Holographic Entertainment Euclideon Entertainment Pty. Ltd.
Investor Information Package & Calculation Worksheets AUS Edition
Valid To: 31 Dec 2020
euclideonholographics.com 5 Palmer Pl MURARRIE QLD 4172 LEGAL DISCLAIMER: http://is.gd/phgv6c Euclideon Entertainment Pty Ltd AUSTRALIA ABN: 20 619 068 745 Table of Contents
Important Disclaimer 4 Executive Summary of Investment Opportunity 5 Our Proven Return On Investment 5 How Your Investment Works 6 Cost of Building A New Centre 6 Highest Rated Tourist Attraction in Australia 6 What About COVID-19? 6 Hologram Technology 7 Who Uses Euclideon Holographics Technology? 7 Existing Investors 8 “Dinosaur World” Entertainment Centre 9 Highest-Rated Tourist Attraction in Australia 10 Highest-Rated Tourist Attraction in Australia 11 Overview of The Current Market 14 Session Pricing Strategy 15 Our Global Expansion Plans 16 Our Plans for New Holographic Content 17 Our Holographic Arcade Games 18 Our Holographic Arcade Games 19 Holographic Auto-Redemption Games 20 Auto-Redemption Game Schematic 21 Examples of Available Toys for Auto-Redemption 21 Floor Space & Staffing Needs 22 Staff Sales Pitch 23 “Dinosaur World” P.O.S. Revenue Data 24 Social Media & Advertising Strategy 25 Merchandise & Toy Sales 26 But What About COVID-19? 27 Competitor Analysis - U.S. 28 Summary of Unites States Competitors: April 2020 28 Dave & Buster’s Entertainment, Inc. (PLAY) 28 Chuck E. Cheese 29 Main Event Entertainment 29 Rainforest Cafe 30 Top Golf 30 Competitor Analysis - Australia 31 Summary of Australian Competitors: April 2020 31 TIMEZONE 31 Funlab 32 iPlay 32
2 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS MillionLife 33 The Global Entertainment Attraction Industry 33 How To Join This Opportunity 34 Important Financial Figures (Part I) 35 Important Financial Figures (Part II) 36 Worksheet: Cost Calculations (1 of 3) 38 Existing “Dinosaur World” Centre (Gold Coast) 38 Important Values Required For Calculations 38 Potential Earnings Formula (By Demographic) 38 Worksheet: Cost Calculations (2 of 3) 39 Maximum Earnings Formula 39 Staff Expenses Formula 39 Worksheet: Cost Calculations (3 of 3) 40 Other Expenses Formula 40 Daily Earnings Breakdown (Seasonal) 40 Max. Rev. Per 8 Hour Day 41 Worksheet: Daily Earnings Breakdowns 41 Daily Earnings Breakdown (Seasonal) 41 Max. Rev. Per 10 Hour Day 41 Max. Rev. Per 12 Hour Day 41 Structure of the Shareholding Entity 42 Advantages of All Centres Being in One Company 42 Investment Structure 42 Information on Intended Use of Funds 43 Operation of the Centres and Board Representation 43 Profit Dilution From Less Successful Centres 44 Concerns Regarding Profit Distribution Strategy 44 Operational Matters Investors Need To Be Aware Of 45 Increased Yearly Returns As The Business Expands 46 Investment Exit Strategy 47
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 3 Important Disclaimer
Recipient to conduct own investigation and analysis This Information Memorandum is not to be considered as a recommendation by Euclideon Entertainment and its advisers or any of their officers, employees, agents or advisers that any Recipient invest in the Shares, or that an investment in shares is a suitable investment for the Recipient. The Recipient should conduct and rely upon its own investigation and analysis of the information in this Information Memorandum and other matters that may be relevant to it in considering whether to acquire the Shares. Each Recipient considering an investment in the Shares must make, and will be taken to have made, its own independent investigation and analysis of the information in this Information Memorandum. Independent expert advice (including from a Recipient’s accountant, stockbroker, lawyer or other professional adviser) should be sought before making a decision to invest in the Shares.
Not a document requiring lodgement with ASIC This information Memorandum is not a prospectus or other disclosure document required to be lodged with ASIC under Chapter 6D of the Corporation Act as the Offer is only made to persons who, or in circumstances that, fall within one of the exclusions from the disclosure requirement contained in section 708 of the Corporations Act. Nor is a product disclosure statement or similar document required under Chapter 7 of the Corporation Act. Accordingly, this Information Memorandum does not contain the information that would be contained in a prospectus or other disclosure document prepared under the Corporations Act and does not purport to contain all of the information that may be necessary or desirable to enable a potential investor to properly evaluate and consider an investment in the Shares.
