Small Cap Network Blog

If you want proof that it can pay to bottom-fish, here you go…..Ckrush Entertainment (OTCBB: CKRH) shares surged from a low of $.17, hit on the 18th, to the current price of 0.29$. Folks, that’s a 70% gain in less than four days. Granted, the precise bottom was probably impossible to pinpoint, but even buying at the high of $0.19 on the 18th would still leave you up by 52% on the trade.

While we applaud Ckrush shares, and congratulate those lucky few who dared to buy at what seemed like the beginning of the end, that’s not even our purpose with this entry. No, there’s a totally seperate point here……and one I already made above.

Sometimes, the right move is to go against the grain, and bet on a reversal. No doubt it’s a dangerous game to play, but it can pay well when you’re right. In CKRH’s case, it did indeed pay well.

Were there any hints here that could have suggested such a bounce was in the air? I see a couple if clues. The first one is a re-visit to support around $.17, where the stock made a handful of lows in September/October before a few buyers stepped in (although half-heartedly). The other hint was the shape of the bar on the 17th…..it’s called an inverted hammer pattern, as the entire day’s range is tall (relatively), with the open at the low, and a close at least in the lower half of the range. Yes, it’s esoteric - even by candlestick standards. Yet, it was an accurate hint of what was to come.

And in the interest of fairness, this probably isn’t a pattern I would have played in search of an upside reversal. It’s just not my personal taste when it comes to trading; I prefer to see momentum. However, that doesn’t make me right all the time. This instance is an example of that.

Perhaps more importantly (or at least as importantly), Ckrush’s shares have finally managed to clear what I see as a long-term resistance line….and they did it on a major volume surge. In my opinion, it’s a huge victory for everyone as it should unshackle the stock quite a bit. Again in the interest of fairness, I don’t personally know that I’d jump in blindly here. I don’t like to chase stocks. I’d rather wait for a pullback. And no, that’s not always the right decision either. It works for me though. As for what works for you, and whether or not CKRH should be of interest to you…..well, only you can decide how to handle that.

Ckrush Entertainment (OTCBB: CKRH) released their third-quarter results today, posting some rather hefty top line increases. Check it out….

Net revenues for the quarter ending on September 30th were a little more than $1.5 million…a big improvement over sales of $100,000 for the same quarter last year. For the first nine months of their fiscal year, the company has booked a little over $1.6 million in sales. Last year’s comparable nine-month period only saw $405,000 in revenue. Needless to say, it was a pretty good quarter as far as cash flow is concerned.

The bottom line figure - earnings - suffered however. This year’s quarterly loss of $4.7 million was significantly greater than the $1.6 million loss incurred for Q3 of 2005. A major increase in the cost of revenues, as well as much heavier administrative costs, set up the biggest portion of the dip into the red. The quarterly per-share loss went from 3 cents to 6 cents.

And what was the story behind the numbers? Our opinion is simple - they’re primarily reflective of the cost of starting a new venture. In the grand scheme of things, Ckrush and its divisions are new enterprises, and will need to lay out more cash than they take in to get off the ground. Of course, at some point they’ll need to earn more than they spend, so the question for investors is…..when is that point? We can’t answer the question with precision, but we think it’s still a little early in the game to expect monster-sized bottom lines from this young corporation.

To get specific, the big bump up in revenue was the result of a minimum guaranteed payment for releasing ‘Artie Lange’s Beer League’. The higher cost of revenue (an increase from $100,000 to $2.9 million) reflects expenses incurred in prior quarters for the filming of Beer League, but not yet charged….they were charged in Q3 instead. The additional $1.8 million in selling and administrative expenses mostly came from the cost of a stock compensation transaction.

Overall, no surprises really. The fact that the company was sitting on some expenses was already known, and the other film project - National Lampoon’s TV: The Movie - didn’t contribute to Q3 revenue. Plus, the LiveMansion.com movie project can’t bear fruit yet. Both films should eventually drive sales though….either theatrically, or via licensing (as will Beer League). So, it may be a little too soon to judge Ckrush on just these numbers. We’ll be very curious to see how things pan out once Beer League gets to DVD, once National Lampoon’s TV: The Movie gets to theaters, and once the LiveMansion film venture is completed.

