EFTA02379468.pdf

Regan Ails - Base Scenario 2015 Income Statement & Cash Flow Key Assumptions Revenue - Income Statement Revenue derived is based on the lay down quantities as proposed by RA Sales team (done in conjunction with S&S) • Laydown quantities are the quantities that the sales team are committing to sell - The selling list price is reduced by the average discount rate of 53%. (This is the industry standard discount rate) - The model assumes laydown occurs during the month of publication of the book • Returns then occur 3 months after laydown. Return rates vary based on category of book: - Fiction 50% - Other 40% - Illustration 30% • The model spreads the returns over 3 months: 60% in Month 1, 20% in month 2 and 20% in Month 3 Exoenses - Income Statement Most expenses are based on the expenses per the Individual Title Budgets which are prepared by Production Director - PPB (Paper Print & Binding) unit cost comes from the individual title budgets. - Plant Expense (Costs to Develop the book) unit cost again comes from the individual title budgets. • PPB and Plant expenses units are based on the laydown units less the returned units and match the month of revenue and returns. Royalties are based on the % contractually agreed on each title - Royalty %and expense increases based on the number of books sold. Note in the P&L for simplicity we booked royalty expense in total during the laydown ( Publication month) (Units are laydown quantities less returns). - Selling and Distribution (paid to our distributor) is 13% of Revenue. The contract stipulates a flat 10% but also includes additional charges, such as special packaging, etc. and this model assumes an additional 3%. Marketing & Promotion (M&P) spend comes from the individual title budgets. As a guide $1.00 per hardcover copy $0.50 to $0.75 per paperback. Freight spend comes from the individual title budgets. - M&P and Freight expense is booked in total during the publication month. Cash Flow - Inflows - Cash is received 60 days after invoicing/publication. (e.g. February revenue is paid In April) - Note during months where no books are published, returns of earlier publications could result in negative revenue. - Cashflow model shows the total revenue and selling & distribution on a separate line (note actual cash received is the net of these 2 lines). Cash Flow - Outflows - Royalty Advances (14) are the commitments we have made in 2014. These are the installments that we have to pay per title in 2015. - Royalty Advances (15) is a placeholder for advances on titles that will be produced in 2016 and beyond. The model front loads (75%) in the first half of 2015. - PPB payments occur In the month of invoicing/publication and are based on the total print run per the individual title budget, not the laydown quantities. Plant expense payments occur in the month of invoicing/publication and are based on the individual title budget, not laydown quantities. - Other expenses (salaries etc.) are based on the P&L and occur in the month the expense is occurred. - The Cash flow Model also includes a capex placeholder of $240k.