Emerald City of Oz LLC was formed to develop and produce entertainment
product based on the intellectual properties licensed from Roger S. Baum. The IP licensing agreement, dated Sept. 30, 2008, includes seven titles written by Roger S. Baum and are based on The Wonderful Wizard of Oz series written by his great-grandfather, L. Frank Baum. It is the Companys vision to develop, produce and distribute the IP under the three main business drivers of filmed entertainment, digital content and marketing and licensing opportunities of products. To facilitate these efforts, we are currently raising funds to develop and produce a 3D version, under our best efforts, two feature-length animated musicals, digital content such as a virtual world, and a capital reserve to stimulate licensing and marketing opportunities, as well as allocated advertising (P&A) funds to promote all media and products. T H E W R A P EXECUTIVE SUMMARY Digital content, which encompasses virtual worlds, games (online & console) and mobile technology, as well as emerging technologies, is a fast-growing entertainment sector with unlimited upside potential. The top 10 virtual worlds are earning revenue estimates in excess of $50 million per year, with the highly successful World of Warcraft leading the way with a staggering estimate of $500 million per year, according to DFC Intelligence. Strategy Analytics, in its Virtual Worlds Market forecast for 2009-2015, said it sees the global population of virtual-world users growing from 186 million today to almost 640 million by 2015. Thats almost 100 million new players a year, a nearly 25% compounded annual growth rate. The fastest-growing demographic is kids between the ages of 5 and 9, which the Company predicts will grow 27%. The current largest segment of virtual worlds players, tweens and teens, should grow by some 21%. Online and console gaming, as well as mobile technology, are exhibiting earning potential in the multi-millions per year, and continued growth is expected in this area as well. T H E W R A P EXECUTIVE SUMMARY Licensing of intellectual property based on animated content has proved to be a highly lucrative market. It has created over 1,000 separate licensing agreements for The Simpsons franchise, earned net revenue of $750 million for Nickelodeons Sponge Bob Squarepants, and projected billions for Disneys Cars, Wall-E and other film franchises. T H E W R A P EXECUTIVE SUMMARY The 1939 film version of The Wizard of Oz has been seen by more viewers than any other movie. Additionally, the book, Dorothy of Oz, has been in print for over 15 years by William Morrow and Co., Inc. and continues to be distributed in a global market by all major book chains. Roger S. Baum is active in promoting his books and personally appears at conventions, book stores, festivals and numerous other promotional events. This Oz legacy provides a unique and limitless opportunity. By exploiting the potential of the revenue streams of film content, digital content and licensed opportunities. The Company will establish multi-platform storytelling across an array of media to create multiple entry points through which consumers can become immersed in the story franchises world. We firmly believe that by strategically integrating all media platforms that the franchises market penetration will enhance all revenue streams, leverage risk and deepen market valuation. Emerald City of Oz LLC plans to capitalize on the tremendous brand identity associated with the adventures of Dorothy Gale in the magical land of Oz and to introduce the century-old fable to the new millennium. T H E W R A P MARKETING STRATEGIES The Company will employ traditional and non-traditional marketing campaigns to maximize target-audience attendance for the film, strengthen digital content participation, and create awareness and demand for licensed consumer products. Traditional Marketing Traditional marketing techniques will rely on established advertising platforms to influence product awareness, brand building and sales. Traditional marketing techniques will include: Television and Radio Paid trailers and commercials on television and radio. Product placement and product integration. Interviews with cast on talk shows and entertainment news programs. Advance trailers, longer pre-views, or behind-the-scenes footage (EPK) on entertainment news programs. T H E W R A P MARKETING STRATEGIES Print Paid advertisements in newspapers and magazines, and inserts in books, mailers and other print material. Cross-promotion of original book, including special printings or new cover jackets. (Now a major motion picture.) Merchandise Tie-Ins Paid co-branding or co-advertising. Promotional giveaways: branded items, toys or food combinations at fast- food chains. Promotional Tour Film actors and directors appearance in television, radio and print media interviews. In the Movie Theater Slide-show stills, trivia and trivia games from the film shown before movie. T H E W R A P MARKETING STRATEGIES In Lobbies and Video Rental Outlets Stand-ups. (Freestanding, paperboard life-size images of figures from the film.) Cardboard 3D displays, possibly with audio elements. Film posters, digital motion posters and mobile barcoding. Outdoor Advertising and Promotion Billboards Bus stops Shelters Kiosks Taxis Shuttle vans Buses Banners Subways T H E W R A P LICENSING Licensing intellectual properties generates $187 billion annually. The licensing and promotion of products, as well as tie-ins from animated entertainment, generate combined revenues in the multi-billions. Animated film entertainment, especially well-established material that has achieved strong market penetration from an established television series or film franchise, can predictably negotiate up to 500 separate licensing agreements for product line-up ranging from plush toys, games and apparel to greeting cards, stationery, gift wrap and party goods. When The Simpsons went on the air, the show had only 12 licensees. Now there are more than a thousand Simpsons items licensed worldwide. Some of the items can be worn, some displayed, some used and some consumed. By the 100 th episode of the television show, over $3 billion worth of Simpsons merchandise had been sold worldwide. Disney is banking big on Wall-E toys and other merchandise to generate some $30 billion