For the full report, click here.

The similarities to YouTube and MySpace are becoming more evident every day…and that’s a good thing, considering YouTube was bought by Google (NASDAQ: GOOG) for $1.65 billion a few days ago, and MySpace was bought by News Corp (NYSE: NWS) for more than $500 million in the middle of this year.

In fact, it was only yesterday we learned one of MySpace’s creators had been hired by Ckrush (OTCBB: CKRH) as a consultant, sending yet another message that LiveMansion was serious about competing with already-established community and creative outlet sites.

And today, we’ve learned LiveMansion now offers its own web-based video player, further mirroring one of the key draws of YouTube. As of right now, the video player is only available to those involved in the casting call for ‘LiveMansion: The Movie’, who will use the tool to upload their own audition, or for directors to use while viewing the auditions. However, the tool will be rolled out for all users soon.

The point investors should take away is simply how LiveMansion has progressed nicely, and in just the way originally described when we first told you about Ckrush. While the stock has been volatile (up, as well as down) since then, the company’s divisions are still proceeding according to plans….and doing quite well with them, to boot. Eventually, we think the stock will start to garner the same kind of interest that Livemansion.com and Ckrush’s movies have.

On a side note, we’ve seen considerably greater buying volume over the last few days. An omen of growing interest? Maybe.

Although the stock is up 7% as I write this, I have to wonder if the word still hasn’t really spread yet. Heck, even when shares were 15% higher just a few moments ago, I found it surprisingly tame, at least based on the news.

What I’m talking about is Ckrush Entertainment’s (OTCBB: CKRH) announcement earlier this morning that they’ve hired Joe Abrams, one of the founders of Intermix Inc., as a consultant. If the names seem vaguely familiar, here’s why…Intermix is the parent company of MySpace.com, which was recently purchased by News Corp. (NYSE: NWS) for a mere $580 million.

What’s that got to do with anything?

MySpace is a social networking site. Ckrush’s LiveMansion.com is a social networking site. MySpace has been wildly successful since its launch, and quite profitable for its owners. LiveMansion is still in its web infancy, but is seeking to rival - and in some ways top - the MySpace phenomenon.

And now we hear they’ve hired one of the key minds of MySpace, presumably to help them mirror what MySpace did right?

If he can help Ckrush’s LiveMansion even do a fraction of what Intermix’s MySpace did, it’s still going to be enormously beneficial for Ckrush….and by extension, its shareholders.

As we mentioned previously, nobody at Ckrush has ever said they’re looking to get bought. However, it’s clear - based on today’s news - that they’re serious about making Livemansion a success. We’re willing to bet if Abrams is able to assist, they’ll have an outstanding shot at doing just that. And, if the company ends up getting bought out, well, there are certainly worse things to have happen.

In any case, getting Abrams on board is a big deal. We’re looking for LiveMansion to further accelerate its own incredible growth in the very near future.

Surely by now you’ve heard…Google (NASDAQ: GOOG) bought YouTube.com yesterday, to the tune of $1.65 billion. The move has gotten mixed reviews by analysts and the public. Of course, we have to put our two cents worth in on the issue. We also have to discuss the implications - direct or indirect - the acquisition could have on companies like Ckrush (OTCBB: CKRH) and Web2 Corporation (OTCBB: WBTO). It’s also worth noting Web2 has already released their public response to the YouTube purchase. It was fair, but definitely not an endorsement. You’ll see below. But first, our take…

Good or bad for Google? We think it’s still too soon to say, to be honest. It really all depends on what they intend to do with it. Most experts feel, and we don’t disagree, that integrating the YouTube offer into the current Google offer will seem like patchwork…and perhaps a bit of a misfit. Most Google users like the clean interface, minimal graphics, and low-hype approach. YouTube is clean-looking, but its targeted audience - avid bloggers, gen Xers, and gen Yers - may not be the same as Google’s.

