Filed On 12/5/07 7:45am ET · SEC File 0-27046 · Accession Number 1144204-7-65834
As Of Filer Filing As/For/On Docs:Pgs Issuer Agent
12/05/07 New Motion/Inc 425 1:46 Traffix Inc Vintage Filings LLC/FA
Business-Combination Transaction Communication · Rule 425
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Filed
by:
New Motion, Inc.
Pursuant
to Rule 425 under the Securities Act of 1933
And
Deemed Filed Pursuant to Rule 14a-12
Under
the
Securities Exchange Act of 1934
Subject
Company: Traffix, Inc.
Address
of New Motion, Inc.
42
Corporation Park, Suite 250
Registrant's
telephone number, including area code: (949) 777-3700
On
Tuesday, December 4, 2007, New Motion, Inc. for the first time publicly
disclosed a management presentation entitled “The Fastest Growing
Digital
Advertising & Entertainment Network” relating
to the planned merger with Traffix, Inc (the "New Presentation"). A copy of
this
New Presentation appears below. The New Presentation updates and supersedes
a
management presentation dated October 12, 2007 (the "October 2007
Presentation"), which was previously filed with the Securities and Exchange
Commission on October 15, 2007. The revised information includes, among other
things, information concerning pro forma and projected financial information
set
forth on the slide entitled "Summary Financials - Pro Forma and Projected
Combined Revenue & Adjusted EBITDA Growth." The information set forth in the
October 2007 Presentation, including without limitation, the foregoing described
pro forma and projected financial information, is materially different than
corresponding information set forth in the New Presentation and does not reflect
New Motion's current expectations of the results of the proposed merger with Traffix,
Inc. Accordingly, the October 2007 Presentation should be disregarded in its
entirety.
“The
Fastest
Growing Digital
Advertising
& Entertainment
Network”
Management
Presentation
New
Motion,
Inc.
This
Presentation
updates and supersedes a management presentation dated October 12, 2007
(the
"October 2007 Presentation"), which was previously filed with the Securities
and
Exchange Commission on October 15, 2007. The revised information includes,
among
other things, information concerning pro forma and projected financial
information set forth on the slide entitled "Summary Financials - Pro Forma
and
Projected Combined Revenue & Adjusted EBITDA Growth." The information set
forth in the October 2007 Presentation, including without limitation, the
foregoing described pro forma and projected financial information, is materially
different than corresponding information set forth in this Presentation
and does
not reflect New Motion's current expectations of the results of the proposed
merger with Traffix, Inc. Accordingly, the October 2007 Presentation should
be
disregarded in its entirety.
Company
Overview
Fast
Growing
Digital Advertising & Entertainment Network
-
A
leading, US based,
mobile entertainment
and Internet media company distributing premium content
directly to consumers.
Cross
Media
Strategy With the Right Revenue Model–
Combine
ad supported
proprietary content and
wide Internet distribution to acquire subscribers
who are billed ‘off portal’ through cell phone carrier.
Addresses
Two Growing Markets
-
The U.S. mobile
content market is growing at 62% CAGR to 22.5 BB by
2010 and online
advertising is expected to almost double in size to 32BB in same time period.
Strong
Organic Growth with Solid Balance Sheet to Fund Expansion–
$145MM to $160MM in
2008 pro
forma revenues; $15MM to $23MM in 2008 pro forma EBITDA; $30MM -
$40MM in cash on balance sheet w/
no debt & generating positive FCF
Unique
Competitive Advantages–
Mixes
growing
off portal mobile content model with online media
presence, owns the lowest
cost media buying platform, offers the most differentiated set of products
with
limited IP costs, and integrates a diverse customer monetization engine
Significant
Merger Synergies–
Reduced
cost per acquisition (CPA)
alongside increased average revenue
per impression create reduced payback
periods and drive higher return on investments.
Headquartered
in NY with Large West Coast Presence in Southern California
– Approx
240 employees
Seasoned
Management Team–
Proven
experience
and success operating companies in a public
environment across the Internet,
mobile, and direct marketing sectors.
Transaction
Summary
Surviving
Entity
New
Motion will be the surviving
publicly trade entity
Key
Terms
Post-transaction
fully-diluted
ownership split of 55% / 45% (calculated using the treasury stock
method
based on an assumed New Motion stock price of $15.50) in favor of existing
New
Motion
shareholders and other security holders (implied exchange ratio of
0.683); fully-diluted
ownership split subject to certain closing adjustments
which could result in a split of 57%/43%
(calculated using the treasury
stock method based on an assumed New Motion stock price of
$15.50 per
share).
