This Week's IPOs: FCStone Group, Big Band Networks, Photowatt Technologies, Tongjitang Chinese Medicines, Santa Monica Media Corporation

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 |  Includes: BBND, FCSX, MEJ.U, PHWT, TCM
by: Abbi Adest

This week's IPOs include; FCStone Group (FCSX), a commodity risk management consulting company; Big Band Networks (NASDAQ:BBND), a networking infrastructure company; PhotoWatt Technologies (PHWT), a company that builds photovoltaic panals for solar energy production; Tongjitang Chinese Medicines Company (NYSE:TCM), a Chinese pharmaceutical company that produces and markets traditional herbal medicines; and Santa Monica Media Corporation (MEJ.U), a blank check company looking to acquire a media, entertainment or gaming company.

All quotations are from the companies' most recent S-1 filings with links provided for each company.

FCSTONE GROUP (FCSX)
Business Overview (from prospectus)

We are an integrated commodity risk management company providing risk management consulting and transaction execution services to commercial commodity intermediaries, end-users and producers. We assist primarily middle-market customers in optimizing their profit margins and mitigating their exposure to commodity price risk. In addition to our risk management consulting services, we operate one of the leading independent clearing and execution platforms for exchange-traded futures and options contracts. We serve more than 7,500 customers, and in the twelve months ended November 30, 2006, executed 50.2 million derivative contracts in the exchange-traded and over-the-counter [“OTC”] markets.

Offering: 4.6 million shares at $21.00-24.00 per share. Net proceeds of approximately $95.4 million will be used to redeem outstanding common stock, pay down debt and for general corporate purposes.

Lead Underwriters: BMO Capital Markets, Banc of America

Financial Highlights:

Net income increased $2.9 million, or 85.3%, from $3.4 million in the three months ended November 30, 2005, to $6.3 million in the three months ended November 30, 2006... Revenues, net of cost of commodities sold, increased $18.0 million, or 45.9%, from $39.3 million in the three months ended November 30, 2005, to $57.3 million in the three months ended November 30, 2006... Sales of commodities increased by $133.6 million, or 42.4%, from $315.2 million in the three months ended November 30, 2005, to $448.8 million in the three months ended November 30, 2006.

BIGBAND NETWORKS (BBND)
Business Overview (from prospectus)

We develop, market and sell network-based platforms that enable cable operators and telephone companies, collectively called service providers, to offer video, voice and data services across coaxial, fiber and copper networks. We have significant expertise in rich media processing, communications networking and bandwidth management. We have delivered what we believe to be the only successful commercial deployments of switched broadcast, an application that substantially increases the volume of content that a service provider can offer. In addition, we were the first to implement what we believe has become the industry’s de facto network architecture for digital simulcast, an application that facilitates the insertion of advertising and the transmission of video in a digital format across a network while still providing service to analog subscribers. Our product applications of Digital Simulcast, TelcoTV, Switched Broadcast, and High-Speed Data and Voice-over-IP are a combination of our modular software and programmable video and data hardware platforms.

Offering:10.7 million shares at $10.00-12.00 per share. Net proceeds of approximately $74.3 million will be used to repay outstanding debt, working capital a for possible future acquisitions of companies or products.

Lead Underwriters: Morgan Stanley, Merrill Lynch

Financial Highlights:

Net revenues for 2006 were $176.6 million compared to $98.0 million for 2005, an increase of $78.6 million, or 80.3%. Revenues from our top five customers comprised 79% and 69% of net revenues for 2006 and 2005, respectively... Gross profit for 2006 was $93.2 million compared to $38.1 million for 2005, an increase of $55.1 million, or 144.4%. Gross margin increased to 52.8% in 2006 compared to 38.9% in 2005...Research and development expense was $30.7 million in 2005, or 31.3% of net revenues, compared to $21.6 million in 2004, or 60.8% of net revenues.