No responsibility for contents of Information Memorandum To the maximum extent permitted by law, no representation, warranty or undertaking, express or implied, is made and, to the maximum extent permitted by law, no responsibility or liability is accepted by Euclideon Entertainment and its advisers or any of their officers, employees, agents or advisers or any other person as to the adequacy, accuracy, completeness or reasonableness of this Information Memorandum. To the maximum extent permitted by law, no responsibility for any errors or omissions from this Information Memorandum whether arising out of negligence or otherwise is accepted.
This Information Memorandum contains various opinions, estimates and forecasts which are based upon assumptions that may not prove to be correct or appropriate. Except to the extent implied by law, no representation or warranty as to the validity, certainty or completeness of any of the assumptions or the accuracy of the information, opinions, estimates or forecasts contained in the Information Memorandum is made by any of Euclideon Entertainment and its advisers or any of their officers, employers, agents or advisers.
Acknowledgements Each recipient acknowledges that: (a) No person has been authorised to give any information concerning Euclideon Entertainment or the Shares other than as contained in this Information Memorandum and, if given, that information cannot be relied upon as having been authorised by Euclideon Entertainment ; and (b) They have been afforded an opportunity to request, and have received and reviewed, all information considered by them to be necessary or appropriate to verify the accuracy of, or to supplement the information contained in, this Information Memorandum and to make an informed decision about investing in the Shares.
Accuracy of projection and forecasts All projections and forecasts in the Information Memorandum are for illustrative purposes only, using the assumptions described in this document. Actual results may be materially affected by changes in economic and other circumstances. The reliance that the Recipient places upon the projections and forecasts is a matter for its own commercial judgment. No representation or warranty is made that any projection, forecast, assumption or estimate contained in this Information Memorandum should or will be achieved.
Speculative investment and liquidity not guaranteed An investment in the Shares is to be considered speculative. Liquidity in the Shares cannot be guaranteed by Euclideon Entertainment and any offer for sale of the Shares must be made in accordance with the Corporations Act and any other applicable laws.
4 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS Important Disclaimer Executive Summary of Investment Opportunity Euclideon Holographics manufactures Hologram Systems for clients like Airbus, Bentley Motors, the US Marines and the Queensland Government. In 2019, we opened our “Dinosaur World” Holographic Entertainment Centre. Before COVID-19, “Dinosaur World” was Australia’s top-rated attraction (4.9 Stars), and was highly profitable, earning twice what it cost to run in the first 3 months, from a small retail space of 150 sq. metres.
Following this success, we have created a new company called Euclideon Entertainment PTY LTD and are now raising funding to open new Hologram Entertainment Centres - investors will own 40% of each centre. All profit above operating expenses will be paid to investors up to 4 times per annum as dividends. Euclideon Entertainment will setup, staff and run each Centre. The minimum investment is $20,000 and share price will be $1.
We are now in mass production of our Hologram entertainment equipment because we see great opportunities when COVID-19 is over. Our market research shows that during recessions, cheaper entertainment like our Hologram Entertainment Centres becomes more popular (e.g. after WWII the cinema industry did very well). Rents will be greatly cheaper due to numerous vacancies. We are also building medical-grade ultra-violet sterilisation into all of our equipment.
Our Proven Return On Investment These are the numbers from our first Hologram Entertainment Centre that was opened on the Gold Coast.
Stage 1 $800,000 Stage 2 $1,120,000 Stage 3
Dec 2019 - Mar $1,360,000 2020 Sep 2020
We earned $200K in Adding Arcade Machines the first 3 months from $1.0 Million & 3D Birthday Party “Dinosaur World”. Pre- Jul 2020 Rooms is expected to add dicted to earn $800K another 40% to income, P/A. Adding HoloSports expected Expected Profit bringing revenue to 55% to add 40% extra income, $1.36M bringing revenue to $1.12M. Stage 1 ROI 80% Expected Stage 3 ROI
NOTE: All values denominated in Australian Dollars (AUD). Estimates do not include COVID-19 impact. Taxes not included.