Number
of
Shares to be Issued
10,970,047
million shares to be
issued, calculated using the treasury stock method, resulting in
pro forma
shares outstanding of 24,451,250 million; 11,935,278 million shares to be
issued
on a
fully-diluted basis, calculated using the treasury stock method,
resulting in pro forma shares
outstanding of 25,854,866
Structure
of
Transaction
Transaction
is structured as a
merger and is intended to qualify as a tax-free reorganization
within the
meaning of Section 368 of the Internal Revenue Code of 1986
Expected
Close Date
NASDAQ
Listing
Approval
of a New Motion NASDAQ
listing is a condition to closing
Post-Transaction
Governance
Seven
member Board of Directors
composed of three individuals nominated by New Motion (two
of whom must
qualify as independents), three individuals nominated by Traffix (two of
whom
must qualify as independents), and the CEO of New Motion
Post-Transaction
Leadership
The
current leadership of New Motion
and Traffix will continue to operate the combined
company. Burton Katz will
assume the role of Chief Executive Officer and Andrew Stollman will
assume
the role as President.
How
Important is Mobile Entertainment and Internet
Media?
Cross
Media
Strategy: Convergence of Mobile Entertainment & Internet
Media
Premium
billed subscriptions allow us to integrate and leverage two
complementary
media, entertainment and distribution channels
VAS
Provider relationship directly
with end consumer.
Consumer
billed by carrier typically
via third party aggregator.
Subscription
based business creates
recurring business model where key operational and
competitive drivers are
Subscribers, CPA, ARPU, Life Time Value (LTV), & Pay Back Period.
Provider
not exposed to lack of
‘merchandising control’ & ‘disintermediation risk’ by carrier.
Company
Overview – Direct
to Consumer
Value Chain
VAS
Provider
relationship directly with end consumer.
Consumer
billed by
carrier typically via third party aggregator.
Subscription
based
business creates recurring business model where key operational and
competitive drivers are Subscribers, CPA, ARPU, Life Time Value (LTV),
&
Pay Back Period.
Provider
not exposed
to lack of ‘merchandising control’ & ‘disintermediation risk’ by
carrier.
Company
Overview – Direct
to Consumer
Value Chain
Company
Overview - Value
Chain Business
Metrics
NMI
Today
NMI
- TRFX
Combined
Standard
End User
Retail Price (Monthly Fee)
$9.99
$9.99
Net
Revenue Booked
Pre-Reserves and Allowances
$6.00
$6.00
Approximate
Net
Revenue per Billed User Per Month (ARPU)
$5.82
$5.82
Third
Party
Content Costs
2%
- 4% of
Net
2%
- 3% of
Net
Approximate
Cost Per Acquisition (CPA)
$10.00
$8.80
Approximate
Net
Revenue per User (ARPU)
$5.82
*$6.22
Approx
Life Time
Value of Customer (LTV) 1st 12 months
$21
to $23
*$22
to $24.5
Est.
Payback Period
(PBP)
4-5
Months
3
- 4 Months
Est.
Return on
Marketing Investment (ROI) first Year
120%
164%
*Increased
Net
ARPU and LTV is due to moderate increases in advertising units to new
and existing mobile premium subscribers.
Incremental
revenue will appear in marketing services segment of financial statements.
**
Illustration
of LTV analysis on specific product set & not represented of all current or
new product initiatives
Projected
Revenue Growth Opportunity
Company
Overview – Our
Products
Categories:
Interactive Contests,
Casual Games, Digital Music,& Lifestyle/ Community.
Product
strategy geared toward
converting online content into mobile subs.
Short
form entertainment content
available ‘on the PC’ or ‘on the Go’.
Services
expand demographic reach
for premium billed mobile services.
Low
bid reverse auction
where
lowest unique bid
wins daily prizes.
Users
signs up for free or
for
$9.99 a month to
play from mobile with
access to also play from
the
fixed Internet.
All
subscribers receive
points
for playing which
they can redeem for
specific prizes.
Initial
launch, January
2007.
Over
450,000 active
subscribers.
(10/12/07)
Interactive
Contests
Bid
4
Prizes
Integrated
online & mobile
game site that taps into the
exploding growth in online
casual
games.
Target
audience - female,
casual
game users who are 28
to 50 years old.
First
online, premium billed
mobile entertainment service
creating a new, powerful
business
model.
Customers
pay $9.99 a month –
via their mobile - to play online
games, download mobile
content,
& win prizes.
Over
175,000 customers have
subscribed; 85,000 active
premium subs. (10/12/07)
Casual
Games
Gator
Arcade
The
hottest brand in P to P
delivered music, TV and film
content returns with backing
from
studios and labels.