($200k in leasehold improvements for the proposed move and $40k in Computer equipment, printers etc.) Prepared by J. Murphy 12/5/2114 EFTA_R1_01392933 EFTA02379468 Regan Arts Income Statement 2015 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 FY 2015 Revenue• 0 510,916 1,972,382 779,069 396,750 19,968 - 352 2,359,713 990,249 r1 i _ 6,265,576 Direct Costs PPS 0 80,000 269,080 139,135 55,230 27,330 : 196,332 438,014 1,089,249 Plant Expense 0 21,456 89,906 68,646 42,251 43,071 26,142 ''),AF.6 42,352 143,752 435,347 Royalty 0 86,240 305,942 80,432 50,027 56,608 28,342 17,192 255,116 111,215 0 15,833 1,006,946 Selling & Distribution 0 66,419 256,410 101,279 51,577 2,596 306,763 128,732 814,525 0 254,115 921,338 389,492 199,085 129,605 43,627 800,562 821,713 LA". C',.,4, 11; A/c., 3, 346, 066 Gross Marin 0 256,801 1,051,044 389,577 197,665 10', 70: I 1,559,152 168,536 rl-i8 CCA, 7, 2,919,510 Other Expenses M&P 0 50,000 285,000 58,000 73,000 62,500 27,500 5,000 246,000 153,000 0 0 960,000 Freight 0 11,791 64,464 12,926 16,412 16,085 6,266 2,433 59,087 50,764 0 3,537 243,765 Salaries- Existing Employees 142,265 142,265 142,265 142,265 142,265 142,265 142,265 142,265 142,265 142,265 142,265 142,265 1,707,180 Salaries- New Employees 50,875 50,875 50,875 50,875 50,875 50,875 50,875 50,875 50,875 50,875 50,875 50,875 610,500 Overhead 67,300 67,300 67,300 67,300 67,300 67,300 67,300 67.300 67,300 78,300 67,300 67,300 818,600 260,440 322,231 609,904 331,366 349,852 339,025 294,206 267,873 565,527 475,204 260,440 263,977 4,340,045 Net Profit (260,440) (65,430) 441,140 58,211 (152,1871 (448,661) (356,370) (448,634) 993,625 (306,668) (328,468) (546,6531 11,420,535) • Negative revenue occurs in months where no books are published and we have returns of earlier publications. Prepared by J. Murphy 12/5/2014 EFTA_R1_01392934 EFTA02379469 Regan Arts Cash Flow - 2015 Jan-1S Feb-15 Mar-15 Apr-1.5 May-16 lun-1S Jul-15 Aug-1S Sep-15 on-is Nov-1S Dec-1S FY 2015 Cash Inflow Revenue 0 0 0 510,916 1,972,382 779,069 396,750 19,968 1&.': ,.s .., se. i J. 2,359,713 990,249 6,772,158 Selling & Distribution 0 0 0 . .6,41;1 i 756,4:0', :LC: in 1? 'Int, 2,410 30,986 +i6 J6 ,,, : 1;F, 772, •2 7.., 3p,: , 0 0 0 444,497 1,715,972 677,790 345,172 17,372 (16,128) (207,367) 2,052,951 861,517 5,891,777 Cash Outflow Royalties - Advances (14)• 141,000 91,250 295,000 205,000 1,250 0 0 33,750 368,750 230,000 10,000 65,000 1,441,000 Royalty Advances (15) 250,000 250,000 250,000 250,000 250,000 250,000 83,333 83,333 83,333 83,333 83,333 83,333 2,000,000 PPS 0 100,000 473,350 123,700 116,725 158,700 44,775 17,000 456,920 526,305 0 0 2,017,475 Plant Expense 0 26,820 133,546 65,080 73,307 92,903 46,644 14,500 108,424 185,000 0 0 746,264 Salaries & Fringe Benefits 193,140 193,140 193,140 193,140 193,140 193,140 193,140 193,140 193,140 193,140 193,140 193,140 2,317,680 Other Overhead 67,300 67,300 67,300 67,300 67,300 67,300 67,300 67,300 67,300 78,300 67,300 67,300 818,600 M&P 0 50,000 285,000 58,000 73,000 62,500 27,500 5,000 246,000 153,000 0 0 960,000 Freight 0 11,791 64,464 12,926 16,412 16,085 6,266 2,433 59,087 50,764 0 3,537 243,765 Capex (L11I & Computers) 70,000 70,000 70,000 10,000 0 0 10,000 0 0 10,000 0 0 240,000 721,440 860,301 1,831,800 985,146 791,174 840.628 478,958 416,456 1,582,954 1,509,842 353,773 412,310 10,784,784 Net Cash Flow (721.440) (860,301) (1,831,800) (540,649) 924,798 (162,838) (133,786) (399,084) (1,599,082) (1,717,209) 1,699,177 449,207 (4.893.007) • Commitments made in 2014 for titles published in 2015. This does not reflect payments made in 2014. Prepared by J. Murphy 12/5/2010 EFTA_R1_01392935 EFTA02379470  Expense Jan-IS Feb-15 Mar-I5 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-IS Oct-15 Nov-I5 Dec-I5 FY 2015 7k14 Yearly Salary Existent Employees CEO 450000 37,500 37,500 37,500 37,500 37,500 37,500 37,500 37,500 37,500 37.500 37.500 37.500 450,000 Head of Production 140,000 11,667 11,667 