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  • TM Entertainment & Media Inc. DEFM14A ยท On 10/2/09: Proposal, Parties, Warrants
    10.02.09
    TM Entertainment & Media (symbol: TMI) is merging with CME.
    http://bit.ly/16ZKvY

    SUMMARY OF THE PROXY STATEMENT
    References in this report as to “we,” “us” or “our Company” refer to TM Entertainment and Media, Inc., a Delaware corporation (“TM”). References to “Public Stockholders” refer to holders of shares of common stock sold as part of the units in our initial public offering (the “IPO”), including any of our stockholders existing prior to our IPO to the extent that they purchased or acquired such shares.
     
    This Proxy Statement relates to a proposed purchase of all of the issued and outstanding capital stock of Hong Kong Mandefu Holding Limited (“CME”) pursuant to a Share Exchange Agreement (the “Share Exchange Agreement”) dated as of May 1, 2009 and amended as of September 30, 2009, among TM, CME, Zheng Cheng, Thousand Space Holdings Limited and Bright Elite Management Limited (collectively, the “Sellers”), Fujian Zong Heng Express Information Technology Co., Ltd. (“Fujian Express”), Fujian Fenzhong Media Co., Ltd. (“Fujian Fenzhong”), Ou Wen Lin and Qingping Lin (collectively, Fujian Express, Fujian Fenzhong, Ou Wen Lin, Qingping Lin and the Sellers are referred to herein as the “CME Parties”) resulting in CME becoming a direct wholly-owned subsidiary of TM, referred to herein as (the “Transaction.”)
     
    This summary highlights selected information from this Proxy Statement and does not contain all of the information that is important to you. To better understand the proposals being considered at the Special Meeting, you should carefully read this entire Proxy Statement and the other documents to which it refers you, including the Share Exchange Agreement attached as Annex A to this Proxy Statement, and the other agreements, instruments and documents attached as annexes to this Proxy Statement.

    TMI:
    TM is a Delaware blank check company incorporated on May 1, 2007 in order to serve as a vehicle for the acquisition of an operating business in the entertainment, media, digital and communications industries. See section entitled “INFORMATION ABOUT TM ENTERTAINMENT AND MEDIA, INC.” As discussed in this Proxy Statement, on May 4, 2009, we announced that we had entered into a definitive agreement to, among other things, purchase from the Sellers all of the issued and outstanding capital stock of CME.

    CME:
    CME, through contractual arrangements with Fujian Fenzhong, an entity majority owned by CME’S majority shareholder, operates the largest television advertising network on inter-city express buses in China. All references in this Proxy Statement to “CME’s advertising network”, “CME’s customers”, CME’s operations in general and similar connotations, refer to Fujian Fenzhong, an entity which is controlled by CME through contractual agreements and which operates the advertising network. While CME has no direct equity ownership in Fujian Fenzhong, through the contractual agreements CME receives the economic benefits of Fujian Fenzhong’s operations. See the sections entitled “RISK FACTORS — Risks Related to CME’s Corporate Structure” and “CME’S CORPORATE STRUCTURE — Contractual Arrangements”. CME generates revenues by selling advertising on its network of television displays installed on inter-city express buses in China. See section entitled “INFORMATION ABOUT HONG KONG MANDEFU HOLDING LIMITED (“CME”) — Business Summary.”
     
    As of June 30, 2009, the number of inter-city express buses within CME’s network exceeded 16,000 and covered inter-city express bus services originating in eleven regions, including the four municipalities of Beijing, Shanghai, Tianjin and Chongqing and seven economically prosperous provinces, namely Guangdong, Jiangsu, Fujian, Sichuan, Hubei, Anhui and Hebei.

    CME has entered into long-term framework agreements with 40 bus operator partners for terms ranging from five to eight years. Pursuant to these agreements, CME pays the bus operators concession fees for the right to install its displays and automated control systems inside their buses and display entertainment content and advertisements. CME’s entertainment content is provided by third parties and advertisements are provided by its clients.
     
    In October 2007, CME entered into a five-year cooperation agreement with an entity affiliated with the Ministry of Transport of the People’s Republic of China to be the sole strategic alliance partner in the establishment of a nationwide in-vehicle television system that displays copyrighted programs on buses traveling on highways in China. The cooperation agreement also gave CME exclusive rights to display advertisements on the system. CME believes its status as the sole strategic alliance partner designated by an entity affiliated with the Ministry of Transport and the exclusive rights to display advertisements on the system has facilitated its historical expansion and is expected to continue to provide them with a competitive advantage in the future.
     
