iPad Revenue - Al`s Records and Tapes

Executive Summary
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children’s market.
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By targeting the eBooks market, and the iPad platform
in particular, e&co. will fulfill a demonstrable market
need for interactive content for the children’s market at
an accepted price point that will result in high margins.
The idea to form an interactive publishing house
targeting children first came to founder
Alan Elliott (composer, producer and new media
entrepreneur) while watching his three-year
old daughter play with an iPad.
She demonstrated an instinctive
sense of how to use the
iPad, but there was a
notable absence of
books targeted at
kids her age – and
those titles that
were available
were static,
non-interactive
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adaptations of traditional printed books. There simply
were no eBooks that took advantage of the iPad platform
and its multimedia capabilities.
The market opportunity became evident.
Apple sold 13 million units this year and
Apple estimates that number will triple in
2011. With the rollout of additional tablet
computing devices from Samsung, Dell, HP,
and others, the expected market for tablet
computers will exceed 81.3 million tablets
by 2012. The iPad was the most requested
“toy” by children for Christmas,
2010 guaranteeing that
in 2011, millions of
fathers like Alan are
scouring the iTunes
store for animated,
interactive eBooks that
simply don’t exist yet.
Executive Summary
Recognizing that the iPad will replace DVD players and traditional
books as the go-to-medium for parents of restless toddlers, Alan
approached long time friend, Rob Edwards (producer and writer of two
Academy Award nominated animated features for Disney as well as
the television series “The Fresh Prince of Bel Air”,
“Full House” and “In Living Color”, and others).
e&co. seeks $3,000,000 from outside
investment sources. Funds will be used for
product development and implementation,
capital expenditures, and working capital.
Edwards, a father of two boys, immediately recognized the opportunity
to tell new stories to a new audience in a new and exciting way.
Together, Edwards and Elliott enlisted
an eager team of writers, animators,
composers and internet developers
from leading studios (Disney, Pixar,
Warner Brothers) who appreciate the
unprecedented and as yet untapped
potential of the eBook as an interactive
story-telling medium.
Armed with top-flight talent, e&co. will
create and produce original properties
featuring new, fully animated and
interactive characters, heartwarming
stories and original music for the
eBook while establishing itself as
a trusted source for commercially
compelling content.
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Core Product
The core product is a catalogue of eBook properties built
for global distribution.
e&co. will build catalogue by developing and producing unique
properties, accomplishing this in four ways:
1
Writing
e&co. producer/writer Rob
Edwards wrote Disney’s
full length, Academy
Award Nominated, “The
Princess and the Frog.”
Mr. Edwards’ crossover
geek love of animation
and writing give e&co.
not only one of the top
writers in the field, but
one of the top judges of
talent inside the space
and one of the few
writers who can both
write and draw.
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3
Animation
e&co. has put together
a team of some of the
most respected and
visionary animators from
inside Disney and
Pixar with the mission
to create new properties
for a new medium.
Music
e&co. founder Alan
Elliott combines an
encyclopedic knowledge
of all things musical with
a distinctive writing voice.
e&co. will create a
unique catalogue of
music that will generate
royalties from radio,
television, the internet
and through public
performances as well as
through traditional sheet
music and licensing of
properties for film/TV use.
e&co. will employ it’s
expertise to create a
team that provides
continuity. Through
continuity, e&co. will
keep costs manageable.
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4
Internet Dev.
e&co. has experience
developing internet
content with a team of
coders and designers
able to fulfill the
content provided by the
animators, writers and
composers.
Through years of
creating web sites and
other on-line content,
e&co. will smoothly
go from writing, to
production, to animation
to internet coding.
Strategic Alliance with
e&co. has formed a strategic partnership with talent
agency William Morris Endeavor.
In addition, e&co.’s partnership
with WME includes The Raine Group.
WME is the largest diversified talent agencyin the world, with offices
in Beverly Hills; London; Miami Beach; Nashville;New York City
and Shanghai. WME represents clients from all artistic disciplines,
including motion pictures, television, music, theatre, publishing,
commercials, sports, digital media, and video games. WME also has
subsidiaries and strategic investments in companies which provide
both marketing and advertising services as well as investment banking
and commercial banking services to its clients in the media and
entertainment industries.
The Raine Group is a boutique merchant bank focused exclusively on
entertainment, digital media and sports. Founded in 2009 by Joseph
Ravitch and Jeffrey Sine, in partnership with WME Entertainment,
Raine has offices in New York, Los Angeles, Palo Alto and Beijing.
With a global reach, Raine focuses on growth equity investments
where its deep industry experience and unique network of strategic
relationships, limited partners and advisory board members can create
value for portfolio companies.
WME and its CEO, Ariel Emanuel, will represent e&co. and our content
across all media, including TV, film, live events, and music.
Included amongst the animation writers for future properties (and represented by WME) are:
JONATHAN AIBEL & GLENN BERGER: Kung Fu Panda 2,
Monsters vs. Aliens (Dreamworks)
JOSH CAGAN - “Undergrads” (MTV)
DAVE COLLARD - “Family Guy” (Fox)
JOHN DAVIS: Jimmy Neutron (Nickelodeon)
DEAN DEBLOIS: How to Train Your Dragon (Dreamworks),
Lilo & Stitch (Disney)
ED DECTER & JOHN STRAUSS: The Wild (Disney)
MIKE DOUGHERTY: Calling All Robots (Disney)
JEFF & JACKIE FILGO: Diary of a Wimpy Kid (Fox)
ADAM GOLDBERG - “The Jetsons” (WB)
RITA HSIAO: Enchanted, Toy Story 2, Mulan (Disney)
KYLE KILLEN: Ready Set Slow (Dreamworks)
KAREY KIRKPATRICK: Over the Hedge (Dreamworks)
ROB LETTERMAN - Monsters vs. Aliens (Dreamworks)
BRIAN LYNCH – HOP (Illumination)
JOHN MANN & JON GUNN – BOO U (Dreamworks Animation)
JASON MICALLEF – Untitled Illumination Animated Project
STEVE OEDEKERK - Barnyard (Nickelodeon)
PAM PETTLER: Monster House (Sony), Corpse Bride (WB)
CHRIS SANDERS: Lilo & Stitch (Disney), How to Train Your Dragon (Dreamworks)
HEATHER SIEFERT & KEVIN KOPELOW: “Striperella” (Spike TV)
JOSHUA STERNIN & JEFFREY VENTIMILIA: Yogi Bear (WB),
The Simpsons (Fox)
TOM WHEELER: Puss in Boots (Dreamworks)
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Addressing the Market Opportunity
e&co. will produce properties at
viable costs via the following methods:
e&co. will build its revenue and
asset base through these means:
e&co. will engage a team of
proven successful writers,
composers, animators and
internet developers, primarily
on a freelance basis.
e&co. will create
and own properties.
e&co. will license
the properties through
traditional publishing
companies.
e&co. will initially be run
virtually, thereby avoiding
significant overhead expense.
e&co. will produce
approximately twelve
properties per year
(ten in year one).
e&co. will license
the properties through
traditional television
and film companies.
e&co. will fulfill digital
distribution through partnership through (amongst others):
e&co. will license the properties through traditional
merchandising companies.