“Lots and lots of fun my kids “Amazing experience! Lovely loved it. This is our 2nd visit in staff. Very educational and not 5 days! Highly recommended!” too expensive. Worth it.” - Francesca Antonaglia, Google - Jaime Who, Google Reviews Reviews
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 5 How Your Investment Works
Cost of Building A New Centre Euclideon Entertainment Pty Ltd is selling shares representing 40% of each new Centre. Early shareholders will receive shares at a discounted rate. The minimum investment is $20,000. Your investment will fund new hardware, installation, shop-fitting and initial expenses, with a small percentage reserved for future expenses. All profit above operating expenses will be released as dividends to investors up to 4 times per annum.
All of the Holographic Entertainment Centres will be run by Euclideon Entertainment Pty Ltd. We can create consortiums of smaller investors to open new Centres if required.
As an example, the cost to the investor for the Gold Coast Centre (comprised of 4 Hologram Rooms) would be $266,000. Our existing Gold Coast Centre has made $200,000 with expenses of $100,000 in 3 months since opening, which is a 55% P/A return on investment. All Hologram Entertainment Centres will be designed, fitted-out and installed by Euclideon Holographics’ certified installers. Sites will be selected & terms negotiated by our expert Real Estate team (formerly employed by Westfield & MIRVAC). Prices have been discounted to cost price for investors.
Highest Rated Tourist Attraction in Australia
The most important question in the Entertainment Industry is “Are people having fun?”
Dinosaur World 4.9 Stars Time Zone 4.4 Stars Laserforce 4.4 Stars Warner Bros. Movie World 4.4 Stars Euclideon Entertainment’s Sea World 4.3 Stars Holographic “Dinosaur World” Infiniti Experience 4.3 Stars Centre has received 4.9 stars on Dreamworld 4.3 Stars Google Reviews and Facebook. Ripley’s Believe It Or Not 4.2 Stars See reviews
What About COVID-19? We are now in mass production of our Hologram entertainment systems because we see great opportunities when COVID-19 is over. Market research shows that after hard times, cheaper entertainment like our Hologram Entertainment Centres becomes more popular. Malls will have lots of vacancies – which means there will be an abundance of cheap rent available.
We are now installing ultra-violet sterilisation equipment into all our Holographic systems. This means we should match new regulations a year before all other entertainment groups which do not manufacture their own machines. Our Centres already offer great social isolation in separate rooms.
6 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS Hologram Technology
Who Uses Euclideon Holographics Technology? Euclideon Holographics builds Hologram Systems that are used by many of the world’s biggest companies. Our customers include Bentley Motors, Airbus, the US Marines, Qatar Military, Hong Kong Airport, Queensland Transport and Main Roads, and many more.
Hologram technology normally costs millions of dollars to make. Because of the high cost, Hologram technology is normally only used by top universities and science Centres.
In April 2019 our company came second in the world’s largest technology contest in Shenzen because we found a way to make Hologram technology for a fraction of the price. In September 2019 the Mayor of Silicon Valley (Santa Clara) gave us the Yosemite Award for Best Technology in Silicon Valley.
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 7 Existing Investors
TheThe following following are are shareholders shareholders of of Euclideon Euclideon HolographicsHolographics Holdings (the(the parentparent company company of of EuclideonEuclideon Entertainment). Entertainment). Though Though corporate corporate logos logos are are shownshown below, inin somesome cases cases the the most most seniorsenior executives executives of ofthose those companies companies preferred preferred to to investinvest privately usingusing their their own own money money rather rather thanthan invest invest through through their their companies companies directly. directly. However However the fact thatthat these these organizations’ organizations’ people people investedinvested their their own own money money shows shows the the how how well well wewe have passedpassed theirtheir due due diligence diligence processes. processes.
Leica Camera AG - As well as cameras, Leica also makes laser scanners. There are ongoing discussions between Leica and Euclideon Holographics regarding distribution of our Holographic products.
SoftBank Group Corp. - Joe Ye is a Softbank advisor to Masa San (Head of Softbank). Softbank itself has not directly invested; instead, Joe Ye has made this a private investment in his own name. Further discussions with Softbank are expected at the opening of Vision Fund Two.
Morgans Financial Limited - Australia’s largest financial advisory firm. Whilst Morgans have not invested directly, the Board, CEO, and the Chairman have all personally invested privately.
Muscat Overseas Group - A multi-billion-dollar conglomerate run by Sheik Salem of Oman. They have recently invested and are assisting with distribution in the Middle East. This investment has been made privately by the Sheik himself rather than through MOG group.
Uni-Innovation Consulting Group - Uni-Innovation represents a number of Chinese investment funds who have put a significant amount of money into Euclideon Holographics during its preparations for large scale manufacturing.
