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August 3, 2006
Dear Fellow Shareholders:
We are very pleased to report to you that since our
last update of just a few months ago, we have made excellent
progress towards realizing several important operating
strategies to fund and grow CSMG, especially our Live
Tissue Connect subsidiary. We believe these very significant
developments will greatly benefit the Company and all
our shareholders.
Live Tissue Connect
Important near term developments were announced in a
July 18, 2006 press release concerning funding of our
medical equipment subsidiary, Live Tissue Connect, Inc.
(LTC), via an initial public offering. We have engaged
the investment banking firm Empire Financial Group,
Inc., a qualified and experienced underwriter, for a
firm commitment underwriting, to raise a minimum of
$5 million in an IPO, and to immediately raise for CSMG
up to $3 million in a privately placed bridge funding.
Neither the offering price of the shares of the IPO,
nor the amount of shares has yet been determined.
It is the intent of management and Empire Financial
Group to qualify Live Tissue Connect, upon going public,
for listing on a major board, either NASDAQ or the American
Stock Exchange. This would infer a price of $5 per share
for the IPO, and if we sold a total of two million shares,
for a total of $10 million, this would result in approximately
17 million shares of LTC outstanding, or a market valuation
at about $85 million. At that point, CSMG would own
12.9 million of the 17 million shares outstanding in
LTC, or almost 76%. At a market price of $5 per share,
this would immediately add about $64.5 million of shareholder
value to CSMG. Assuming CSMG has approximately 35 million
shares outstanding at the time of the IPO, this would
boost CSMG shareholder book value to approximately $2
per share. If CSMG stock were to sell at book value,
which is a very conservative valuation, this would reflect
an increase of over 500% from the current market price
for our stock.
It is important to note that we plan to sell shares
in LTC, with only a warrant transaction in the parent
company, or CSMG as described below.
Importantly, in preparation for the IPO of LTC, the
underwriter has agreed to raise, on a best efforts basis,
at least $3 million in a bridge financing for CSMG.
The offer consists of a note that will convert, at a
discount to the initial offering price, into shares
of LTC, and significantly, have no dilution to CSMG
shareholders. The proceeds from this financing will
give the Company needed working capital in the interim,
fund the LTC FDA filings and allow CSMG to pay off some
debt obligations in the process. Additionally, note
holders receive three (3) year warrants for up to 50%
of the amount of his note, and interest that is convertible
to CSMG common stock, with an exercise price that is
to equal to 120% of CSMG's common stock price upon the
Maturity Date of the Note. There is a 5% underwriter's
warrant attached to the note offering that allows the
placement agent to purchase shares of both CSMG and
the IPO, priced at the market price on the date of closing
of the transaction.
Sincerely,
Don Robbins
President and CEO
CSMG Technologies, Inc.
Additional information about CSMG can be found at http://www.ctum.com
or e-mail publicrelations@ctum.com.
Investors may contact Don Robbins or K. Bruce Jones,
CSMG, at (361) 887-7546, e-mail: publicrelations@ctum.com.
Safe-Harbor Statement: Under the Private Securities
Litigation Reform Act of 1995. This press release may
contain forward-looking information within the meaning
of Section 21E of the Securities Exchange Act of 1934,
as amended (the Exchange Act), including all statements
that are not statements of historical fact regarding
the intent, belief or current expectations of the company,
its directors or its officers with respect to, among
other things: (i) the companys financing plans; (ii)
trends affecting the companys financial condition or
results of operations; (iii) the companys growth strategy
and operating strategy; and (iv) the declaration and
payment of dividends. The words may, would, will, expect,
estimate, anticipate, believe, intend and similar expressions
and variations thereof are intended to identify forward-looking
statements. Investors are cautioned that any such forward-looking
statements are not guarantees of future performance
and involve risks and uncertainties, many of which are
beyond the companys ability to control, and that actual
results may differ materially from those projected in
the forward-looking statements as a result of various
factors.
CONTACT:
CSMG Technologies, Inc.
Donald S. Robbins, 361-887-7546
President and CEO
or
K. Bruce Jones, 770-955-0409
or
ROI Group Associates, Inc.
Michael Dodge, 212-495-0744
mdodge@roiny.com
or
Bob Giordano, 212-495-0201
Newsletter Archive:
February 16, 2006
August 3, 2006
November 29, 2006
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