• iPad (through Apple)
• Kindle (through Amazon)
• Direct to consumer (e.g., Topspin Media)
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Principals:
Alan Elliott, Founder
Rob Edwards, Producer/Writer
Alan Elliott signed a recording
contract with Warner Bros. Record
shortly upon graduating from
Northwestern University.
Rob Edwards, an accomplished
screenwriter and producer, is an
industry veteran with more than 20
years of experience.
Mr. Edwards most recent career achievement
includes his work as a writer on Disney’s
Academy-Award nominated “The Princess
and the Frog,” starring Anika Noni Rose, Oprah
Winfrey, John Goodman, Bruno Campos and
Terrence Howard.
Mr. Elliott worked as a staff
producer/Artists and Repertoire
representative at Atlantic
Records, Warner Brothers Records,
Dreamworks Records, and founded
“Al’s Records & Tapes” with funding from
Interscope Records.
Mr. Edwards has also produced and written for
popular television shows including: “Full House,”
“A Different World,” “The Marshall Chronicles,”
“Roc,” “In the House” and “In Living Color,” for
which he received an
Emmy Award nomination.
Mr. Elliott and partner Ariel Emanuel started Matter, Inc. (later, the
Endeavor Agency). Matter, Inc. produced original entertainment
programming for the internet, including the first celebrity “chat show”
on line for America Online in 1995 with “The Oldsmobile Hour.”
Mr. Elliott composed, orchestrated and arranged scores for the movies
“Let’s Go To Prison,” “Seeing Other People,” “Secret Window,” “Cheer
Up!” and “Hitch” and for the television shows “Here and Now,” “The
Naked Truth,” “The Ortegas,” “The NFL on Fox,” “The Hollow Men” in
addition to twice composing the opening and closing themes for the
Grammy Awards.
Mr. Edwards also worked on “The Fresh Prince of Bel Air,” where he
met show creators Andy and Susan Borowitz. The team went on to
create “Out All Night,” starring Patti LaBelle, Morris Chestnut and
Vivica A. Fox.
Mr. Edwards has also written for Disney’s Academy Award-nominated
animated feature, “Treasure Planet.”
Mr. Elliott is producing Sydney Pollack’s film of Aretha Franklin’s 1972
live recording of “Amazing Grace.” Mr. Elliott is working on the musical
theater version of “The Bad and The Beautiful,” and for television,
“Rahzel’ Field Trip” with Jeff Tremaine and Rafi Zabor’s PEN/Faulkner
winning novel “The Bear Comes Home.”
Mr. Edwards is currently working on “The King of the Elves,” based on
a short story by Phillip K. Dick as well as live action projects for Walt
Disney Studios and Will Smith’s company, Overbrook Entertainment.
Born in Detroit, Mr. Edwards lives in Los Angeles with his wife
and two sons.
Mr. Elliott lives in Hollywood with his pregnant wife, three year old
daughter and two dogs.
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Storytelling:
When the printing press was invented in 593 A.D., the state of
the art in story telling was the printed word and the printed image
on paper.
The Possibilities
of eBooks
With the invention of the eBook, 1,400 years later, we are still telling
stories with stationary words and images on paper.
The eBook, in it’s infancy (now), is a digital replication of traditional
bound books. The eBook experience has transferred data from the
page into the digital realm.
Today, we can tell original
stories to a new generation of
readers.
While publishing houses are scrambling around to add digital
gimmicks to preexisting fiction, but the nature of the storytelling still
hasn’t changed.
Plainly: eBooks will reinvent
storytelling.
The eBook has made
reading a book…
portable.
A
e&co. will create unique
interactive properties for the
next generation of storytelling
by providing compelling stories
for young readers versed in
technology.
step forward.
But not a leap.
e&co.’s unique properties will blur
the lines between films, television,
computers, and traditional books to
combine and make an interactive
hybrid that thus far has no comparable.
e&co. will deliver these properties
through the fastest growing medium
in the world: the iPad.
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The Interactive Experience
As entertainment has made it’s way from the storybook to the movie screen, to the
television set, into the laptop and finally into the iPad, e&co. sees an opportunity
to redefine the experience of a new type of storytelling that interacts with readers.
Here’s an example:
In “The Adventures of Sammy the Awesome Bunny (and That Turtle Guy),” (e&co.’s
Warner Brothers-esque treatment of the further adventures of a Hare who will do
anything under the sun to avoid a hard day’s work- and his sensible, pragmatic
Tortoise friend), the Hare gets impatient when the reader has not turned the page.
The Hare looks at
the reader and asks,
“Are we finished reading?”
Further, the young reader
might click on a word like
“run,” and the Hare will… run!
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The possibilities of
interactivity are endless
and push storytelling in
directions it has yet to fulfill.
e&co. has brought together
the best and brightest to produce
tomorrow’s storytelling.
If the young reader presses a word
they do not know the eBook will
read the word out loud.
The Plan: Production as Priority
e&co. has put together a development model with
realistic expectations for production and sales.
Development and execution within
e&co.’s system will see properties made
by the same creators working to make studio
features and television shows.
e&co. will create a catalogue of unique original properties by creating
and investing in a community of proven writers, musicians and
animators to deliver properties which can be used across a spectrum
from eBooks to feature films.
e&co. is using the lessons provided by the original studio animation
system model.
The studio animation system model was designed to create new
unique properties by putting together a team of writers, composers
and animators working together to create these properties. e&co.
is employing and updating this model for the 21st Century.
e&co. will establish this by producing unique original properties at
low prices with exposure through both traditional and burgeoning
distribution outlets.
By making production a focus, e&co. can build a valuable catalogue–
and reputation–quickly.
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Building Catalogue
A valuable long-term asset
e&co. will build is a catalogue
of unique properties.
Warner Bros. Cartoons was responsible
for the Looney Tunes and Merrie Melodies
theatrical cartoon short subjects.
The characters featured in these cartoons, including Bugs Bunny, Daffy
Duck, Porky Pig, Speedy Gonzales, Wile E. Coyote and Road Runner,
are among the most famous and recognizable characters in the world.
e&co. will create and produce twelve
properties a year (ten in
year one).
During the time of inception, Warner Bros. Cartoons averaged 40 fully
produced cartoons per year.
Each property will follow its own path, and
the connective tissue these properties
share is the system they will be funneled through: e&co.’s development
process.
By making production a priority, the characters were able to find their
own unique voices out of the system the studio employed.
