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  1. 1. Highly interactive eBook production, distribution and commerce for the K through 8 market.
  2. 2. Products and Services <ul><li>eBook Production – highly interactive ebooks with audio tracks, synchronized word highlighting, page flips, user tracking, assessment engines, and social collaboration. </li></ul><ul><li>Platform - centralized asset repository with the ability to create on the fly distributed ebook players anywhere on the web or on devices. Reporting across all players and platforms. </li></ul><ul><li>Commerce – sell your eBooks with K8E white labeled eBook stores that include catalogs, curriculum bundling, entitlements, shopping carts and check out services. </li></ul><ul><li>Distribution – build and operate ebook stores on publisher and educational sites, highly trafficked web portals, and into libraries and schools in exchange for revenue share . </li></ul>THE GSI COMMERCE OF INTERACTIVE EBOOKS
  3. 3. <ul><li>eBook production and distribution is too fragmented for Publisher Web 2.0 businesses. </li></ul>Problem: eBook Industry <ul><li>eBook Universe </li></ul><ul><li>Fragmented production </li></ul><ul><li>Multiple Device developers </li></ul><ul><li>No centralized asset tracking </li></ul><ul><li>Costly to produce assets </li></ul><ul><li>No centralized reporting </li></ul><ul><li>No centralized commerce </li></ul><ul><li>NO Platforms for ROI </li></ul><ul><li>Web 2.0 Universe </li></ul><ul><li>Unified production </li></ul><ul><li>Creation </li></ul><ul><li>Distribution </li></ul><ul><li>Sharing </li></ul><ul><li>Syndication </li></ul><ul><li>Commerce </li></ul><ul><li>Platforms for ROI </li></ul>Market Gap
  4. 4. eBook Production Audio Word Timings Acrobat PDF Resize for Platforms Word Coordinates
  5. 5. Multi-Platform Distribution Audio Word Timings Word Coordinates Acrobat PDF Nook/Kindle iPhone/iPad PC: B2C PC: Educational Set-Top Boxes
  6. 6. <ul><li>Publishers lacking options to create consumer eBook stores and to distribute to school systems </li></ul>Problem: eBook Commerce <ul><li>Publishers </li></ul><ul><li>Trade </li></ul><ul><li>Educational </li></ul><ul><li>ELL &ESL </li></ul><ul><li>Training </li></ul><ul><li>Commerce </li></ul><ul><li>Publisher Stores </li></ul><ul><li>App Stores </li></ul><ul><li>White Label Stores </li></ul><ul><li>School Systems </li></ul><ul><li>Library Systems </li></ul>
  7. 7. White Label eBook Stores
  8. 8. Vision <ul><li>“ Your eBooks, highly interactive, anywhere for everyone.” </li></ul><ul><li>Value Proposition </li></ul><ul><li>“ K8E enables distribution and commerce of highly interactive eBooks to the K though 8 market on all platforms with the only scalable system in the industry.” </li></ul>
  9. 9. eBooks - Is this the right market? <ul><li>K through 8 market size </li></ul>* Educational Market Research – 2010 TRADE MARKET Industry in 2010: $27 Billion (all ages)* Random House (15.9% market share) Pearson (11%) HarperCollins (10.6%) Simon & Schuster (9.3%) Hachette (6.2%) Approximately 2600 publishers active SCHOOL MARKET Industry in 2009: $6.2 Billion in the US Pearson $1.9 billion Houghton Mifflin Harcourt $1.6 billion McGraw-Hill $1.1 billion School Specialty $897 million Scholastic $477 million* Hundreds of publishers $1-50 million/yr * Educational Market Research – 2010
  10. 10. eBooks - Is this the right market? US Trade Wholesale Electronic Book Sales Q3 2010 = $119.7 Million * International Digital Publishing Forum– 2010
  11. 11. eBooks - Is this the right market? <ul><li>DISRUPTION - Books are now finally going digital. </li></ul><ul><ul><li>Google – large movement into eBooks. </li></ul></ul><ul><ul><li>Borders, Barnes & Noble – traditional retailers going under. New distribution models needed. </li></ul></ul><ul><ul><li>Industry currently in land grab state, and still pre-roll up phase. </li></ul></ul><ul><li>REAL MONEY– media users are used to paying for. E-book sales from the 13 publishers that report figures to the Association of American Publishers soared 176.6% in 2009, to $169.5 million, 164.4% in 2010, to $441.3 million – AAP. </li></ul><ul><li>COMPETITION – minimal for scalable platforms and partners with real media experience. Most competitors are aiming for the Trade and General Audience – not K through 8. </li></ul>