PHOTOWATT TECHNOLOGIES INC. (PHWT)

Business Overview (from prospectus)

We design, manufacture and sell photovoltaic products, commonly referred to as solar cells and modules. Solar cells and modules provide clean, renewable energy by converting sunlight into electricity through a process known as the photovoltaic effect. We operate through two segments, Photowatt International, our core business that is based on a wafer technology, and Spheral Solar™, a development project that is based on a spheral technology.
Photowatt International designs, manufactures and sells solar modules and installation kits, and provides solar power system design and other value-added services, principally in Western Europe. Photowatt International also manufactures wafers and solar cells, primarily for use in manufacturing its modules and for sale to third parties on an opportunistic basis. Most of Photowatt International’s products are manufactured in our Photowatt France facility outside of Lyon, France. Photowatt USA, our facility in Albuquerque, New Mexico, performs certain module assembly operations for Photowatt International. Photowatt International, through its French and U.S. operations, sells its products under the Photowatt and Matrix brands to a network of independent solar power systems distributors and installers. Solar modules manufactured by Photowatt International are used by businesses, institutions and homeowners to generate electric power. Photowatt International has been developing and selling photovoltaic products since 1979. Photowatt International accounted for all of our combined revenue for our fiscal 2006 and for the nine months ended December 31, 2006.

Offering: 10.9 million shares at $15.00-17.00 per share. Net proceeds of approximately $158 million will be used to expand manufacturing capacity and repay debt.

Lead Underwriters: BMO Capital Markets, UBS Investment Bank

Financial Highlights:

External revenue was entirely derived from Photowatt International. Strong market demand continues to drive the revenue for solar products, which is primarily a result of attractive government incentive programs in Europe. For the nine months ended December 31, 2006, revenue was $99.4 million, or 14% higher than the same period of 2005... For the nine months ended December 31, 2006, cost of revenue from Photowatt International was $71.5 million, representing 72% of revenue, compared to $65.1 million, or 75% of revenue, in the nine months ended December 31, 2005... For the nine months ended December 31, 2006, earnings from operations were $0.4 million compared with $4.6 million of earnings from operations in the nine months ended December 31, 2005.

TONGJITANG CHINESE MEDICINES COMPANY (TCM)
Business Overview (from prospectus)

We are a vertically integrated and profitable specialty pharmaceutical company focusing on the development, manufacturing, marketing and selling of modernized traditional Chinese medicine. We believe that our flagship product, Xianling Gubao, is the leading traditional Chinese medicine for the treatment of osteoporosis in China as measured by sales in Renminbi amounts, according to a May 2006 report commissioned by us and prepared by China Southern Medicine Economy Research Institute, or SMERI, which is a research institute affiliated with the China State Food and Drug Administration, or the SFDA. Our product portfolio consists primarily of Xianling Gubao and three other SFDA-approved modernized traditional Chinese medicines designed to address large market opportunities. Our product development pipeline includes potential expanded uses of our existing products for additional medical indications and a number of new product candidates that are intended to address significant medical needs in China, primarily in the therapeutic areas of women’s health, mental health and dermatology.

Offering: 9.9 million shares at $15.00-17.00 per share. Net proceeds of approximately US$128.3 million will be used for marketing R&D and general corporate purposes.

Lead Underwriters: Merrill Lynch, UBS Investment Bank

Financial Highlights:

Our net revenues increased by 40.1% from RMB346.1 million in 2005 to RMB485.0 million (US$62.1 million) in 2006... Our cost of revenues increased by 14.0% from RMB141.8 million in 2005 to RMB161.7 million (US$20.7 million) in 2006...As a result of the foregoing, our gross profit increased by 58.2% from RMB204.4 million in 2005 to RMB323.3 million (US$41.4 million) in 2006. Our gross margin also increased from 59.0% in 2005 to 66.7% in 2006...our net income increased by 21.2% from RMB110.8 million in 2005 to RMB134.3 million (US$17.2 million) in 2006.


SANTA MONICA MEDIA CORPORATION (MEJ.U)

Business Overview (from prospectus)

We are a Delaware blank check company incorporated on June 24, 2005 in order to serve as a vehicle for the acquisition of an operating business in the communications, media, gaming and/or entertainment industries. These industries encompass those companies that create, produce, deliver, distribute and market entertainment and information products, communication services, as well as companies that enable voice, video and data transmission. We intend to focus on opportunities where we can combine management and board member knowledge of these sectors with our operational experience in identifying and applying new technologies, including experience in developing online businesses and products to enhance shareholder value. We believe opportunities exist, not only in acquiring stand-alone companies but also in identifying and acquiring underperforming businesses currently owned by larger conglomerates.

Offering: 12.5 million shares at $8.00 per share. Net proceeds of approximately $97 million will be placed in trust until the completion of a business combination or liquidation.

Lead Underwriter: Citigroup

Financial Highlights:

We have neither engaged in any operations nor generated any revenues to date. Our entire activity since inception has been to prepare for our proposed fundraising through offerings of our equity securities.