By aggressively focusing on creating new properties with a system of
accomplished professionals across the spectrum, e&co. can build a
lasting catalogue.
e&co. can build a lasting catalogue by adhering to this tried and
true system.
Again, e&co. is looking toward the future with the lessons provided by
the original studio animation system model.
Warner Bros. Cartoons, Inc., the in-house division of Warner Bros.
Pictures during the golden age of American animation was one of the
most successful animation studios in American media history.
Current Conditions
The principle factors which drive demand are:
traditional model of production has created an opportunity for e&co.
1) need for new and unique properties inside e-publishing business;
While studios seek to reduce overhead, opportunity exists to fulfill the
need for unique original properties for what continues to be a growing
pipeline of outlets such as the iPad and the internet.
2) decreasing budgets at traditional studios for development unique
original properties;
3) need for animators/coders for existing properties from legacy
properties.
As development at traditional film studios dwindles and the publishing
business consolidates, the prohibitive price point of entry for the
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Delivery Of Properties:
iPad
eBooks, iPad and the Company:
The iPad is particularly marketed as
a platform for audio and visual media
such as books, periodicals, movies,
music, and games, as well as web
content.
The iPad has become the distribution prism through which
media is daily adapting in all forms.
The device was initially popular with
300,000 iPads being sold on their first
day of availability. By May 3, 2010
Apple had sold a million iPads, this
was in half the time it took Apple
to sell the same number of original
iPhones. By May 31, 2010 Apple had
sold two million iPads and by June
22, 2010 they had sold 3 million.
Between July 1 and September 30,
2010 Apple sold a further 4.2 million
iPads. During the October 18, 2010
Financial Conference Call, Steve
Jobs announced that Apple had sold more iPads
than Macs for the Fiscal Quarter.
Topspin Media
Topspin Media will fulfill
digital needs for e&co. (see
Topspin’s attached pdf’s;
including case study for
Brian Eno/David Byrne
and Topspin overview)
including:
Whereas traditional companies try to shoe-horn old media product
into the iPad format., e&co. is designed to develop and produce
new properties to the iPad which are uniquely designed to take
advantage of the iPad’s technology.
Through e&co.’s experience inside the technology field, e&co. is
versed in the realities of building product that is exportable and
updatable as technology grows.
Over the years, the iPad may lose market share. Google’s
Android or some new device undoubtedly will tap into this share.
However, e&co. has spent 15 years at the forefront of internet
technology and has relationships and experience inside this sector
that will minimize obsolescence of our product.
As technology expands the ability of our devices, e&co. is poised to
adapt accordingly.
• Distribution and sales through: Amazon, Emusic, Napster and Rhapsody.
• Property Marketing:
• Fan-to-fan viral marketing
• Target marketing to acquire new fans
• Direct marketing to existing fans
• Flexible offers to drive higher revenue per transaction
• A 360° data analytics platform to help optimize marketing tactics
• For more information and specifics, please refer to the attached Topspin pdfs.
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Positioning of the Company
e&co. seeks to capitalize on existing and
anticipated market conditions by structuring its
operating model to be of relevance to business to
consumer (b2c) arenas.
Equally important is the fact that e&co.’s
properties are independent of both infrastructure
and technological changes.
e&co.’s properties rely on creating original
properties rather than on future technologies.
The combination of e&co.’s properties and its positioning will direct
on-line usage in a way that will give structure to the current cluttered
state of the internet.
Importantly, e&co. plans to make the properties able to be exported
between devices easily, making the choice of Internet interface matter
little to the user’s ability to access e&co.’s properties.
In this way, e&co. can quickly establish a brand name in on line
entertainment, thereby creating a loyal customer base and an
immediate advantage over future competitors.
e&co. will benefit by the development of new means
of interactivity regardless of the channels of distribution
(i.e., 3-D or upgrades to operating systems).
Competitive Advantage
As of the writing of this, there are no current like-minded
content providers with a business model similar to e&co.’s.
Although there is no “proprietary intellectual property” or technology,
at present, no other competitor in the area of developing original
properties for eBooks, television and film exists.
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iPad’s Dominance Today:
Resolve Market Research, the Los Angeles-based New Media research
consulting firm, recently completed a study detailing the impact of the
iPad on other media and entertainment devices.
devices in the future and instead defer to
the iPad for their e-reading and portable
gaming needs. 60% of iPad owners/intenders
view portable gaming devices as most enjoyable
for playing games, and yet 38% say they will not buy
new portable gaming devices after owning an iPad.
The study investigated the attitudes, usage patterns, brand affiliations
and spending habits of technology device owners and "intenders,"
those intending to own devices by the end of 2010, in four categories:
the iPad, smartphones, e-Readers and portable gaming devices.
Nearly 50% say they will not buy an e-Reader
after buying an iPad.
The iPad is trending towards a major takeover given that users of
e-Readers and portable gaming devices intend to forego buying those
#1 reason to own an iPad?
It's an entertaining and cool device! The top reasons for wanting an iPad
support that assertion. 1
(56%) Entertainment
2
(42%) Cool factor
3
(40%) Convenience
4
(28%) Brand (Apple)
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The Difference Between Legacy Properties
and the Company’s Properties:
Traditional media have existing properties (Bugs Bunny, Mickey
Mouse, Dr. Seuss–as examples).
Translating these existing “legacy” properties are the priorities for
traditional media.
Traditional media have no serious dedicated effort toward building
development inside this new and so far unspecified area.
e&co. properties require a focus on development that traditional media
have almost completely stopped investing in:
original eBook content
animation department
music department
creative development
Traditional media are aiming to completely outsource these
departments (e.g.– Warner Bros. Film Music Department cut 40% of
it’s department in 2010) so it does not seem practical to anticipate that
traditional media will shift their business model to adjust, especially
since eBooks have no track record.
In this way, the opportunity for a “Google,” “YouTube” or other such
business to emerge to rival traditional media is likely.
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Competitive Landscape
No companies today are currently positioned to exploit the opportunity
for interactive eBooks in the children’s market, despite the market
opportunity:
so-called "on the lot" deals that allow
them to hire a cadre of young helpers –
plummeted 34% from 2006 to 2009,
according to the industry trade paper Variety.
Traditional Book Publishers / Traditional Media
Companies:
Although some studios (such as Disney) have developed stand-alone
applications targeted at children, the iPad platform is at best tangential
to the studios’ core mission of producing mass audience, hit-driven
product.
Traditional book publishers see great opportunity in eBooks. (See
“E-Readers With Color Open Door for Pictures” NY Times, Dec. 15,
2010).
It is anticipated that for the foreseeable future, large media companies
will either buy into an existing company, or wait until a competitor
inside the space begins an in-house model that is replicable.
However, publishers’ business models thus far are limited to static
versions of existing legacy titles (“Winnie the Pooh,” or “Dr. Seuss”).