Integrated
PC based music rental
and ringtone service sold
alongside mobile music club for
one single
price.
Service
billed on the mobile
phone rather than credit card.
Mid
term ability to leverage
innovative GFR, DRM capability.
Exclusive
marketing partnership
with New Motion signed.
Digital
Music
Altnet
Live
Free
open access and premium billed
mobile
communities.
Community
& Lifestyle
SEARCH
Over
1MM organic
& PPC search clicks p/d
1.8MM
search terms
managed p/d
Full
service SEO/SEM
agency
DATA
MGMT
Database
of 150
million consumers
20
million opt-in
wireless users
300+
direct
clients
AFFILIATE
5000
publishers
across Hot Rocket network
500+
new publishers
per month
Exclusive
access to
key offers
WEB
18
content websites
across verticals
25
million unique
visitors p/m
50,000+
full
registrations per day
COMMUNITY
Q121
mobile photo
sharing community
Mobile
and Internet
music community
Traffix
-
Wide,
Diverse, &
Owned Distribution
Brand
Marketing
Ad
serving leverages
all major targeting
capabilities to
produce optimal
results.
Optimize
by
Behavioral,
Demographic, &
Contextual targeting
Traffix
–
efficiently connects 3rd
party
advertisers with
unparalleled Marketing Services
Performance
Marketing
Direct
response
network allows
advertisers to reach
their performance
driven
marketing
objectives by
measuring
performance with
pre-determined
goals.
Enforce
the
strictest
guidelines in the
industry, ensuring
quality leads.
Search
Marketing
Search
Engine
Marketing (PPC) –
experience on over
1,500 managed
accounts with
Google and Yahoo.
Search
Engine
Optimization (SEO)
- organic search
engine results are
one of
the most
popular mediums
on which to
advertise websites.
Affiliate
Marketing
Online
marketplace
of Publishers through
search traffic,
websites and email
managed
by Traffix.
Result
is an
end-to-
end self-optimizing
marketplace where
campaigns are
continuously
optimized and
improved.
Mobile
Marketing
Advertisers
message can be
targeted to a
specific audience,
defined by
geography, interest
categories, service
types and time of
day on
high quality,
user-requested SMS
content
The
addressable
market is over 235
million American
mobile users, larger
than
any other
mobile medium.
Mobile
Entertainment & Internet Media Company Competitive
Matrix
Existing
Mobile Content Companies
Service
Emphasis
- acquire customers via indirect media
buying relationships or
via carrier deck for basic services;
ringtones, & wallpaper
subscriptions within an increasingly
crowded space
Current
Environment–
strong
growth
business but facing
increasing CPA’s, historically low usage services, and
difficulty in
creating brand
recognition
Thumbplay
Dada
Mobile
Buongiorno
Cellfish
(Lagadere)
Acotel
Jamster
(Fox)
Glu
Mobile
Hands
On
Mobile
Playphone
New
Motion
Mobile
Entertainment & Internet Media Company Competitive
Matrix
Existing
Mobile Content Companies
Mobile
Entertainment & Internet Media Company Competitive
Matrix
Thumbplay
Dada
Mobile
Buongiorno
Cellfish
(Lagadere)
Acotel
Jamster
(Fox)
Glu
Mobile
Hands
On
Mobile
Playphone
New
Motion
Existing
Mobile Content Companies
Ad
Networks
& Lead Generation
Service
Emphasis
- develop wide
relationships with
thousands of individual
web publishers
acting as value
added supplier between publishers & advertisers
Current
Environment
- A growing
market where top
tier players create sustainable competitive advantages
by controlling exclusive offers which accelerate
growth in the
underlying publisher network.
Mobile
Entertainment & Internet Media Company Competitive
Matrix
Thumbplay
Dada
Mobile
Buongiorno
Cellfish
(Lagadere)
Acotel
Jamster
(Fox)
Glu
Mobile
Hands
On
Mobile
Playphone
New
Motion
Existing
Mobile Content Companies
Ad
Networks
& Lead Generation
Blue
Lithium
Value
Click
Traffix
Miva
Aptimus
Right
Media
Think
Partnership
Azoogle
Service
Emphasis
- Employ premium
content
leveraging brand loyalty alongside organic search to
drive & own, well segmented audience online
Current
Environment–
Growth
business
as
expanding number of consumers spend more time
online &
advertisers follow with new & innovative
ad formats. Still, inventory is
larger than current
demand as ½ of all inventory goes
unsold.