The other downside is simply that YouTube is still unprofitable, and isn’t guaranteed to ever be solvent. It’s an ad-supported site, but that may not enough anymore. An investor asking what the revenue model is may not necessarily like the answer - it would take a lot of clicks and impressions from YouTube users to create any serious dollar amounts.

Like we said, we’re not saying it was a bad move. What we’re saying is how Google chooses to integrate and monetize it is the key to its success. We just don’t know if it’s the right fit. We do know that $1.65 billion is a lot of money though

That said, there’s a huge implication for Ckrush Entertainment shares. Its online community site Livemansion.com, in many respects, mimics YouTube. LiveMansion also mimics MySpace.com. Both MySpace and YouTube were acquired by media gaints for giant sums of cash. See the connection? Whether we’re right or wrong about the misfit is irrelevant…online communities and self-made video sites are in demand. Ckrush has not once directly said they are interested in LiveMansion being acquired by anyone else (although they haven’t denied it either). However, there’s a clear industry trend in place now, and Ckrush’s LiveMansion could indeed look like the answer for a big company feeling the urge to jump on the bandwagon. Never count on an acquisition, but don’t be shocked if it happens.

Bill Mobley, Web2 Corporation’s CEO, released his own thoughts on the acquisition…and we don’t disagree with them. In short, he doesn’t see how Google can successfully integrate YouTube. He contends that organic and internal growth of web media and sites is the only viable way for an internet-based company to expand. Otherwise, you just get confusion…especially for the advertisers who may not even understand what they’re getting from Google anymore. He compared it to the Yahoo (NASDAQ: YHOO) acquisition of Broadcast.com a few years ago…which ended disastrously, primarily because it’s tough to integrate an acquired company once both entities have been established within a particular category.

That’s why he addressed the issue (and yes, well before the MySpace and YouTube purchases) with the recent simultaneous launch of several Web2 divisions, which are related, yet distinct…and even a little self-serving. All four major divisions are indeed integrated as he described, and all can seamlessly grow together. That was the point we were trying to make when we first featured WBTO in the September 20th edition of the newsletter. While we’d never say never about the Google/YouTube partnership, we also think Mobley has a better finger on the pulse of where the web is going. We shall see.

To see Mobley’s complete release, click here.

It was less than three months ago we were highlighting the newest of Ckrush’s (OTCBB: CKRH) profit centers - LiveMansion.com. The site was unveiled amidst the buzz of the News Corp. (NYSE: NWS) purchase of MySpace.com’s parent company Intermix Media (AMEX: MIX)…to the tune of $580 million. Even if LiveMansion only became a fraction of what MySpace ended up being, it would still be a gigantic win for Ckrush, and its shareholders.

Well, the proof-of-concept is really starting to materialize. LiveMansion’s first web-traffic results are in, and the numbers are impressive to say the least. Since its launch on July 24th, the site has recorded over 4.3 million page views from 100,000 unique visitors. That’s huge for any web site, but for a new web site, it’s phenomenal. But wait, it gets even better….

The numbers so far are great, but the incredible part is the rate of growth we saw between August and September. In August, there were 1.3 million page views. In September, there were 2.3 million…a 35% increase. We can’t wait to see October’s results.

The point of all this, though, is not to talk about cool web sites. We’re most interested in what it means as an investment. And, since eyeballs=dollars on the world wide web, we’d have to say Ckrush has - and is - headed in the right direction with LiveMansion.com. In turn, that makes CKRH’s current price of 18 cents (a 10-month low) very cheap by comparison.

The irony is, in the meantime, one of Ckrush’s other profit centers has also developed some revenue momentum…the entertainment (film) arm. Beer League has been released, and well received, and National Lampoon’s TV has some major distributors lined up in the North American and United Kingdom markets.