Game Companies:
Traditional book publishers – already challenged by the transformation
of their core business – lack the creative and technical resources to
develop interactive versions of existing properties in-house and will
have to turn to third parties (through licensing or on an outsourced
basis) to produce offerings to rival e&co.’s interactive titles.
Gaming companies are currently focused on providing on-line gaming
and console based games.
While gaming companies may be more easily adaptable than
traditional big media companies, gaming companies have grown
more conservative in terms of in-house development targeted to the
children’s market, focusing instead either on the older “hard-core”
gamer demographic (young men) or the on-line casual
gaming segment comprised of both older women and men.
Traditional media’s film and television divisions have effectively shut
down the in-house development needed to provide competitive new
product on this new platform.
The traditional economic model underpinning the traditional media is in
the midst of a radical shift.
Game Companies could become competitive as they
have both the technological and producing know-how
to integrate their corporate culture to adapt to the
creation and production of eBooks.
With the lucrative DVD market shrinking, digital alternatives stealing
consumers' attention from traditional entertainment and media
conglomerates demanding fatter profit margins, every major studio
is finding ways to rein in spending and reduce overhead. Consumers
can see the results at the multiplex, where 18% fewer movies will have
been released this year than in 2007.
As with traditional media, becoming competitive
will require gaming companies to make a
departure from their existing business models.
The number of producers whose overhead is covered by studios –
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Competition
Apple is making a major push into illustrated
books, having introduced more than 100 titles to
its iBookstore in December, 2010, an assortment
of children’s books, photography books and
cookbooks.
At some point, competition will exist.
e&co. views its competition as any entity providing properties through
the iPad and like technology. However, within the structure of e&co.’s
business model, e&co. sees the major recording labels (both inside
and outside the United States) as future partners.
Inside traditional media’s film, television, music and book divisions, the
development costs necessary to provide competitive product is not
available due to the dearth of in-house development.
Currently, the field is wide open and looks to remain so due to
structural challenges inside legacy media companies.
Big media will be competitive at some point.
Most probably, the existing media corporations will buy their way into
this business as they lack the needed infrastructure to put the pieces
together to compete with their existing products: i.e.- films, television,
music and books.
Add to this the reality that inner-division squabbles are likely as each
film, tv, technology are all territorial about their products inside large
media companies.
Thus, it is anticipated that for the foreseeable future, large media
companies will either buy into a company like e&co., or wait until
a competitor inside the space begins an in-house model that is
replicable.Thus far the business model is to invest in legacy properties
like “Winnie the Pooh,” or “Dr. Seuss.” Disney, Warner Brothers, Fox…
everyone will be in this space eventually to exploit existing properties.
Publishers are making headway in converting their enormous libraries
of illustrated titles to e-books, hoping to capitalize on the growing
popularity of the Apple iPad and the Nook Color and their ability to
showcase books with color photographs and illustrations.
Some of the most popular children’s picture books of all time
will be available, including some of the “Olivia” picture books,
published by Simon & Schuster. Other titles are “Ad Hoc at Home,”
a lavish cookbook by the chef Thomas Keller; “Beginnings,” by the
photographer Anne Geddes; and “In the National Parks,” a photograph
collection by Ansel Adams.
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Competition
Jon Anderson, the publisher of Simon & Schuster
Children’s Publishing, said about eBooks, “It finally
gives us the opportunity to have our picture books
join the e-book revolution.” Mr. Anderson said in
an interview. “It gives us a great opportunity to
monetize our content in a way that we previously
haven’t been able to.”
The prices of e-books with pictures be generally
in line with print prices.
Some of the books released are exclusive to
Apple’s iBookstore, while others are available
through other digital book retailers. But some
features, including the ability to view two
consecutive pages as one uninterrupted image, are not available
through reading applications from Kindle and Nook for Apple devices.
Books available in the Nook Store are readable on the Nook Color, an
e-reader that Barnes & Noble began selling in October for $249.
He said that by early 2011, the company hoped to release picture
e-books at the same time as the print versions, which is standard
practice now for trade books and their digital counterparts.
The titles published by HarperCollins, including books in the “Amelia
Bedelia” and “Fancy Nancy” series, are available on the Nook Color.
They are the first picture books the publisher has made available
digitally.
Converting image-heavy books into digital form has not been easy.
Authors are careful to monitor how their work appears on a screen,
and publishers have struggled to replicate the experience of reading a
print book.
Some publishers have also had success breaking into the digital
space by turning books into applications for mobile devices. Disney
Publishing says it has reached one million downloads of its book apps,
featuring Winnie the Pooh, Disney princesses and characters from
“Toy Story.”
Other publishers whose books will be featured in the iBookstore
include HarperCollins, Disney Publishing, the Hachette Book Group,
Macmillan and Workman Publishing, Apple said.
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Marketplace Background:
Retail and Education
Beyond its rising
production, iPad sales also are benefitting
from improvements in Apple’s retail strategy.
“In addition to its traditional channels, Apple now is
expanding to sell the iPad through new retailers, including Amazon,
Target, Verizon and Walmart,” Alexander said. “Apple has moved
more rapidly than expected to push the iPad out to new retailers,
which will give it maximum retail presence during the critical holiday
sales period.”
Demand for the iPad is rising as users find new ways to use the
product to replace tasks previously done on or with paper.
Interest from the education sector
also is increasing.
Apple has yet to offer incentives to
the education segment to purchase
iPads. However, the company is
expected to offer those kinds
of packages in 2011 and beyond,
similar to deals that Apple
currently offers on its laptops
to students and teachers.
As usage increases in primary
education, expect increased
interest from students’
other family members,
young and old.
How will next generation get their information?
A recent survey shows their kids are eyeing some wallet-stretching
electronics this holiday season.
Across a multitude of electronic offerings, the Apple iPad leads all
devices (31% interest in future purchase) among American kids ages
6-12.
Kids aren’t the only ones interested in the iPad: fully 18% of the 13+
population is also eyeing the iPad. By end of 2010, iPad production
exceeded 2.5 million units per month.
With Apple bringing on additional suppliers in 2011, 2011 shipment
forecast is for 43.7 million units, up from 36.5 million, and expanded
in 2012 outlook to 63.3 million units, up from 50.4 million previously.
19
Marketplace Background:
The iPad tops children’s wish lists
item and simply had to indicate if they were interested in acquiring a
given item or not.
Preteens are more interested in iPads and iPod Touches than they
are in a Playstation 3 or Xbox 360, according to a Nielsen survey.
Among members of the population aged thirteen and older, the iPad
still remains popular with 18 percent saying they were interested in the
tablet. The older crowd ranked a computer at number one (20 percent),
followed by a television (nineteen percent), and a smartphone (also
nineteen percent).
According to a Nielsen survey, Apple’s iPad is the number one item
desired by children aged six through 12 beating out a computer (no
particular brand specified) and an iPod touch. 31 percent of kids
surveyed said they were hoping for an iPad with both a computer
and iPod touch tying for second place with 29 percent of kids placing
them on their lists.