  12. 12. eBooks - Is this the right market? <ul><li>DISRUPTION – online book sales outpacing retailers. </li></ul>* Foners Books and SEC filings
  13. 13. Trade - Is this the right market? <ul><li>TRADE PUBLISERS AT STAND STILL </li></ul><ul><li>RIGHTS - fragmented rights issues -aggregators pursuing trade publishers will fail at creating a scaled catalog. </li></ul><ul><li>STUCK - Trade Publishers are thinking that they can build their own systems. </li></ul><ul><li>DECLINING – traditional retail outlets in decline or closing but afraid to chose new online partners. </li></ul>
  14. 14. Educational - the Right Market? <ul><li>EDUCATIONAL PUBLISHERS READY TO GO! </li></ul><ul><li>RIGHTS - Educational Publishers have large catalogs and usually own all rights – globally. </li></ul><ul><li>CAPTIVE AUDIENCE - Content is exposed to students, teachers, and parents daily in schools but no access to buy independently B2C. </li></ul><ul><li>DISRUPTION - economy and educational funding has parents interested in supplementing education. </li></ul>
  15. 15. eBook Competitors Flash Page Flip Books & Educational Commerce Interactive eBooks, video & Multi-Platform Commerce Animated eBooks PDF Download Interactivity Scalable Commerce Trade Publishers Educational Publishers Ruckus Media Impelsys Capstone Blackboard Independent iPad developers
  16. 16. Go To Market Strategy <ul><li>Phase 1 – PENETRATE - initially go after K through 8 educational publishers to aggregate large catalogs, launch white label stores , and hone production. Prove scale. (GSI Commerce of eBooks) </li></ul><ul><li>Phase 2 – RADIATE - leverage momentum built through the educational space to get the Trade Publishers on board for distribution. (Brightcove of eBooks) </li></ul><ul><li>phase 3 – CONQUER - enablement of social media tools and gaming on platform to increase revenue and user engagement. (Facebook of eBooks) </li></ul>
  17. 17. Read Together Live Read together live via web cam video sessions.
  18. 18. Teacher & Author Notations Authors and teachers can leave video notes on books, pages or series.
  19. 19. Book Chat
  20. 20. Social Book Clubs
  21. 21. Product Differentiation <ul><li>SCALABLE - production and distribution platform built on proven top tier media distribution CMS in the world. </li></ul><ul><li>MATURE – core functions already built – we are focusing on developing ebook specifics. </li></ul><ul><li>FAST - Faster and cheaper to market with new technologies and features. </li></ul><ul><li>EASY TO INTEGRATE – built on systems already being used by most media companies and already supported by all 3 rd parties – analytics, advertising, CDNs, and pay walls. </li></ul>
  22. 22. The Right Company? <ul><li>TEAM: </li></ul><ul><li>Ken Ruck – CEO . Formerly VP of Digital Media - HIT Entertainment , Head of Mobile - Nickelodeon, General Manager – Virgin Mobile, Original Member – Oberon Media. Currently advises Turner Broadcasting on New Product Development. 2 - American Library Association Awards. </li></ul><ul><li>John Cheary – President. Currently CEO of the world's largest independent producer of audio books – John Marshall Media. With multi-millions in revenues, clients include Random House , Harper and Macmillan. In 2008, acquired Paul Ruben Productions, Inc., a leading production company specializing in language teaching programs for top publishers such as McGraw-Hill, Education, Macmillan ESL/ELT, and Berlitz. </li></ul>
  23. 23. The Right Company? <ul><li>TEAM continued: </li></ul><ul><li>Paula Parker – Sales. 25 years in publishing industry. Deep relationships with many target publishers. Co-Founder Paul Ruben Productions. Generated Millions in sales of audio book production. </li></ul><ul><li>Glyn Beaumont – Technical Director (contractor.) Over 15 years experience in transactional application architecture and development of web systems for many of the best-known media companies in the world. Awards include a Nexus Supreme Gold , and an international ECHO Awards. </li></ul>