    During the year ended December 31, 2008, more than 400 advertisers had purchased advertising time on CME’s network either through advertising agents or directly from CME. Some of these clients have purchased advertising time from CME for more than three years, including Hitachi, China Telecom, Toyota, Siemens and China Pacific Life Insurance. CME has attracted several well-known international and national brands to its advertising network, including Coca Cola, Pepsi, Wahaha, Siemens, Hitachi, China Telecom, China Mobile, China Post, Toyota, Bank of China, and China Pacific Life Insurance. While CME is unable to determine the exact dollar amount paid by these individual advertisers who purchase advertising through a third party agency, CME is able to determine, based on the number of ads run for these advertisers, that these advertisers comprise a significant portion the advertising on CME’s network. For the years ended December 31, 2006, 2007 and 2008, CME generated total net revenues of $4.0 million, $25.8 million and $63.0 million, respectively. During the same periods, CME had net income of $0.9 million, $7.0 million and $26.4 million, respectively.

    Warrants
     
    Warrants to purchase an aggregate of 10,255,000 shares of TM Common Stock (excluding the insider warrants and the underwriter’s purchase option, each described below) are currently outstanding. The material terms of the warrants are set forth herein. Each warrant entitles the registered holder to purchase one share of our common stock at a price of $5.50 per share, subject to adjustment as discussed below, at any time commencing on the later of:
     
       
     • the completion of a business combination; and
     
     • one year from the date of our IPO.
     
    However, the warrants will be exercisable only if a registration statement relating to the common stock issuable upon exercise of the warrants is effective and current. The warrants will expire October 17, 2011 at 6:00 p.m., New York City time.
     
    We may call the warrants for redemption (including any warrants held by the underwriters as a result of the exercise of their option, but excluding any insider warrants held by our existing stockholders or their affiliates), without the consent of Pali Capital, Inc.:
     
       
     • in whole and not in part,
     
     • at a price of $0.01 per warrant at any time after the warrants become exercisable,

       
     • upon not less than 30 days’ prior written notice of redemption to each warrant holder, and
     
     • if, and only if, the reported last sale price of the common stock equals or exceeds $11.50 per share, for any 20 trading days within a 30 trading day period ending on the third business day prior to the notice of redemption to warrant holders.
     
    The right to exercise will be forfeited unless they are exercised prior to the date specified in the notice of redemption. On and after the redemption date, a record holder of a warrant will have no further rights except to receive the redemption price for such holder’s warrant upon surrender of such warrant.
     
    The redemption criteria for our warrants was established at a price which is intended to provide warrant holders a reasonable premium to the initial exercise price and provide a sufficient differential between the then-prevailing common stock price and the warrant exercise price so that if the stock price declines as a result of our redemption call, the redemption will not cause the stock price to drop below the exercise price of the warrants.
     
    The warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. Although the material provisions of the warrants are set forth herein, a copy of the warrant agreement has been filed as an exhibit to the registration statement.
     
    The exercise price and number of shares of common stock issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of common stock at a price below their respective exercise prices.
     
    The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified or official bank check payable to us, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of common stock and any voting rights until they exercise their warrants and receive shares of common stock. After the issuance of shares of common stock upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.
     
    No warrants held by public stockholders will be exercisable and we will not be obligated to issue shares of common stock unless at the time a holder seeks to exercise such warrant, a registration statement relating to the common stock issuable upon exercise of the warrants is effective and current and the common stock has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. Under the terms of the warrant agreement, we have agreed to use our best efforts to meet these conditions and to maintain a current prospectus relating to the common stock issuable upon exercise of the warrants until the expiration of the warrants. However, we cannot assure our stockholders that we will be able to do so and, if we do not maintain a current prospectus relating to the common stock issuable upon exercise of the warrants, holders will be unable to exercise their warrants and we will not be required to settle any such warrant exercise. If the prospectus relating to the common stock issuable upon the exercise of the warrants is not current or if the common stock is not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside, we will not be required to net cash settle or cash settle the warrant exercise, the warrants may have no value, the market for the warrants may be limited and the warrants may expire worthless.
     
    No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round up or down to the nearest whole number the number of shares of common stock to be issued to the warrant holder.

    Long TMI and TMI Warrants
     





    Tags: TMI
    Oct 08 07:55 pm | Link | Comment!
  • Battling the Deadliest Cancer
    This is a 2-3 minute audio that ABC broadcast Sunday, Sept 27th. I have read the February report on MELA's website; I have read research reports; I have looked at the data.

    I can not find one reason this stock is not a key stock holding for a lot of folks. Very small growth; tremendous profit margins & growth opportunities. It's just a matter of time before someone takes them out.

    This remains the top pick on the board in my view.  

