Loan Financing by bng58526

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									Comparison Between MediaShares Financing Method and Other Typical Financing Methods
           Assumptions
1. Common Assumptions For All 3 Methods
    - the Movie Producers are seeking $20,000,000 financing for their movies
    -   the movie production and distribution time is 2 years until these revenues are calculated
    -   the GROSS PROFIT of the movie is the remainder of revenues after all the production, marketing and distribu
    -   the NET PROFIT is the reminder of the Gross Profit after Financing Costs are paid
    -   we present 3 scenarios where the GROSS PROFIT is:
                * $30,000,000 or 130% of initial investment ("30MM Profit" Worksheet)

2. Assumptions for MediaShares Method
    - the Movie Producer (MediaShares Licensee) forms a public company with the following ownership structure
             * Movie Producer receives 47% of shares for his I.P. and movie package
             * Online Investors purchase shares representing 46% of total equity
             * MedaShares (Licensor) receives 7% of shares as part of licensing fee

3. Assumptions for Studio Loan Financing Method
    - the Movie Producer takes a loan for $20 MM at 8% interest (which must be paid back from profits)
    - the Lender requires 2 points (2%) loan fees plus 8% interest on loan
    - the Loan requires $100,000 in legal fees and loan preparation fees

4. Assumptions for Equity Invesment Financing Method
    - the Movie Producer gets $20 MM financing from equity investor
    - the Equity Investment requires $100,000 in legal fees, PLUS full repayment to investor
    - the Equity Investor also requires 50% participation in net profits
Typical Financing Methods




 roduction, marketing and distribution costs are paid




 e following ownership structure




paid back from profits)
                  Comparison Between MediaShares Financing Method and other Typical Financi
         MediaShares Method (forming a public company)
                                                                       $
Funds obtained from MediaShares U.S.          1,000,000 shares     $20,000,000
Patented online IPO                                     @$20


SAMPLE EARNINGS (Revenues - Prod.&Distrib.Costs)                   $30,000,000

Financing Costs (see below *)                                      ($2,000,000)
NET REVENUES                                                       $28,000,000
                        For MediaShares                 7%           $1,960,000
     Net earnings for online shareholders              46 %        $12,880,000
NET PROFIT for Movie Producer                          47 %        $13,160,000



* Breakdown of Financing Costs using MediaShares Method
Licensing costs                                                         $500,000
IPO costs (SEC compliance for 2 years)                                  $500,000
  Cost to Distribute DVD Dividend            1,000,000      x $1      $1,000,000

Total financing costs                                                $2,000,000


COMPARISON OF PRODUCER'S NET PROFIT

                                            Gross Profit                   $30.00 MM
                                            MS Method:
                                            Equity
                                            Financing                      $13.16 MM
                                            Typical Loan:
                                            Loan
                                            repayment +
                                            Interest                       $6.17 MM
                                            Indep. Movie:
                                            Investment
                                            Repayment +
                                            Interest +
                                            Equity                         $3.29 MM
Method and other Typical Financing Method
                                  STUDIO LOAN Financing Method
                                                                                        $
          Funds obtained from LOAN                                                  $20,000,000




        GROSS PROFIT (Revenues - Prod.&Distrib.Costs)                             $30,000,000
        Loan repayment                                                          ($20,000,000)
        Financing Costs (see below *)                                            ($3,828,000)
        NET PROFIT                                                                 $6,172,000


        Net profit for Movie Producer:                                               $6,172,000
        Difference to Media Shares Method                                            $6,988,000

        * Breakdown of Financing Costs using Studio Loan Method
        Loan Fees                                          2%                           $400,000
        Legal Fees and Preparation Fees                                                $100,000
          Loan Interest for a 2-year film production      8   %
                                                                                       $3,328,000
        Total financing costs                                                         $3,828,000




                                          NET PROFIT COMPARISON BETWEEN FINANCING METHODS
     MM


                                        Indep. Movie:               $3.29
     MM                           Investment Repayment +
                                      Interest + Equity
              Financing Methods




     MM                         Typical Loan:                                        $6.17
                          Loan repayment + Interest



     MM                                    MS Method:
                                         Equity Financing



                                                            0   2    4          6            8          10
                                                                         Net Profit in Million Dolars
                     EQUITY Financing Method
                                                                                  $
                 Funds obtained from EQUITY                                 $20,000,000
                INVESTMENT


                GROSS PROFIT (Revenues - Prod.&Distrib.Costs)               $30,000,000
                Preferred return of investment                            ($20,000,000)
                Financing Costs (see below *)                              ($3,428,000)
                NET PROFIT                                                   $6,572,000

                INVESTOR'S SHARE                                50 %        $3,286,000
                Net profit for Movie Producer:                               $3,286,000
                Difference to Media Shares Method                               $9,874,000

                * Breakdown of Financing Costs using Equity Investment Method
                Legal Fees                                                         $100,000

                 Interest for a 2-year film production and       8   %
                 distribution                                                    $3,328,000
                Total financing costs                                           $3,428,000




NCING METHODS




                                 $13.16




                10       12         14
illion Dolars

								
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