in retail revenue this year. Disneys Wall-E push encompasses everything from pricey deluxe robots to branded Wall-E Crocs shoes that leave caterpillar-tread-like tracks. T H E W R A P VIRTUAL WORLDS An exciting new element that will expand and support the existing revenue streams of filmed media and licensing of goods is the development and creation of an Oz Virtual World. A virtual world is a computer-based simulated environment intended for its users to inhabit and interact via avatars. These avatars are usually depicted as textual, two-dimensional or three- dimensional graphical representations. The three basic tenets of a virtual world are social networking, gaming and education with the main revenue drivers of subscriptions, micro-transactions and sponsorship. The Oz legacy lends itself well to developing, creating and implementing a virtual world and will expand possible revenue streams exponentially. The virtual world will also provide a key component of transmedia marketing, which integrates filmed entertainment, licensing of hard goods and interactive Web-based entertainment. This allows for greater depth of consumer immersion and market penetration. An example of this might be that when a consumer purchases an action figure or clothing and accessories for the action figure, the product will be accompanied by a code. The consumer enters the code on the virtual world site that unlocks a companion virtual product to be owned, traded or sold within the virtual community. T H E W R A P VIRTUAL WORLDS T H E W R A P FINANCING All monies will be used to produce at least one animated film and distributed for the theatrical release; home video, broadcast and cable markets: international markets. In addition to filmed content, the Company will employ best efforts to develop, produce and maintain digital content, virtual worlds and games for the online and console play, as well as mobile technology. In addition to filmed content and digital content, the Company will reserve a conservative capital amount to offset any incurred costs related to licensing efforts, as well as a substantial capital amount to support marketing and advertising efforts. T H E W R A P STRUCTURE Emerald City of Oz LLC (ECOZ) will share on a pari passu 50/50 basis with Dorothy of Oz LLC. After ECOZ earns a gross profit of 120% of its investment, it will share with the production company at the rate of 50% to ECOZ, and 50% to the production company for perpetuity and includes all film rights in all markets, and earned net revenue from digital exploitation; virtual worlds, casual gaming, and mobile applications, etc., as well as all negotiated licensing rights worldwide. T H E W R A P REVENUE RATE RANGES As the following illustrates, the median gross revenue earned by film content with an average budget of $25 million has been extraordinary. Film Title Estimated Worldwide Gross Jonah: A VeggieTales Movie $25,606,175 Hoodwinked $110,011,106 Spirited Away $274,949,886 Beauty and the Beast $403,476,931 Peter Pan: Return to Neverland $109,862,682 The Jungle Book 2 $135,703,599 Jimmy Neutron: Boy Genius $102,992,536 Aladdin $504,050,319 The Rugrats Movie $140,894,685 Wallace & Gromit $185,724,838 SpongeBob SquarePants $140,416,609 Toy Story $361,996,233 Average Budget: $23,458,334.00 Average Gross: $207,973,792.00 Average Gross Profit: $184,515,458.00 T H E W R A P EXPANSION PLAN Phase 1: Animated Musical Dorothy of Oz Phase 2: Digital Content a) Virtual World b) Games i) Console ii) Online c) Mobile Technology d) New Technologies Phase 3: Licensing and Merchandise Phase 4: Soundtrack and Downloadable Music T H E W R A P EXPANSION PLAN Phase 5: Musical Proposal a) Animated Musical The Oz Odyssey (proposed) b) Animated Musical The Green Star of Oz (proposed) Phase 6: Episodic Series for Cable and Satellite TV and Home Video Markets T H E W R A P PROJECTIONS Gross Sales (in millions of dollars) Low Med High Film Content* Domestic Theatrical 200 400 600 Domestic DVD / VOD / PPV 200 400 600 Domestic TV / Cable 80 160 240 International Sales (All Media) 240 480 600 720 1440 2040 Digital Content Virtual World (5 Yr. Projection) 400 800 1600 Casual Games (5 Yr Projection) 200 400 800 Mobile Applications (5 Yr Projection) 20 40 80 620 1240 2480 Licensing of IP Licensing & Marketing of IP (5 yr Projection) 100 200 400 Total Gross Sales 1440 2880 4920 * Film Content projection reflect both Dorothy of Oz and the follow-up sequel. T H E W R A P PROJECTIONS Costs Low Med High 50/50 Split with Theaters 100 200 300 1340 2680 4620 Worldwide Distribution Fee (20%) 144 288 408 1196 2392 4212 Prints and Advertising (P&A) 30 60 90 1166 2332 4122 Digital Content Operating Expense (Avg. 30% gross sales) 186 372 744 980 1960 3378 * Film Content projection reflect both Dorothy of Oz and the follow-up sequel. T H E W R A P PROJECTIONS Low Med High 1) Return on Investment A) Dorothy of OZ LLC 30 30 30 B) Emerald City of OZ LLC 70 70 70 Total Return on Investment 100 100 100 880 1860 3278 2) Return on Investment A) Dorothy of OZ LLC 440 930 1639 B) Emerald City of OZ LLC 440 930 1639 Total 880 1860 3278 3) 50% to Dorothy of OZ LLC (50/50*) 440 930 1639 A) 20% Return 6 6 6 434 924 1633 B) Less 50% Split with Production Company 217 462 816.5 Total Return to Dorothy of OZ LLC 223 468 822.5 * Film Content projection reflect both Dorothy of Oz and the follow-up sequel. T H E W R A P PROJECTIONS Low Med High 4) 50% to Emerald City of OZ LLC 440 930 1639 A) Plus 20% Return 14 14 14 426 916 1625 B) Less 50% Split with Production Company 213 458 812.5 Total Return to Emerald City of OZ LLC 227 472 826.5 Return on Investment (ROI) ECOZ 324% 674% 1180% * Film Content projection reflect both Dorothy of Oz and the follow-up sequel. Emerald City of OZ LLC will share equally on all net profits with Dorothy of OZ LLC pari passu for perpetuity in all markets.
All figures in million of dollars (USD).
Source: Pixar Revenue Model The summary may contain forward-looking projections relating to the future operating results of the Company, which may prove to be incorrect. Please be advised that there is not assurance the Company will achieve the financial results and that the Company will earn revenues or that investors will receive a return of their capital or any cash distributions. Any projections are estimates. T H E W R A P T H E W R A P