The survey makes clear that the iPad’s popularity is still going strong
even as rival table products, such as Samsung’s Galaxy Tab, begin to
enter into the market. The big surprise is that the device beat out the
Playstation 3 and Nintendo DS for the top spot among preteens.
The Nielsen survey is officially titled “Interest in Buying in the Next Six
Months,” but is widely taken as an indicator of popular holiday items
among kids this season. Kids obviously didn’t have to choose just one
20
Risk Analysis
An investment in e&co. should be considered to involve a high degree
of risk.
Many factors external to e&co. may impact its operations: As a startup venture, e&co. will be attempting to penetrate new markets with
properties that have yet to demonstrate their commercial potential in
the wider consumer marketplace.
Reliance On Key Personnel
Competitors are likely to enter the markets in which e&co. plans
to operate, some of which may have greater resources than e&co.
At this point in time, the effects of such developments are largely
unforeseeable and could have the potential to negatively impact
e&co.’s operations and growth either singly or in combination.
Investors should consider these factors before undertaking any
commitment of capital to support e&co.’s operations.
e&co.’s success depends in part upon the performance of its
executive officers and other key employees. The loss of the services
of several of its key personnel could have a materially adverse effect
on e&co.’s projected earnings.
It should be noted, however, that most of these factors are common
to investments in any venture which plans to operate in a technologyintensive market sector. Additionally, Company management is
committed to the success of the venture and has attempted to
account for such risks in formulating its strategic direction.
e&co. recognizes that as it develops its assets portfolio and moves
closer to a liquidity it will need to retain the services of a CFO,
someone with institutional credibility, knowledge and know-how to
realize the full market potential.
The consumer on-line services market is both emerging and highly
competitive.
Competition ranges from small companies with limited resources to
large companies with substantially greater financial, technical and
marketing resources than those of e&co.
e&co. believes that existing competitors are likely to expand their
service offerings and that new competitors, including internet
companies, telephone companies and media companies, are likely
to enter the consumer on-line services market, resulting in greater
competition for the company
21
Contacts
Alan Elliott
Donald M. K
Founder
e&co.
Tel 323.988.9692
fo
[email protected]
Daniel M. Friedland
Partner
eller, Jr.
Orrick, Herrin
gton & Sutclif
fe LLP
1000 Marsh R
oad
Menlo Park, C
a 94025-1015
Tel 650.614.76
09
Fax 650.614.
Mobile 650.86
7401
7.6965
Dke
[email protected]
om
Partner
Orrick, Herrington & Sutcliffe LLP
777 South Figueroa Street
Suite 3200
Los Angeles, Ca 90017-5855
Tel 213.612.2469
Fax 213.612.2499
[email protected]
Ariel Emanuel
William Morris Endeavor Entertainment
Tel 310.248.3064
9601 Wilshire Boulevard, 3rd Floor
Beverly Hills CA 90210
22
e&co.: Financial Assumptions
General Expenditures
The statements of operations and cash flows
for the three-year period contained herein and
this accompanying Summary of Significant
Assumptions represent the best estimate as
of January 4, 2011 of the most probable result
of the Company operations for the proceeding
three years. The financial forecast reflects
judgment based on present circumstances
of the most likely set of conditions and most
likely course of action, to the extent such
conditions or actions are anticipated to affect
the results described in the financial forecast.
The assumptions described herein are those
that the Company believes are significant to
the financial forecast or are the key factors
upon which the results shown in the financial
forecast depend. The financial forecast was
prepared in good faith and is based upon
a variety of estimates and assumptions,
which though considered reasonable, may
not be realized and are inherently subject
to significant business decisions which are
subject to change. Therefore, the actual
results achieved during the forecast period
will vary from those set forth in the financial
forecasts, and the variation may be material.
In Year Two, Expenditures (excepting
“Executive Compensation,” which remain flat)
are increased 25% to reflect growth of the
company.
In Year Two, an additional twelve books are
added (22 eBooks in Year Two vs. 10 eBooks
in Year One).
For modeling purposes, we assume first
month's sales of each eBook 10,000 units,
declining over an 18-month period There
will be, in Year Two, 18 books on the income
statement after month 20.
a month each ($40,000 each annually). In
years two and three, Salaries expenses
shall be increased by adding two full time
employees each year.
1) Coding expense has been derived from the
cost of a team to design, code and execute
our eBooks as of January 7, 2011. With
ten projects, the Company anticipates that
expense will decrease as there becomes a
flow to the process.
Income Statement
2) Animation expense has been derived
from the cost of a full time team to design
characters and create animation for our
eBooks as of January 7, 2011. With three
projects, the Company anticipates that
expense will decrease as there becomes a
flow to the process.
3) Recording costs are based on having two
songs per ebook. Each session (three hours)
will have fifteen musicians, one orchestrator,
(16 musicians x AFM New Media $250 each =
$4,000) plus $1000 for orchestrations/copying
and $1,000 for studio costs.
4) Talent costs are based on SAG New Media
Off Camera Performers (minimum $759/ per
performer per session). Estimated six to seven
performers/sessions per book.
5) Executive Compensation to Robert
Edwards and Alan Elliott: $150,000 each
($300,000 total). Assistants’’ salaries expense
has been derived from a monthly salary for
one full time employee working for $3,333.33
23
With our proposal, with the help of Topspin
Media, who will fulfill digital distribution, our
roster would fall in to four sales categories:
1) iPad revenue is based on the Company’s
ability to sell product through Apple’s iTunes
store. Estimate derived from sales of similar
iPad eBooks and in particular the application
“Uzu” which released its sales figures from a
similar venture from August 2010.
Estimate is based upon estimates of iPad
sales in the future. Apple expects to ship
nearly 13 million units this year and Apple
estimates that number will triple next year.
With the rollout of additional tablet computing
devices from Samsung, Dell, HP, and others,
the expected market for tablet computers will
exceed 81.3 million tablets by 2012.
Lastly, figure derived as follows:
For modeling purposes, we assume first
month's sales of 10,000 units, declining over
an 18-month period. Top-line revenue is
projected at $7.00 per unit (based upon a
70% revenue share).
Year One has ten eBooks (production starting
at one per month in month three).
e&co.: Financial Assumptions
Year Two is demonstrated in two different
sheets, each reflecting the addition of 12 new
eBooks in Year Two (22 total in year two: 12
from Year Two, 10 from Year One):
Sheet two has flat (0%) growth for year two.
Sheet three has 25% growth for year two.
2) License Revenue (TV; movies) is based
on the Company’s ability to find licensing
partners in television and film. Figure provided
by ICM.
License Revenue in sheet two (Year Two) is
flat from Year One.
