivity by consolidating offices. The Company also reduced its expenditures on
consultants by terminating or suspending certain engagements and restructuring compensation terms with existing
consultants and employees to more closely link compensation to results. The benefits of the Company’s cost
cutting measures will be reflected fully in fiscal 2011.
As part of the Company’s annual review for indications of impairment, it determined there to be a reduction in
value of $1,543,575 in its long lived asset group, which includes patents, investment in technology and deferred
development costs. The Company believes that its cost savings initiative and the recent restructuring of
management will enhance the Company’s economic future.
Recent period highlights include a multi-year agreement with Viacom’s BET Networks to use YANGAROO’s
Digital Media Distribution System (DMDS) technology for delivery of all artist and music-related audiovisual
content to BET properties, an agreement with the Academy of Country Music to power online review and
professional member voting for the 46th Annual Academy of Country Music Awards and receiving the grant of
Canada patent number 2,349,797 titled “Biometric Rights Management System”. YANGAROO named advertising
industry veteran Anthony G. Miller to the board of directors and appointed former advertising executive Karen
Dealy to President of U.S. Advertising Operations.
In the fourth quarter we made great strides in expanding our reach beyond the music industry to the advertising
industry. The revenue growth in Q4 is just the beginning. With music video revenues continuing to grow, and the
advertising rollout well underway, we expect revenue growth to continue and accelerate.
We will continue to execute our profitable growth strategy and expect to see the full impact of our initiatives in
2011.
Scott Wambolt
Chief Executive Officer