Mobile
Entertainment & Internet Media Company Competitive
Matrix
Thumbplay
Dada
Mobile
Buongiorno
Cellfish
(Lagadere)
Acotel
Jamster
(Fox)
Glu
Mobile
Hands
On
Mobile
Playphone
New
Motion
Existing
Mobile Content Companies
Ad
Networks
& Lead Generation
Blue
Lithium
Value
Click
Traffix
Miva
Aptimus
Right
Media
Think
Partnership
Azoogle
Ad
Supported
Branded Content
Mobile
Entertainment & Internet Media Company Competitive
Matrix
Thumbplay
Dada
Mobile
Buongiorno
Cellfish
(Lagadere)
Acotel
Jamster
(Fox)
Glu
Mobile
Hands
On
Mobile
Playphone
New
Motion
Existing
Mobile Content Companies
Ad
Networks
& Lead Generation
Blue
Lithium
Value
Click
Traffix
Miva
Aptimus
Right
Media
Think
Partnership
Azoogle
Ad
Supported
Branded Content
Yahoo
HowStuffWorks.com
MSN
ESPN.com
CNN.com
iVillage
About.com
Traffix
Mobile
Entertainment & Internet Media Company Competitive
Matrix
Thumbplay
Dada
Mobile
Buongiorno
Cellfish
(Lagadere)
Acotel
Jamster
(Fox)
Glu
Mobile
Hands
On
Mobile
Playphone
New
Motion
Fully
Integrated Mobile Entertainment
&
Internet Media Company
Ad
Networks
& Lead Generation
Blue
Lithium
Value
Click
Traffix
Miva
Aptimus
Right
Media
Think
Partnership
Azoogle
Ad
Supported
Branded Content
HowStuffWorks.com
MSN
ESPN.com
CNN.com
iVillage
About.com
Existing
Mobile Content Companies
Service
Emphasis
- Combines digital content, online
distribution, & premium
billing into a single entity w/
ability to provide innovative mobile offers,
create brand
recognition, & higher LTV’s
Current
Environment–
limited
competition & first mover
advantage w/ ability to breakout w/
significant scale, high
gross margins, & strong cash
flow
Yahoo
Traffix
Mobile
Entertainment & Internet Media Company Competitive
Matrix
Thumbplay
Dada
Mobile
Buongiorno
Cellfish
(Lagadere)
Acotel
Jamster
(Fox)
Glu
Mobile
Hands
On
Mobile
Playphone
New
Motion
Ad
Networks
& Lead Generation
Blue
Lithium
Value
Click
Traffix
Miva
Aptimus
Right
Media
Think
Partnership
Azoogle
Ad
Supported
Branded Content
HowStuffWorks.com
MSN
ESPN.com
CNN.com
iVillage
About.com
Existing
Mobile Content Companies
Fully
Integrated Mobile Entertainment
&
Internet Media Company
New
Motion/Traffix
Combined
Company
Yahoo
Traffix
Summary
Financials–Pro
Forma and
Projected Combined Revenue & Adjusted
EBITDA
Growth
USD
MLN
2005
2006
2007
(est.)
(c)
2008
(est.
range)
(d)
%
CHANGE
2007-2008
Revenues
(a)
$69
$92
$115
$145-160
26%-39%
Adjusted
EBITDA
(b)(e)
$5
$7
$3
- $5
$15-23
AEBITDA
Margin
8%
8%
2.5%-4.3%
10%-14%
$
in Millions
(a)
Revenue
for 2005 and
2006 is combined revenue and reflects the summation of NWMO and TRFX revenue
for
that fiscal year, as if the companies were combined as of
January 1, 2005.
(b)
Adjusted
EBITDA
reflects the combination of NWMO and TRFX results as if the companies were
combinedas
of January 1, 2005
and reflects additional expenses to be
incurred related to the
acquisition.Adjusted
EBITDA
presented for all periods is anon-GAAP
financial
measure.Adjusted
EBITDA
refers to a financial measure defined as
earnings before net interest,
income taxes, depreciation,amortization
and
stock-based compensation. Adjusted EBITDA may not be comparable to EBITDA
as
reported
by other companies because it is adjusted to exclude stock-based
compensation, which is not excluded from EBITDA as reported by other companies.
Adjusted EBITDA
is
a part of the
internal management reporting and planning process and assists management
in the
evaluation of operating performance. It is not, and is not intended
to
be, a substitute for any GAAP financial measures.
(c)
The
information
presented for 2007 consists of management’s projected combined results of NWMO
and TRFX as if the companies were combined as of January 1, 2007.