David Merson and Scott McTaggart - David was the CEO and founder of Mincom (the southern hemisphere’s largest technology company). Scott was Head of Mincom’s Oil and Gas Division. They were Euclideon Holographics’ first investors.
JPMorgan Chase & Co. - One of the world’s largest investment companies, holding over $2.6 trillion in assets. They are shareholders in Euclideon Holographics through Industry Funds Management Australia.
In addition to these we also have many other smaller Australian investors.
8 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS “Dinosaur World” Entertainment Centre
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Dinosaur World is our new Holographic Entertainment Attraction. Dinosaur World uses Hologram technology to make objects appear solid - but they are really made out of laser light. Each family is taken into a single “Hologram Room”. The room projects dinosaurs that people interact with as they go on ten different dinosaur adventures. A family or group of people pay around $100 (AUD) for 28 minutes of Hologram entertainment. In 2019 we opened our first Dinosaur World Hologram Entertainment Centre on the Gold Coast. It earned over $200,000 AUD in the first 3 months. Two of the weeks were school weeks and two were holidays. We often had to turn people away because we were fully booked out. We were surprised by the number of repeat customers who came back the next day to do it again. We did no advertising, and we had no birthday party trade.
We had only one piece of content which was “Dinosaur World” (later in 2020 we are adding HoloSports and underwater experience). After this the Centre continued to be highly profitable. We saw how the revenue this business generated was so much higher than nearly all other business with similar floor space and staff requirements, so we began planning the rollout of numerous Centres around the world.
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 9 Highest-Rated Tourist Attraction in Australia
4.9 Stars Euclideon “Dinosaur World” Google & Facebook Ratings
Euclideon Entertainment’s Dinosaur World Centre has 4.9 Stars (out of 5) on Google Reviews and on Facebook. That is more than entertainment giants like Warner Brothers and Sea World! Dinosaur World 4.9 Stars See reviews Time Zone 4.4 Stars Laserforce 4.4 Stars Warner Bros. Movie World 4.4 Stars Sea World 4.3 Stars Infiniti Experience 4.3 Stars Dreamworld 4.3 Stars See reviews Ripley’s Believe It Or Not 4.2 Stars
10 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS Highest-Rated Tourist Attraction in Australia
4.9 Stars Euclideon “Dinosaur World” Google & Facebook Ratings
The most important question in the Entertainment Industry is: “Are people having fun?”
See reviews
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 11 12 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 13 Overview of The Current Market
Bowling - Has had a life span of over 50 years. It has grown and shrunk on two occasions but still supports thousands of profitable businesses even though people do the same thing every time.
Computer Game Arcades - In the ‘80s they made more money than all sports, movies and music combined; in the early ‘00s they fell into decline but were revived in the last eight years by adding the element of winning prizes from a prize bar. There are now 1.1 arcades for every shopping mall with a cinema. With numerous chains like Dave & Buster’s, Timezone, Chuck E. Cheese, iPlay, etc.
Trampoline Centres - Were a huge success although the problem was that anyone could buy a giant trampoline from China, so the market has become quite flooded. Today there are 600 trampoline Centres in the US with 70% being owned by one of eight major chains.
Build-A-Bear - If you are not familiar with this activity, children buy a teddy bear skin that they stuff, dress, and customise to their liking. It is popular for small children’s birthday parties. Build-a-Bear started in 1997, by 2010 they had 400 stores worldwide including 35 in Australia. They ran successfully and profitably for over 20 years before recently closing down a large number of stores in 2019.
Laser Tag - A less common form of entertainment but it is still profitable after 30 years. Laser tag makes over 75% of their income from the birthday party trade.
Our Points of Differentiation: 1. Hologram Entertainment is new and exciting - this gives us leverage with shopping malls & rent 2. Content can change quickly and remain fresh 3. Small floor space needed - which means much lower rent 4. Minimal staff required - our Hologram systems are largely automated 5. Financially practical for malls so requires a much smaller advertising budget 6. Different content can appeal to different age groups and genders 7. Lower set up costs than most other forms of entertainment ($20,000,000 vs. $500,000)
14 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS Session Pricing Strategy
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The cost of a session is around $32 per person or $100 per family or group. This figure is considered slightly higher than other forms of entertainment, but customers seem to think they are getting good value for money. Here are some comparisons with other forms of entertainment in Australia (in AUD*):
Laser Tag: $25 for 3 x seven-minute games (Laserforce) Bowling: $19 per person, per game (Strike Bowling, AMF) Go Karting: $40 for 10 minutes Movies: $23 per person or $36 for Gold Class (Event Cinemas) Build-A-Bear: Averages $35 per bear Arcades: $25 minimum credit to play (Timezone, iPlay)
Average Session Price Around 30% of customers are a single child with parent. For this we generally only charge for the child. 40% are groups that pay $100, and 20% are couples paying $64. Therefore, the summarised average price per session is around $65*.