License Revenue in sheet three (Year Two) is
from Year One increased to reflect anticipated
growth due to increased production (22
eBooks in Year Two vs. 10 eBooks in Year
One).
3) Merchandise is based on the Company’s
ability to strike licensing deals for
merchandise including toys, clothing, etc.
Figure provided by ICM.
Merchandise in sheet two (Year Two) is flat
from Year One.
Merchandise in sheet three (Year Two) is
increased from Year One to reflect anticipated
growth (22 eBooks in Year Two vs. 10 eBooks
in Year One).
Each new eBook projects at $5,000 worth of
merchandise for opening month, decreasing
to $2,500 in month two, decreasing to $1,500
in month three and decreasing to $1,000 for
each month after.
4) Book Revenue (Physical) is based on the
Company’s ability to sell physical rights to a
publishing company for $50,000 per book.
Figure provided by ICM
Book Revenue (Physical) in sheet two (Year
Two) is flat from Year One.
Book Revenue (Physical) in sheet three
(Year Two) is increased from Year One to
reflect anticipated growth due to increased
production (22 eBooks in Year Two vs. 10
eBooks in Year One).
e&co.: iPad Revenue
iPad revenue is based on the assumption that
each eBook has an 18 month virtual shelf life.
iPad revenue is based on the Company’s
ability to sell product through Apple’s iTunes
store. Estimate derived from sales of similar
iPad eBooks and in particular the application
“Uzu” which released it’s sales figures from
a similar venture from August 2010 and
“Camera” which released it’s sales figures
from a similar venture from January, 2011.
For modeling purposes, we assume first
month's sales of 10,000 units, declining over
an 18-month period. Top-line revenue is
projected at $7.00 per unit (based upon a
70% revenue share).
24
Year Two is seen
as follows:
Sheet two (Year Two) is
flat growth from Year
One, while reflecting
growth due to increased
production (22 eBooks in
Year Two vs. 10 eBooks in Year One).
Sheet three (Year Two) has 25% growth from
Year One, while reflecting growth due to
increased production (22 eBooks in Year Two
vs. 10 eBooks in Year One).
Estimate is based upon estimates of iPad
sales in the future. Apple expects to ship
nearly 13 million units this year and Apple
estimates that number will triple next year.
With the rollout of additional tablet computing
devices from Samsung, Dell, HP, and others,
the expected market for tablet computers will
exceed 81.3 million tablets by 2012.
e&co.: Financial Assumptions
iPad Revenue
iPad Revenue
Year 1
1
Revenues
UNITS
UNITS
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Month 13
Month 14
Month 15
Month 16
Month 17
Month 18
10,000
7,500
5,000
2,500
1,250
750
500
500
500
285
214
143
72
72
57
43
29
14
2
INCOME
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
70,000
52,500
35,000
17,500
8,750
5,250
3,500
3,500
3,500
2,000
1,500
1,000
500
500
400
300
200
100
3
4
5
6
$
70,000.00
$
$
52,500.00
70,000.00
$ 35,000.00
$ 52,500.00
$ 70,000.00
$
$
$
$
17,500.00
35,000.00
52,500.00
70,000.00
$
70,000.00
$ 122,500.00
$ 157,500.00
$ 175,000.00
7
$
$
$
$
$
8,750.00
17,500.00
35,000.00
52,500.00
70,000.00
$ 183,750.00
8
$
$
$
$
$
$
5,250.00
8,750.00
17,500.00
35,000.00
52,500.00
70,000.00
$ 189,000.00
9
$
$
$
$
$
$
$
3,500.00
5,250.00
8,750.00
17,500.00
35,000.00
52,500.00
70,000.00
$ 192,500.00
10
$
$
$
$
$
$
$
$
3,500.00
3,500.00
5,250.00
8,750.00
17,500.00
35,000.00
52,500.00
70,000.00
$ 196,000.00
11
$
$
$
$
$
$
$
$
$
3,500.00
3,500.00
3,500.00
5,250.00
8,750.00
17,500.00
35,000.00
52,500.00
70,000.00
$ 199,500.00
12
$
$
$
$
$
$
$
$
$
$
1,995.00
3,500.00
3,500.00
3,500.00
5,250.00
8,750.00
17,500.00
35,000.00
52,500.00
70,000.00
$ 201,495.00
Total
$
$
$
$
$
$
$
$
$
$
201,495.00
199,500.00
196,000.00
192,500.00
189,000.00
183,750.00
175,000.00
157,500.00
122,500.00
70,000.00
$ 1,687,245.00
iPad Revenue
iPad Revenue
Year 2- 0% Growth Revenues, 25% Growth General Expenses
1
Revenues
UNITS
UNITS
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Month 13
Month 14
Month 15
Month 16
Month 17
Month 18
Month 10
10,000
7,500
5,000
2,500
1,250
750
500
500
500
285
214
143
72
72
57
43
29
14
500
INCOME
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
70,000
52,500
35,000
17,500
8,750
5,250
3,500
3,500
3,500
2,000
1,500
1,000
500
500
400
300
200
100
2
3
4
5
6
7
8
9
Book 1
Book 2
Book 3
Book 4
Book 5
Book 6
Book 7
Book 8
Book 9
Book 10
Book 11
Book 12
Book 13
Book 14
Book 15
Book 16
Book 17
Book 18
Book 19
Book 20
Book 21
Book 22
$
$
$
$
$
$
$
$
$
$
$
2,000
3,500
3,500
3,500
3,500
5,250
8,750
17,500
35,000
52,500
70,000
$
$
$
$
$
$
$
$
$
$
$
$
1,500
2,000
3,500
3,500
3,500
3,500
5,250
8,750
17,500
35,000
52,500
70,000
$
$
$
$
$
$
$
$
$
$
$
$
$
1,000
1,500
2,000
3,500
3,500
3,500
3,500
5,250
8,750
17,500
35,000
52,500
70,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
500
1,000
1,500
2,000
3,500
3,500
3,500
3,500
5,250
8,750
17,500
35,000
52,500
70,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
500
500
1,000
1,500
2,000
3,500
3,500
3,500
3,500
5,250
8,750
17,500
35,000
52,500
70,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
400
500
500
1,000
1,500
2,000
3,500
3,500
3,500
3,500
5,250
8,750
17,500
35,000
52,500
70,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
300
400
500
500
1,000
1,500
2,000
3,500
3,500
3,500
3,500
5,250
8,750
17,500
35,000
52,500
70,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
200
300
400
500
500
1,000
1,500
2,000
3,500
3,500
3,500
3,500
5,250
8,750
17,500
