Total Sports Media Inc. (fka TSMI)

[PennyPincher12]

LUXD Due Diligence:


Use the following link to check on the latest SEC filings for LUXD:

http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001442376&owner=exclude&count=40



Timeline:

- July 11th, 2011: 51,539,223 O/S, 83.5% of the entire O/S is held by insiders. From the 10-Q: "The Company is currently in negotiation to do a reverse merger with a larger Company with far greater liquidity then Lux". Stock prices jumps as a result, but is fairly illiquid after initials large buys

- August 10th, 2011: "the Company converted $31,500 of the loan to 9,729,478 shares of common stock." The convertible note in question is a $70,000 loan that can be converted via common stock. Total conversion $ = $41,500, which leaves $28,500 to be converted. These shares are brought to market in pieces everyday, resulting in greater liquidity for stock movement and slight dilution.

- October 14th, 2011: S-8 is filed; our company sets up a payment with our CEO for services rendered - 1,250,000 shares per quarter (for at least 1 year). This agreement took place on September 17th and notes that 50,000,000 total shares are authorized for the future (but are restricted for the time being). My initial reaction is that a potential R/M candidate could use the remaining shares in that authorization to buy most of the company's majority without diluting into the market, but this has not come to fruition (yet).

-- It's also important to note that there was an error in the S-8 that linked us with an Imaging company. This error was corrected shortly thereafter. Also, the S-8 reveals that as of August 31th, there was 67,541,023 shares of common stock outstanding. This means that between August 10th and August 31th, an additional 6,272,322 shares were added (assuming roughly 51M + 9.7M before). Estimating a 75% increase in stock price from the 10th to the 31st (and using .0032 as the conversion rate, based off of $31,500 and approx 9.7M shares issued), I calculate that the rest of the $28,500 loan was paid off, thereby providing a clean shell for a potential R/M.

- November 29th, 2011: the 10-K is filed and confirms what many on the board were wondering: the original R/M fell through. HOWEVER, the 10-K provides the following paragraphs that depict a new scenario:

"In its latest fiscal year the Company has negotiations with several Companies regarding acquisitions and reverse mergers. In June the Company entered into negotiations with a Company in the digital online advertising business and signed a non-binding Letter of Intent to acquire the business via a reverse merger. After extensive due diligence the Company was unable to confirm the Financial Statements presented by the business and the Company had to terminate negotiations. The prospective acquisition also failed to pay the legal expenses accrued in connection with the proposed transaction defaulting on their written agreement to absorb all of these costs leaving the Company with a substantial liability. The Company intends to file an action against the business to recover its legal expenses and other damages.

As of mid November 2011 the Company has had extensive negotiations and is actively conducting due diligence on a new, prospective reverse merger with a company that is in a related entertainment field and which holds several, important assets. As of mid November the talks and negotiations were continuing but no formal agreement has been reached and there is no assurance that agreement will be reached.

The Company has not been successful raising any new capital except for a small Convertible Note and has limited liquidity in its publicly traded shares and although we continue to explore various merger opportunities we have not yet formalized a transaction. Without far greater liquidity or new outside investment it will be very difficult to grow the Company in any meaningful way in the near term as the Company will be solely reliant on generating income from its motion picture properties and assets. The Company is also, currently, exploring and considering several potential options to re-capitalize the Company, to the long term benefit of shareholders, including possible mergers, as described herein, and/or share distributions, which may substantially dilute share holders and which may result in the Company installing new management and, potentially, operating new businesses."


In my opinion, this means that LUXD shielded us (and themselves) from a bad deal! It also depicts that LUXD does not have the cash power to continue funding new movies, but can most likely finish the ones currently in production. This means that LUXD will be very active in finding a suitable merger/reverse merger - more liquidity for the company(ies). News could be released of this new reverse merger at any time. Also, as italicized above, the company has taken on the additional liability that was associated with this bad deal. I expect that the company will handle this and have this liability removed from the books as soon as legal proceedings take place.




Some other takeaways from the 10-K:

1.) "At November 27, 2011, there were 69,191,023 shares of Registrant's ordinary shares outstanding."

2.) "The balance due on the convertible note payable was $28,500 as of August 31, 2011. Subsequent to the end of the fiscal year, in early September 2011 the Note holder fully converted the Note and the debt has been fully paid. The Company has, subsequent to the end of its fiscal year on September 27, 2011, entered into a new agreement with the Investor for a Convertible Note for $78,500 on similar terms as the prior Note."

** LUXD looks to be cash-infusing many of their projects with this new loan, which won't be convertible for the foreseeable future.

3.) This will be lengthy, as I have been piecing it together for some time now:

"The Company, at the request of its principal shareholder, the holder of all previously issued Preferred Stock, in a Corporate Resolution to be effective November 28, 2011 converted the 2,500,000 Preferred Shares to 25,000,000 common shares and issued the new common shares to Lux Digital Pictures GmbH Partners to effectuate the original intent of issuance. The Company also issued, in the same Resolution to be effective November 29, 2011, 34,200,000 new common shares to its principal shareholder Lux Digital Pictures GmbH to fully satisfy the terms and conditions of an anti-dilution provision contained in the agreement dated June 8, 2008 by and between the Company and Lux Digital Pictures GmbH Partners."


The principal shareholder previously owned 38.5M shares in the company - the controlling interest. Our CEO is the operating manager for him (and it might be him as well). The principal shareholder also held 100% of all outstanding preferred shares. Because controlling interest was being diluted (38.5M against close to 70M total O/S), the controlling interest wanted to make sure that further dilution to pay consultants, etc (before a R/M takes place) does not result in him losing control of the company.

The math: the principal shareholder owned 38.5M shares and now adds 25M common shares (10:1 conversion from the preferred) and 34.2M, as enacted by a dilutive clause in the original agreement. This means the principal shareholder now controls 97.7M shares of the company. The Coleman Family Trust remains locked in with 5M shares, meaning that the total amount that the directors and executive officers own is 102.7M shares. It also means that our O/S has increased, but our float remains the same.

Adding these numbers to the new O/S, we come to a final total of 128,391,023 shares. Insiders hold 80% of all outstanding common stock and the float is 25,691,023 shares. Since no director or EO has ever sold their shares, I don't expect them to now. This is purely a measure to make sure that controlling interest remains with them. I think that the reason the PPS dropped right after the filing was due to this conversion. Yes, there has been dilution, but the float remains the same and the need for a R/M remains.




This is where we are as of today. I hope shareholders and potential shareholders will take the time to immerse themselves in this research, as well as confirm with your own DD. Remember, trade at your own risk and make sure you do your own DD! Every move the company has made, they have made with us in mind. If they didn't care, they would have taken the 1st R/N deal (a bad one). Instead, I think we will see progress made in the next 10-Q filing in mid-January. And if they report that another deal has fallen through, I will remain with this company because they have always looked out for shareholders and they are in need of the R/M. It's only a matter of time! Are you patient enough to wait until that time arrives? :)