11,667 11,667 11,667 11,667 11,667 11,667 11.667 11,667 11.667 11.667 140,000 Editorial Intern 32,000 2,667 2,667 2,667 2,667 2,667 2,667 2,667 2,667 2,667 2,667 2,667 2,667 32,000 Editonal Intern 32,000 2,667 2,667 2,667 2,667 2,667 2,667 2,667 2,667 2,667 2.667 2.667 2.667 32.000 Editor 50000 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 50,000 Senior Editor 100.000 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8.333 8,333 8,333 8,333 100,000 Associate Editor 55,000 4,583 4,583 4,583 4,583 4,583 4.583 4,583 4,583 4,583 4.583 4.583 4.583 55,000 Managing Editor 50,000 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 50,000 Executive Editor and Associate Publisher 160000 13.333 13,333 13,333 13,333 13,333 13,333 13,333 13.333 13,333 13.333 13.333 13,333 160,000 Head of Marketing and Publicity 103000 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8.333 8.333 8.333 100,000 Head of Sales 90000 7,500 7,500 7,500 7,500 7,50D 7,500 7,50D 7,500 7,500 7,500 7,500 7,500 90,000 Creative Director 250,000 20,833 20,833 20,833 20,833 20,833 20,833 20,833 20,833 20.833 20.833 20.833 20.833 250,000 Finance Manager (40% Allocation) 29)200 2,417 2,417 2,417 2,417 2,417 2,417 2,417 2,417 2,417 2,417 2,417 2,417 29,000 Total Salaries 128.167 128,167 128,167 128,167 128,167 128,167 128,167 128,167 128,167 128,167 128,167 128,167 1,538.000 Fringe & Benefits 11% 14,098 14,098 14,098 10,098 14,098 14,098 14,098 14,098 14,098 14,098 14,098 14,098 169,180 Total Salaries and Fringe Benefits-Existing Employees 142,265 142,265 142,265 142,265 142,265 142,265 142.265 142,265 142,265 142,265 142,265 142,265 1,707,180 New Hires Director of Publicity 150,000 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 Junior Publicist 75,000 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6.250 6.250 6,250 6,250 6,250 75.000 Executive Assistant 75.000 6,250 6.250 6,250 6,250 6.250 6.250 6.250 6,250 6,250 6,250 6,250 6,250 75,000 Editorial Assistant 40,000 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 40,000 Senior Editor 150.000 12,500 12,500 12,500 12,500 12,503 12.500 12.500 12,500 12,500 12.500 12.500 12.500 150,000 Interior Designer 60,000 5,003 5000 5,000 5,030 5,000 5,000 5,000 5,000 5,000 5,000 5.000 5,000 60,000 Total Salaries 45,833 45,833 45,833 45,833 45,833 45,833 45,833 45,833 45,633 45,833 45,1133 45,833 550,000 Fringe & Benefits 11% 5.042 5,042 5,042 5,042 5,042 5,042 5,042 5,042 5,042 5,042 5,042 5,042 60,500 Total Salaries and Fringe Benefits • New Hires 50,875 50,375 50,875 50,875 50,875 50,875 50,875 50275 50,675 50,375 50,175 50,875 610,500 Total Salaries and Fringe Benefits for Existing and New 193,140 193,140 193,140 193,140 193,140 193,140 193,140 193,140 193,140 193,140 193,140 193,140 2,317,680 Prepared by 1. Murphy 12/5/2014 EFTA_R1_01392936 EFTA02379471  Expense fan-15 Feb-15 Mar-1S Apr-1S May-15 fun-1S Jul-15 Aug-15 Sep-1S Oct-15 Nov-15 Dec-IS EV 2015 Rent • 327.600 27,300 27,300 27.300 27,300 27.300 27.300 27,300 27.300 27.300 27,300 27.300 27,300 327,600 0 Other Overheads 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 300,000 Insurance 0 0 0 0 0 0 0 0 0 11,000 0 0 11,000 legal Fees 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,030 10,000 10,000 10,000 10,000 120,000 Travel and Entertainment 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000 Total Overhead 67,300 67,300 67,300 67,300 67,300 67,300 67,300 67,300 67,300 78,300 67,300 67,300 818,600 • 6,300 square feet at 552 Prepared by 1. Murphy 12/5/2014 EFTA_R1_01392937 EFTA02379472