These
estimates are presented solely for the purpose of providing a better
understanding of management’s expectations concerning the results of the
proposed
combination transaction. Revenueand
Adjusted EBITDA
have been adjusted to eliminate intercompany transactions and to reflect
additional expenses to be incurred
related to the acquisition.
(d)
The
information
presented for 2008 consists of management’s projected combined results of NWMO
and TRFX assuming the companies are combined as of January 1,
2008. These
estimates are presented solely for the purpose of providing a better
understanding of management’s expectations concerning the results of the
proposed
combination transaction. Revenue and Adjusted EBITDA
have been adjusted to eliminate intercompany transactions and to reflect
additional expenses to be incurred
related to the
acquisition.
Future
Growth Opportunities
Surging
consumer demand in US for
wireless & online entertainment.
Increased
consumer mindshare online
combined with enhanced digital advertising formats.
Select
international markets with
scalable business model for future penetration.
New
products & applications
built on unified tech platform.
Mobile
marketing supported by a
large, wholly owned customer database.
M&A
platform to consolidate
industry & diversify product sets.
Forward-Looking
Statements
This
communication contains
forward-looking statements within the meaning of the Private Securities
Litigation Reform act of 1995.
Forward-looking
statements are
statements that are not historical fact, are based on certain assumptions
and
reflect our current
belief and expectations. These
forward-looking statements are subject to risks and uncertainties, and other
important factors that
could cause actual results, performance, or
achievements to differ materially from any future results, performance or
achievements, discussed or implied by such forward-looking statements.
The
following factors among others
could cause actual results to differ materially from the anticipated results
or
other expectations
expressed in the forward-looking statements. The risk
that the proposed transaction may not be completed in a timely manner if
at
all, the failure of stockholders to approve the transaction, the failure
to
realize synergies and cost savings from the transaction, or
delay in
realization thereof, the business of New Motion Inc. and
Traffix Inc. may not be combined successfully, or such
combination may take longer, be more difficult, time consuming or costly
to
accomplish than expected, operating costs
and
business disruption following the merger,
including our relationships with third parties, general business and economic
conditions,
geopolitical events and
regulatory changes, the performance of financial markets and interest
rates, and the ability to obtain
governmental approval of the
transaction on a timely basis, as well as other relevant risks detailed in
the
filings of New Motion and
Traffix with the Securities and Exchange
Commission, and available at the SEC's Internet site located at www.SEC.gov.
The
information set forth herein
should be read in light of such risks. The information set forth herein speaks
only of the date
hereof, and New Motion and Traffix disclaim any intention
or obligation to update the information contained in this communication.
Important
Additional Information and Where to Find it
This
communication is being made in
respect of the proposed business combination involving New Motion Inc. and
Traffix Inc. In
connection with the proposed transaction, New
Motion Inc. filed with the SEC a registration statement on Form S-4
containing a joint proxy statement/ prospectus, and each of New Motion
and
Traffix's plan to file with the SEC other documents
regarding the proposed
transaction.
The
definitive joint proxy
statement/ prospectus will be mailed to stockholders of New Motion and
Traffix. Investors and security
holders of New Motion, Inc. and
Traffix, Inc. are urged to read
the joint proxy statement/prospectus and other
documents filed
with the SEC carefully in
their entirety when they become available,
because they will contain important information about the
proposed transaction.
Investors
and security holders will
be able to obtain free copies of the registration statement and the
joint proxy
statement/prospectus when available, and other
documents filed with the SEC by New Motion and Traffix through the
Web site
maintained by the SEC at www.SEC.gov.
Free
copies of the registration
statement and the joint proxy statement/ prospectus when available, and other
documents filed
with the SEC can also be obtained by directing a request to
Ray Musci, President of New Motion, Inc. at 949-777-3700 extension 221,
or
by directing a request to Todd Framer, 212-682-6300 extension 215, or Beth
Moore, 212-682-6300 extension 224 of KCSA investor
relations for Traffix
Inc.
New
Motion, Traffix and their
respective directors and executive officers and other persons may be deemed
to
be participants in
the solicitation of proxies in respect to the proposed
transaction. Information regarding the identity of the persons who
may, under
SEC rules, be deemed to be participants in the solicitation of
proxies and a description of their direct and indirect
interests
in the solicitation by security holdings or otherwise will be contained
in
the joint proxy statement/prospectus and any other
relevant materials to be
filed with the SEC when they become available.
Dates Referenced Herein and Documents Incorporated By Reference
Filing Submission - Alternative Formats (Word / Rich Text, HTML, Plain Text, SGML, XML, et al.)
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