We don’t yet have any firm dollar figures for the movies or for LiveMansion.com, but we figure it’s gotta’ be significant for Ckrush. The company did $704,000 in revenue in fiscal 2005 (year ended on 12/31/05). So, it shouldn’t be too difficult to top those numbers…by a lot. As such, speculators may want to consider CKRH, since it’s becoming less and less of a long-shot as time passes.

In mid-August, we first mentioned in the blog how Ckrush (OTCBB: CKRH) had chosen Xenon Pictures as the U.S. distributor for ‘National Lampoon’s TV: The Movie”. And, the news came on the heels of the announcement about Peace Arch Entertainment’s licensing rights. Well, the circle became a little more complete today, when Slam Dunk Media, Ltd. was unveiled as the flick’s United Kingdom Distributor. Like Xenon and Peace Arch, Slam Dunk is a legitimate, high-powered name in its market. So, Ckrush continues to raise its status by rubbing elbows with good company.

For the full release, click here.

With generation-X icon Artie Lange as the highlight of the film, we’re not surprised at all to hear ‘Beer League’ was a hit when it premiered Wednesday at Ziegfeld Theater in New York City. Ckrush (OTCBB: CKRH) pin-pointed exactly who and what today’s young adults wanted, and then delivered it right on target. We have little doubt the film will be major hit within the demographic. It opens nationwide today, Friday, September 15th.

Beyond that, though, we have to think this bodes well for Ckrush’s next project, ‘National Lampoon’s TV: The Movie’. In turn, it bodes well for Ckrush. The films will drive in millions at the box-office, even though (like most indie films) it was produced with a relatively tiny budget. With Ckrush gaining some traction in the entertainment world, can the stock be far behind?

For the whole release, click here.

Ckrush Entertainment (OTCBB: CKRH) will be enjoying Xenon Pictures’ expertise when it comes time to roll out one of their movie projects to theaters, and then later as a DVD. Xenon has acquired theatrical and DVD rights to Ckrush’s ‘National Lampoon’s TV: The Movie’. The press release didn’t include any specifics about the contract, but no matter what, it’s a major victory for an up-and-comer like Ckrush to be rubbing elbows with a higher-profile promoter like Xenon. Once again, Ckrush has moved a little higher up the credibility ladder. And, with Xenon fronting the film, it won’t hurt Ckrush’s revenue effort either.

Don’t forget, SmallCap Digest offers free stock ideas and market commentary through our e-newsletter. Be sure to sign up today using the link in the top left corner…and don’t forget to respond to the confirmation e-mail.

Don’t forget, SmallCap Digest offers free stock ideas and market commentary through our e-newsletter. Be sure to sign up today using the link in the top left corner…and don’t forget to respond to the confirmation e-mail.

With all the talk about Livemansion.com and the ‘Beer League’ movie, starring Artie Lange, it’s easy to forget Ckrush (OTCBB: CKRH) has some other projects going on too. In fact, one of them today got some serious backing for distribution in Canada. Peace Arch Entertainment, through its kaBOOM Entertainment division, has acquired the rights to distribute “National Lampoon’s TV: The Movie” in Canada.

This is actually a double-win for Ckrush. The first win is simply the idea of getting good sponsorship in a market that may otherwise be a tough nut to crack from the southern side of the border. And, Peace Arch Entertainment is no second-rate outfit…they have the rights to a whole library if impressive movie titles, while kaBOOM brings a high degree of marketing expertise to the table. So, even from just a revenue-based point of view, Ckrush is in good hands.

The other win is the message this kind of endorsement sends. The relatively small, somewhat unknown indie film company known as Ckrush is gaining a little more prowess every day. With each new layer of credibility, the company has a little better foothold in its market. And where the company goes, shares will follow. That’s not to imply this stock is no longer ’speculative’…it’s very speculative. However, the potential reward may certainly make it worth some risk.

Since our coverage began last month, we’ve seen shares trade in a range. The lower edge of the range is at 18 cents, while the upper edge can be as high as 40 cents (or more). It’s a little volatile, but the current price of 26 cents may be a relatively low entry level. It’s definitely worth a closer look.