35,000
52,500
70,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
100
200
300
400
500
500
1,000
1,500
2,000
3,500
3,500
3,500
3,500
5,250
8,750
17,500
35,000
52,500
70,000
TOTAL
$
205,000
$
206,500
$
207,500
$
208,000
$
208,500
$
208,900
$
209,200
$
209,400
$
209,500
25
10
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
100
200
300
400
500
500
1,000
1,500
2,000
3,500
3,500
3,500
3,500
5,250
8,750
17,500
35,000
52,500
70,000
$
209,500
11
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
100
200
300
400
500
500
1,000
1,500
2,000
3,500
3,500
3,500
3,500
5,250
8,750
17,500
35,000
52,500
70,000
$
209,500
12
Total
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
100
200
300
400
500
500
1,000
1,500
2,000
3,500
3,500
3,500
3,500
5,250
8,750
17,500
35,000
52,500
70,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
209,500
$
6,500
10,000
13,500
17,000
20,400
25,450
33,900
51,000
85,500
137,500
206,500
205,000
203,000
199,500
196,000
192,500
189,000
183,750
175,000
157,500
122,500
70,000
2,501,000
e&co.: Financial Assumptions
iPad Revenue
iPad Revenue
Year 2- 25% Growth Revenues, 25% Growth General Expenses
1
Revenues
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Month 13
Month 14
Month 15
Month 16
Month 17
Month 18
UNITS
12,500
9,375
6,250
3,125
1,563
938
625
625
625
356
264
179
90
90
71
54
36
18
INCOME
$ 87,500
$ 65,625
$ 43,750
$ 21,875
$ 10,938
$ 6,563
$ 4,375
$ 4,375
$ 4,375
$ 2,494
$ 1,846
$ 1,251
$
630
$
630
$
499
$
376
$
254
$
123
2
3
4
5
6
7
8
Book 1
Book 2
Book 3
Book 4
Book 5
Book 6
Book 7
Book 8
Book 9
Book 10
Book 11
Book 12
Book 13
Book 14
Book 15
Book 16
Book 17
Book 18
Book 19
Book 20
Book 21
Book 22
$
$
$
$
$
$
$
$
$
$
$
1,846
2,494
4,375
4,375
4,375
6,563
10,938
21,875
43,750
65,625
87,500
$
$
$
$
$
$
$
$
$
$
$
$
1,251
1,846
2,494
4,375
4,375
4,375
6,563
10,938
21,875
43,750
65,625
87,500
$
$
$
$
$
$
$
$
$
$
$
$
$
630
1,251
1,846
2,494
4,375
4,375
4,375
6,563
10,938
21,875
43,750
65,625
87,500
$
$
$
$
$
$
$
$
$
$
$
$
$
$
630
630
1,251
1,846
2,494
4,375
4,375
4,375
6,563
10,938
21,875
43,750
65,625
87,500
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
499
630
630
1,251
1,846
2,494
4,375
4,375
4,375
6,563
10,938
21,875
43,750
65,625
87,500
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
376
499
630
630
1,251
1,846
2,494
4,375
4,375
4,375
6,563
10,938
21,875
43,750
65,625
87,500
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
254
376
499
630
630
1,251
1,846
2,494
4,375
4,375
4,375
6,563
10,938
21,875
43,750
65,625
87,500
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
123
254
376
499
630
630
1,251
1,846
2,494
4,375
4,375
4,375
6,563
10,938
21,875
43,750
65,625
87,500
TOTAL
$
253,716
$
254,967
$
255,597
$
256,227
$
256,726
$
257,102
$
257,356
$
257,479
26
9
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
123
254
376
499
630
630
1,251
1,846
2,494
4,375
4,375
4,375
6,563
10,938
21,875
43,750
65,625
87,500
$
257,479
10
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
123
254
376
499
630
630
1,251
1,846
2,494
4,375
4,375
4,375
6,563
10,938
21,875
43,750
65,625
87,500
$
257,479
11
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
123
254
376
499
630
630
1,251
1,846
2,494
4,375
4,375
4,375
6,563
10,938
21,875
43,750
65,625
87,500
$
257,479
12
Total
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
123
254
376
499
630
630
1,251
1,846
2,494
4,375
4,375
4,375
6,563
10,938
21,875
43,750
65,625
87,500
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
257,479
$
5,609
8,103
12,478
16,853
21,228
27,668
38,352
59,851
103,102
168,097
254,967
253,716
251,870
249,376
245,001
240,626
236,251
229,688
218,750
196,875
153,125
87,500
3,079,086
e&co.: Financial Assumptions
income statement
Income Statement
1
1
2
3
4
5
6
7
8
9
10
11
12
Total
Year 1
Revenues
1
iPad Revenue
2
License Revenue (tv; movies)
3
Merchandise
4
Book Revenue (physical)
$70,000
$122,500
$157,500
$175,000
$183,750
$189,000
$100,000
$5,000
$50,000
Gross Revenue
$0
$5,000
$5,000
$50,000
$50,000
$70,000
$192,500
$196,000
$199,500
$100,000
$5,000
$5,000
$50,000
$277,500
$162,500
$7,500
$7,500
$50,000
$230,000
$188,750
$10,000
$50,000
$344,000
$200,000
$253,500
$209,500
$201,495
$1,687,245
$100,000
$300,000
$10,000
$60,000
$50,000
$300,000
$361,495
$2,347,245
GENERAL EXPENSES
Ten Projects
(one year)
1
Coding
$
12,500
$
12,500
$
12,500
$
12,500
$
12,500
$
12,500
$
12,500
$
12,500
$
12,500
$
12,500
$
12,500
$
12,500
$
150,000
2
Animation
$
12,500
$
12,500
$
12,500
$
12,500
$
12,500
$
12,500
$
12,500
$
12,500
$
12,500
$
12,500
$
12,500
$
12,500
$
150,000
3
Music
$
6,000
$
6,000
$
6,000
$
6,000
$
6,000
$
6,000
$
6,000
$
6,000
$
6,000
$
6,000
$
6,000
$
6,000
$
72,000
4
Talent
$
4,167
$
4,167
$
4,167
$
4,167
$
4,167
$
4,167
$
4,167
$
4,167
$
4,167
$
4,167
$
4,167
$
4,167
$
50,004
$
28,333
2,083
500
2,000
400
5,000
5,000
5,000
2,000
$
$
$
$
$
$
$
$
$
28,333
2,083
500
2,000
400
5,000
5,000
5,000
2,000
$
$
$
$
$
$
$
$
$
28,333
2,083
500
2,000
400
5,000
5,000
5,000
2,000
$
$
$
$
$
$
$
$
$
28,333
2,083
500
2,000
400
5,000
5,000
5,000
2,000
$
$
$
$
$
$
$
$
$
28,333
2,083
500
2,000
400
5,000
5,000
5,000
2,000
$
$
$
$
$
$
$
$
$
28,333
2,083
500
2,000
400
5,000
5,000
5,000
2,000
$
$
$
$
$
$
$
$
$
28,333
2,083
500
2,000
400
5,000
5,000
5,000
2,000
$
$
$
$
$
$
$
$
$
28,333
2,083
500
2,000
400
5,000
5,000
5,000
2,000
$
$
$
$
$
$
$
$
$
28,333
$
339,996
$
85,483
$
85,483
$
85,483
$
85,483
$
85,483
$
85,483
$
85,483
$
85,483
$
85,483
$ 1,025,796
$
77,017
$
144,517
$
103,267
$
