After difficult times in the late 90s and the beginning of this decade, Chyron (CGS:Amex)
made several management changes. The new management team initiated their extremely
successful turnaround strategy that has resulted in current strong financial performance.
Beginning in 2004, the company regained profitability. In each year subsequent the company
has at least doubled net income. In 2006, all debt was eliminated.

Recent financial performance has been extraordinary. Third quarter 2007 revenues were up
year over year by 36%. Corresponding net income showed a 450% increase for the same
period.

In alliance with the completion of the turnaround strategy, the board of directors
authorized a reverse split to gain access on a broader exchange – the AMEX. Previous to
the split, the company had over $45 million shares outstanding; a remnant from the days it
was a much larger entity in the late 90s. After the transformation that began in early
2003, the company essentially was operating similar to a start-up, with the advantage of
35+ years experience in graphics. The reduction in the number of shares was more in line
with the size of the company. The stock has appreciated 20% in the two months after the
split.

Peter Lynch is credited with coining the phrase “10 bagger”. This author will attempt
to argue that CGS will have accomplished this within 3 years.

In conjunction with the graphics segment that is currently poised for 30 to 40% revenue
gains in 2008, the company has utilized this core technology and expertise to develop
products to expand into ancillary markets. The first is digital signage. The market in
which Chyron competes is anticipated to be $400 to $500 million annually. Chyron has
developed the ChyTV line and a network for customers, ChyTV.net. Similar to the graphics
one sees on ESPN, NBC, CNBC, and CNN (all Chyron customers), individual establishments
will be able to customize any screen in their place of business. Currently, Buffalo Wild
Wings is in the process of installing ChyTV and ChyTV.net into its network of 450
restaurants. Other installations include the San Francisco Giants baseball stadium, Miami
Dolphins football stadium, and the New York Islanders hockey arena.

ChyTV also has significant applications in schools, universities, and government. The
ChyAlert system can immediately post to every screen at a facility any information in the
event of a crisis, bad weather, or criminal event.

Other initiatives include WAPSTR, a system of integrating user content flawlessly and
immediately into newscasts. Anyone with a camera phone can send and image directly to a
local TV station by phone, and within seconds the station can have the image on air as
breaking news.

Channel Box integrates the images on the bottom of the screen during broadcasts. Examples
are the ABC logo, what show is next, etc.

Chyron has developed strategic partnerships to assist in the marketing and distribution of
the new initiatives. Another exciting possibility is the partnership with Madison Road
Entertainment, a leader in product integration in media applications.

The main impetus for Chyron’s growth for the remainder of 2007, 2008 and 2009 will be
the switch to HD and digital broadcasts worldwide. The demand for broadcasters, cable, and
individual productions to provide the most current HD products with all graphic abilities
will enable Chyron to grow revenues in excess of 30% annually just on the graphics
segment. Add the ability of digital signage and the other products, and Chyron could
obtain year over year revenue growth surpassing 50% beginning in 2008.

Because their business has migrated to a more software centric and recurring revenue
model, the economies, combined with gross margins of 70%, will result in net income growth
well in excess of that of the revenue. In addition, the company has nearly $50 million in
tax loss carry forwards to apply against earnings, which adds to bottom line profitability
and results in increased cash generation.

The stock is current trading at $5.50 with a P/E of 26 based on trailing twelve month
earnings. This author agues the stock is greatly undervalues based on future growth in
earnings prospects. Being that the company has no analyst coverage, one must derive key
statistical ratios and data oneself. Utilizing a conservation growth rate of 30%, the PEG
ratio is less than 1. My current projection of the forward P/E is under 7.

The recently released study by IBM stated advertising will change more in the next 5 years
more than it has changed in the last 50 years. Traditional methods (print, radio and TV
commercials) lack the ability to locate and target specific customers to the level
Chyron is positioned, through all of its products and established position in media
markets, to extraordinarily benefit from the dynamic shift in advertising delivery not
only in the United States, but worldwide. Because of the relative small size of the
company (market cap of $86M), and its integration into media channels and essentially all
channels of electronic delivery of advertising, it would be negligent not to recognize the
potential of the model as an acquisition as all large internet, media, and entertainment
and technology organizations battle to gain competitive advantage in advertising delivery.