    Battling the Deadliest Cancer
    http://abcnews.go.com/video/playerIndex?id=8688866
    Tags: MELA
    Sep 30 10:14 pm | Link | Comment!
  • Transcept Pharma (TSPT) Offers an Interesting Biotech Value Play

    Transcept Pharma is a small market cap company and has little public awareness. The company has experienced unique corporate changes in the past year. These changes include a 1:5 reverse split & a name change. The market cap is $190m: (15.3 m fully diluted shares x current share price of $12.44) http://bit.ly/PgmH0

    TSPT has one key product, Intermezzo. "Intermezzo ® (zolpidem tartrate sublingual tablet) is a sublingual low dose formulation of zolpidem that has been developed for use as-needed for the treatment of insomnia when a middle of the night awakening is followed by difficulty returning to sleep." http://www.transcept.com/content/view/39/95/

    TSPT has 15.3m shares fully diluted with warrants and options included. Cash balance currently is $98m, which is $6.40 per share, fully diluted.

    On August 2nd Purdue Pharma and TSPT agreed on terms to commercialize Intermezzo within the US. http://tinyurl.com/ms7xlh. The terms include an initial, unconditional on Intermezzo approval, $25m TSPT received from Purdue Pharma.

    The product, a 3.5 mg zolpidem forumlua, is to assist people who have insomnia-symptoms and occasionally wake up in the middle of the night and can not fall back to sleep. Ambien is typically given for users to take nightly in a 10 mg formula.

    Intermezzo is up for FDA approval by 10.30.09. The patient takes Intermezzo and on average falls asleep within 14-minutes. The insomnia market currently does not have a market which serves this specific need. http://bit.ly/HRcPH

    The Intermezzo FDA ruling was delayed from June 30 to Oct 30. The FDA requested TSPT to provide additional info on how the user should take the product. There are zero requests for additional studies, and user instructions on Intermezzo usage is the key issue in FDA dialogue.

    Purdue has excellent relationships with primary physician doctor sales. The company's core sales product is the pain-killer Oxycontin. Purdue is currently working to establish their internal sales reps to prepare selling Intermezzo upon approval.

    Purdue Pharma is a private company with $2b in sales. Purdue will pay TSPT a specific percentage of Intermezzo royalties for US sales. The specific terms of payout percentages of revenues ranges between 10-25% depending upon undisclosed milestones. Purdue, as a private company, has not publicly divulged what the specific terms are, and TSPT has refrained from detailing the exact contractual terms. TSPT's 8k states what is public information and is non-specific about Purdue royalties figures - other than management referring to a range of approximately (MY INTERPRETATION) 10-25% of revenues.

    Upon Intermezzo approval, Purdue Pharma is planning to immediately be up and running to sell Intermezzo in the US. TSPT, after the 1-year anniversary of Intermezzo commercial launch, retains co-promotion rights to psychiatric & sleep disorders. Purdue Pharma will pay all Intermezzo marketing costs. Intermezzo is ready to be sold immediately upon NDA, with the PDUFA action date scheduled no-later-than 10.30.09.

    TSPT stated on the 08.03.09 conference they expect 110-120 TSPT sales reps will be required for Intermezzo sales within the US psychiatric market, after the 1-year wait upon Intermezzo commercial release.

    MY QUESTIMATE: Peak US sales are expected to run $500m with an initial yearly sales of $75m - $125m a baseline. Analysts have projected US Intermezzo sales at $250m within 3-4 years post approval. TSPT will retain psychiatric and US sleep disorder co-promotional sales after 1-year in Pharma Prod agreement. The psychiatric market is approximately 15% of all insomnia-related prescriptions.

    Countries outside the US have various degrees of regulatory oversight and approval.

    TSPT has Canada & Mexico Intermezzo rights up for contract negotiations as deemed timely and appropriate. Purdue Pharma - per the private negotiations - will retain right to an unspoken "1st right of refusal" for an agreement to sell in Canada and Mexico. I assume Purdue will pay an undetermined price for this right.

    TSPT retains control over the remaining countries. Europe has an approximately 50-70% expected sales figure of the US sales expectations. Europe is the key focus because the area is conservative in drug approval and Ambien and Ambien generics are established within this market.

    I anticipate TSPT to establish a Intermezzo deal with an established Europe distributor, similar to the Purdue Pharma contract. Management has stated that exploratory research has been conducted.

    TSPT has patents pending upon Intermezzo delivery with US Patent office. The outcome of this decision, presumably but not announced, will effect Purdue's royalty payment structure to a certain degree.
     

    I am long TSPT common.


    Tags: TSPT, Biotechnology
    Sep 25 10:12 am | Link | 1 Comment
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