In our last blog entry for Ckrush Entertainment (OTCBB: CKRH), we posed a simple question of when and how digital entertainment - and Ckrush specifically - would further be legitimized by the mass media. As you might recall, LiveMansion: The Movie has been discussed in Variety Magazine as well as in the New York Times. We love to see such coverage, since each media mention advances the foothold of online communities and digital entertainment within a world formerly dominated by film and TV studios.

Well, we got our answer yesterday when Ckrush was featured on CNBC’s ‘On The Money’ television show. The two-minute segment focused mostly on Ckrush, and did so with a positive spin. If you’d like to see the online version of the segment, click here (it may require an update or download).

The national news coverage is nice, but that’s not even quite the point here…we’re excited to see the concept of digital entertainment further propagated by mainstream outlets. Each of these little mentions and blurbs is another growth step for the industry. Of course, Ckrush shareholders don’t mind that LiveMansion.com was the highlight of the news piece, as it positions the company as an industry leader.

The buzz continues to build about Ckrush’s (OTCBB: CKRH) online film project ‘LiveMansion: The Movie’. This time, the company’s initiative is being highlighted in none other than the New York Times. Needless to say, that ain’t bad exposure. 

To read the actual article in the online version of the N.Y. Times, click here (it’s free, although it could take a moment or two to load): http://www.nytimes.com/2006/07/30/weekinreview/30bellafonte.html?ex=1154923200&en=f02ae62e21405cf4&ei=5070&emc=eta1

Rather than rehash what you can read for yourself, we’ll just add this thought…although  the movie project was only announced a few days ago, it’s done a pretty nice job of working its way into the mainstream media. We’ve now seen it mentioned in Variety and the New York Times, which leads us to wonder where the idea might pop up next.

The ‘bigger picture’, though, is how what some regarded as a quirky little internet project has now garnered the attention of some major media outlets. Well, our answer to that is this - LiveMansion isn’t a fluke, quirky, nor a mere curiosity. The concept is solid, and Ckrush hit the nail on the head. Trust us, the New York Times doesn’t waste space or time on anything not news-worthy, which leads is back to our point we made a few days ago….

Ckrush and LiveMansion are the real deal, and a real opportunity for shareholders.

On Tuesday we mentioned Ckrush’s (OTCBB: CKRH) plan to allow Livemansion.com participants to create and direct the website’s first feature. ‘LiveMansion: The Movie’. Well, Ckrush released a few more details yesterday about the production process.

There are three different participatory routes for LiveMansion members…

1) They can audition to become the director, through the online self-nomination process. Anyone can be nominated, but only the top submissions will make it to the next level…to actually shoot a short film. From that group, site members will narrow the submissions down to five candidates, who will then each shoot a specific scene from the film. Then, from those five submissions, LiveMansion users will narrow it down to one director.

2) They can have a role as a producer. All LiveMansion members will have an opportunity to help produce, but the degree of impact any participant has on the film will depend on the number of ‘producer points’ he or she has earned in the process. Producers will have a say in who makes the cut in the casting call.

3) They can enter the open casting call. Again, the casting call will be a multi-staged process, with each round getting more and more involved. The field will be narrowed to a final list of potential cast members who will ultimately have to make a short film of themselves playing out one of the scenes from the film. The ‘producers’ will collectively vote to narrow the field down to the final eight characters of the movie. 

As for plot or story details, the only thing Ckrush has said so far is ‘The Movie’ will be a “thriller set in the underground world of mega-mansion, rave-style parties.” We’re not quite sure what that means, but it sure sounds like fun.

As for the stock, we’re not surprised to see it revving its engines again, on the heels of all this exciting news. The current price of 30 cents is well off of July’s low of 18 cents, and we’re starting to see a lot of higher highs and higher lows (the MACD lines tell the whole story). We said it last Friday and again on Tuesday, but we’ll say it again now…as word of the LiveMansion venture spreads, the market’s interest in Ckrush’s stock is going to grow exponentially.