258,517
$
114,517
$
168,017
$
124,017
$
276,012
$ 1,321,449
5
6
7
8
9
10
11
12
13
Travel
Accounting Services
Independent Publicist
Business Insurance
Independent Counsel
Business Development
Marketing
Equipment/Web Services
Executive Compensation
$
$
$
$
$
$
$
$
$
28,333
2,083
500
2,000
400
5,000
5,000
5,000
2,000
$
$
$
$
$
$
$
$
$
28,333
2,083
500
2,000
400
5,000
5,000
5,000
2,000
$
$
$
$
$
$
$
$
$
28,333
Total
$
85,483
$
85,483
$
85,483
Ten Projects
Total Operating Income
2,083
500
2,000
400
5,000
5,000
5,000
2,000
$
$
$
$
$
$
$
$
2,083
500
2,000
400
5,000
5,000
5,000
2,000
$
$
$
$
$
$
$
$
25,000
6,000
24,000
4,800
60,000
60,000
60,000
24,000
(one year)
$
(85,483) $
(35,483) $
(15,483) $
192,017
27
e&co.: Financial Assumptions
Income Statement
income statement
2
1
2
3
4
5
6
7
8
9
10
11
12
Total
Year 2- 0% Growth Revenues, 25% Growth General Expenses (except "Executive Compensation" which remains flat)
Revenues
1
iPad Revenue
2
License Revenue (tv; movies)
3
Merchandise
4
Book Revenue (physical)
$205,000
$206,500
$207,500
$208,000
$208,500
$208,900
$209,200
$209,400
$100,000
$5,000
$50,000
Gross Revenue
$205,000
$5,000
$5,000
$50,000
$256,500
$207,500
$209,500
$209,500
$209,500
$100,000
$5,000
$5,000
$50,000
$363,000
$213,500
$7,500
$7,500
$50,000
$263,900
$214,200
$10,000
$50,000
$364,400
$217,000
$267,000
$219,500
$209,500
$2,501,000
$100,000
$300,000
$10,000
$60,000
$50,000
$300,000
$369,500
$3,161,000
GENERAL EXPENSES
Twelve Projects
(one year)
1
Coding
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
187,500
2
Animation
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
187,500
3
Music
$
7,500
$
7,500
$
7,500
$
7,500
$
7,500
$
7,500
$
7,500
$
7,500
$
7,500
$
7,500
$
7,500
$
7,500
$
90,000
4
Talent
$
5,209
$
5,209
$
5,209
$
5,209
$
5,209
$
5,209
$
5,209
$
5,209
$
5,209
$
5,209
$
5,209
$
5,209
$
62,508
5
Executive Compensation
Travel
Accounting Services
Independent Publicist
Business Insurance
Independent Counsel
Business Development
Marketing
Equipment/Web Services
$
$
$
$
$
$
$
$
$
28,333
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
$
28,333
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
$
28,333
$
28,333
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
$
28,333
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
$
28,333
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
$
28,333
$
28,333
$
28,333
$
28,333
$
28,333
$
28,333
$
339,996
Total
$
99,771
$
99,771
$
99,771
$
99,771
$
99,771
$
99,771
$
99,771
$
99,771
$
99,771
$
99,771
$
99,771
$
99,771
$ 1,197,252
$
113,729
$
164,129
$
114,429
$
264,629
$
117,229
$
167,229
$
119,729
$
269,729
$ 1,963,748
6
7
8
9
10
11
12
13
2,604
625
2,500
500
6,250
6,250
6,250
2,500
Ten Projects
Total Operating Income
$
$
$
$
$
$
$
$
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
25,000
7,500
30,000
6,000
75,000
75,000
75,000
30,000
(one year)
$
105,229
$
156,729
$
107,729
$
263,229
28
e&co.: Financial Assumptions
income statement
Income Statement
3
1
2
3
4
5
6
7
8
9
10
11
12
Total
Year 2- 25% Growth Revenues, 25% Growth General Expenses (except "Executive Compensation" which remains flat)
Revenues
1
iPad Revenue
2
License Revenue (tv; movies)
$253,716
$254,967
3
Merchandise
$12,500
$12,500
$15,000
$15,000
$17,500
$17,500
$20,000
$20,000
$22,500
$22,500
4
Book Revenue (physical)
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$316,216
$417,467
$320,597
$421,227
$324,226
$424,602
$327,356
$427,479
$329,979
$255,597
$256,227
$100,000
Gross Revenue
$256,726
$257,102
$100,000
$257,356
$257,479
$100,000
$257,479
$257,479
$100,000
$257,479
$3,079,086
$257,479
$100,000
$100,000
$600,000
$25,000
$25,000
$225,000
$50,000
$50,000
$50,000
$600,000
$429,979
$332,479
$432,479
$4,504,086
GENERAL EXPENSES
Twelve Projects
(one year)
1
Coding
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
187,500
2
Animation
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
15,625
$
187,500
3
Music
$
7,500
$
7,500
$
7,500
$
7,500
$
7,500
$
7,500
$
7,500
$
7,500
$
7,500
$
7,500
$
7,500
$
7,500
$
90,000
4
Talent
$
5,209
$
5,209
$
5,209
$
5,209
$
5,209
$
5,209
$
5,209
$
5,209
$
5,209
$
5,209
$
5,209
$
5,209
$
62,508
$
28,333
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
$
28,333
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
$
28,333
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
$
28,333
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
$
28,333
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
$
28,333
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
$
28,333
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
$
28,333
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
$
28,333
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
$
339,996
$
99,771
$
99,771
$
99,771
$
99,771
$
99,771
$
99,771
$
99,771
$
99,771
$
99,771
$
1,197,252
$
224,455
$
324,831
$
227,585
$
327,708
$
230,208
$
330,208
$
232,708
$
332,708
$
3,306,834
5
6
7
8
9
10
11
12
13
Travel
Accounting Services
Independent Publicist
Business Insurance
Independent Counsel
Business Development
Marketing
Equipment/Web Services
Executive Compensation
$
$
$
$
$
$
$
$
$
28,333
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
$
28,333
2,604
625
2,500
500
6,250
6,250
6,250
2,500
$
$
$
$
$
$
$
$
$
28,333
Total
$
99,771
$
99,771
$
99,771
2,604
625
2,500
500
6,250
6,250
6,250
2,500
Ten Projects
Total Operating Income
$
$
$
$
$
$
$
$
25,000
7,500
30,000
6,000
75,000
75,000
75,000
30,000
(one year)
$
216,445
$
317,696
$
220,826
$
321,456
29