  24. 24. The Right Company? <ul><li>B2C and B2B REVENUE STREAMS: </li></ul><ul><li>eBook Store Revenue Share – K8E receives 1/3 of all revenues from sales to consumers on stores we operate (costs recouped.) Publisher gets 1/3, Site partner gets 1/3 (Oberon model.) </li></ul><ul><li>Platform Licensing Fees - monthly licensing fees from Publishers for usage of our ebook distribution platform into school systems. (Brightcove model) </li></ul><ul><li>Distribution Revenue Share – K8E receives 1/3 of revenues generated from distributing titles to devices. </li></ul><ul><li>Professional Services – K8E gets paid by Publishers for development of software products that leverage our core platform and ebook capabilities. </li></ul>
  25. 25. The Right Company? <ul><li>3 Year PRO FORMA: </li></ul>* All numbers are USD                 Year 1 Year 2 Year 3     Income           White Label Systems $ 621,228 $ 3,419,678 $ 6,691,493     Educational Systems $ 234,500 $ 623,000 $ 962,500     Distribution $ 6,870 $ 234,047 $ 659,101     Total Income $ 862,598 $ 4,276,725 $ 8,313,093                 Expense           Sales & Marketing $ 369,333 $ 1,385,000 $ 2,150,000     Research & Development $ 637,333 $ 1,217,083 $ 1,705,000     G&A $ 221,333 $ 601,000 $ 1,240,000     Total Expenses $ 1,228,000 $ 3,203,083 $ 5,095,000                 Net Ordinary Income $ (365,402) $ 1,073,642 $ 3,218,093              
  26. 26. The Right Company? <ul><li>MILESTONES TO DATE: </li></ul><ul><li>Product Development - January 2010. </li></ul><ul><li>Alpha Built – May 2010. </li></ul><ul><li>Company Formed – September 2010. </li></ul><ul><li>Catalog Secured - October 2010 - 2500 titles under contract, 3000 more under LOI . </li></ul><ul><li>Beta Store & Player Complete – December 2011. </li></ul><ul><li>Sales Outreach – January 2011 – Industry soft sell. </li></ul><ul><li>Distribution - March 2011 - Agreement with Sharp naming K8E as content aggregation partner for eReaders. </li></ul>
  27. 27. The Right Company? <ul><li>TEAM - Publishing industry insiders teamed with digital media execs successful in multi-platform distribution and monetization. Deep existing business relations with Publishers. </li></ul><ul><li>PLATFORM - Most scalable distribution engine in the industry. </li></ul><ul><li>MOMENTUM - Largest independent catalog of K through 8 titles in world. Agreements for store and product development. </li></ul><ul><li>POSITION – world’s largest catalog of rights, and immediate access to all files required for eBook production. </li></ul><ul><li>PLAN - Positioned for revenue scale and/or acquisition. </li></ul>
  28. 28. Barriers to Entry <ul><li>PRODUCTION & DISTRIBUTION– very difficult at scale (more complicated than games and video.) </li></ul><ul><li>RIGHTS FRAGMENTATION – trade publishers do not own all rights. Most successful titles are legacy with fragmented ownership. </li></ul><ul><li>ROI - Publishers can not find ROI working with multiple partners. </li></ul><ul><li>INDUSTRY - slow to embrace new changes and partners and lacking knowledge of scaled distribution & digital commerce. Making the mistakes media, music and gaming companies did. </li></ul>
  29. 29. Capital Requirements <ul><li>$250K USD - Convertible Note to Series A round. </li></ul><ul><ul><li>25% discount </li></ul></ul><ul><ul><li>CAPITAL NEEDED TO RESPOND TO CLIENT DEMANDS </li></ul></ul><ul><ul><li>Launch white label store and production platform (2 months.) </li></ul></ul><ul><ul><li>Production of titles already under contract. </li></ul></ul><ul><ul><li>Major industry trade show roll out. </li></ul></ul><ul><ul><li>Secure and launch more store partnerships. </li></ul></ul><ul><ul><li>Build educational platform v1.0. </li></ul></ul><ul><ul><li>Scale revenue. </li></ul></ul>
  30. 30. 6 Month Use of Funds Plan <ul><li>WHITE LABEL STORES – 5 live stores. </li></ul><ul><li>CATALOG - 3000 titles produced for multi-platform distribution. </li></ul><ul><li>EDUCATIONAL SYSTEM– 1 major publisher. </li></ul><ul><li>DISTRIBUTION - to eReaders and devices. </li></ul><ul><li>PRODUCT DEVELOPMENT - 2 educational software projects. </li></ul><ul><li>REVENUE – scale to break even. </li></ul>
  31. 31. Contact <ul><li>Ken Ruck – [email_address] 917 406 4789 </li></ul><ul><li>John Cheary – [email_address] 917 838 9134 </li></ul>