We now know a little more about Function (X) – but very little – as Bob Sillerman has completed his transformation of Gateway Industries into the platform for his new venture. He’s also hired some top staffers.
Sillerman closed his $3.6 million acquisition of 120 million shares – which were immediately worth $3.12 billion at Wednesday’s closing price of $26 for the new Function (X), which uses the pink sheets trading symbol of “FNCX.” (Yes, Sillerman’s stock buy at three cents per share was AFTER the one-for-ten reverse split of the former GWAY stock!)
Jack Howard, who had been CEO of Gateway and put together the deal with Sillerman, received 250,000 of the new shares – he already had over 200,000 post-split – and he was reimbursed for the $200,000 he’d paid out of his own pocket to keep Gateway operating since 2007.
In addition to the Sillerman investment, Function (X) sold 940,000 shares at approximately 53 cents per share and more than 13.2 million shares at approximately 76 cents per share. Combined those stock sales to an unidentified institutional investor raised $10.5 million.
Sillerman’s financial advisor, Berenson & Company, received a five-year warrant to purchase 100,000 shares at 80 cents each.
Just what the new company will do is still a closely guarded secret. The announcement of the closing gave only a hint that it will be a media venture focused on digital and mobile platforms. “Mr. Sillerman has made his investment in the Company to establish a new platform for investments in media and entertainment, with a particular emphasis on digital and mobile technology. Mr. Sillerman is evaluating several initiatives aimed at combining certain established business principles with a new element enabled by digital and mobile distribution capabilities. An initial product under consideration would emphasize Smartphone application, with a goal of being ready for Beta testing in the 3rd quarter of 2011. The Company is not disclosing any details about this product for competitive reasons, and because this product has not reached the stage of a specific plan for its commercial adaptation,” the announcement stated.
Effective with the closing, Howard and Director Ronald Hayes resigned, taking their newly valuable stock holdings with them. The new Sillerman crew is now in place.
Robert F.X. Sillerman himself is Executive Chairman and a director. Former MTV and 19 Entertainment (creator of “American Idol”) executive Janet Scardino is CEO of Function (X). Mitchell Nelson was appointed Director, Executive Vice President, General Counsel, and Secretary – and continues to hold similar posts at Circle Entertainment, another penny stock company headed by Sillerman which recently emerged from Chapter 11 reorganization. Attorney Michael Burrows of Greenberg Traurig LLP was named a director of Function (X).
After shooting skyward when the Sillerman deal was announced, the stock of the former Gateway Industries cooled off a bit in recent days and has been trading at a little more than half of its peak. So, the post-reverse-split stock now trading as “FNCX” on the pink sheets shows a 52-week trading range of 10 cents (as recently as February 7) to $53.90 (on February 10).
RBR-TVBR observation: RBR-TVBR has a mobile app. Your station no doubt has a mobile app. Just about every media company has a mobile app – or several of them. So, what’s so special about the mobile apps coming from Function (X)? We’ll have to wait several months to find out if the wild stock speculation is justified.