Session Length Sessions in our Entertainment Centre are timed at 28 minutes. This allows us to have 2 sessions per room per hour, with a 2-minute change-over time period factored in. Many investors ask whether we can have shorter sessions - our belief here is that 28 minute sessions provide a satisfying length and create more perceived “Value for Money” than shorter sessions.
*These figures are based on the Australian, Gold Coast flagship store and may vary from location to location.
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 15 Our Global Expansion Plans
Our “Dinosaur World” Holographic Entertainment Centre is the highest-rated tourist attraction in Australia as of February 2020 with many regular repeat customers. Our financials have proven that Holographic Entertainment is a highly profitable business and an excellent opportunity to make considerably more money when many more Centres are opened globally. We are building teams and restructuring the company to bring in investor money and achieve this goal.
New Attractions Our first Centre was called Dinosaur World because it only had the “Dinosaur Adventure” Holographic entertainment title. We are about to add our next piece of content called “HoloSports”. The good thing about “Dinosaurs” is that it’s the world’s biggest brand name IP, but no one owns it. 60% of our “Dinosaur World” customers are children under 14 - the current ratio is around 60% boys and 40% girls. The other 40% of our customers are an even mixture of teenagers, young adults, and even much older people in their 40’s to 60’s.
HoloSports - In HoloSports you play different Olympic-style sports against the other people in your group. HoloSports is a competitive, team-based Holographic entertainment title that offers a different type of gameplay to “Dinosaur Adventure” and will widen our target market. Click HERE to watch a preview video of HoloSports
16 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS Our Plans for New Holographic Content
Every eight months a new piece of content will be delivered. The Hologram Rooms can easily swap between different content so there is no limit to how much content can be made available over time. At present we are working on an underwater sea-life adventure, and HoloSports 2. These different pieces of content do not require new individual Hologram Rooms, they all run in the same Hologram Rooms. This is very different to traditional arcades, where a new game being released means that operators must buy a new, expensive machine.
Click HERE to watch a preview video of our Underwater Adventure
Hologram Arcade Machines In addition to Hologram Rooms we have also built Hologram arcade machines. These 2-player machines are like traditional arcade machines except the objects project 90cm off the screen and include a toy vending machine/redemption game. There are 15 different games at present. Some of these games are two-player, some are one-player. We created our Hologram Arcade Machines because we noticed that many customers were waiting up to 15 minutes to start their “Dinosaur World” session and needed something to do.
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 17 Our Holographic Arcade Games
18 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS Our Holographic Arcade Games
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 19 Holographic Auto-Redemption Games
Redemption Games are a very popular attraction, not only in Arcades and Family Entertainment Centres, but also as stand-alone units in many Shopping Malls. The most well-known Redemption Game is the familiar “Crane Game”, where players move around a metal claw in an attempt to win a prize by grabbing a toy. Many arcades reward players by letting them score points that can be redeemed at a “Redemption Counter” for toys, sweet treats and gift vouchers.
Euclideon’s New Auto-Redemption Hologram Arcade Games We have invented a new, exciting form of Redemption Game. Our Hologram Arcade machines (pictured above) are already innovative and offer a brand new style of Hologram arcade gameplay. We have built in automated vending machines that will reward players with toys when they reach a certain number of points. This innovative approach has numerous advantages, including: 1. Instant reward feedback mechanism makes players feel good; 2. No expensive staff required to redeem points/tickets; 3. Reward ratios (in other words, how often you win) can be fine-tuned easily; 4. Unique and novel new approach is memorable and will attract new players.
Every 1,000 points a toy is given, or in a two-player game the winner gets a toy. All of these toys can be cheaply manufactured and occupy very little space, allowing the vending machine in our Arcade systems to dispense hundreds of toys before they need to be restocked.
20 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS Auto-Redemption Game Schematic
Stacks of 100’s of Toys
Toy Redemption
Examples of Available Toys for Auto-Redemption
Cardboard fold-up house, roughly 15cm in when assembled (flat cardboard pack).
Cardboard fold-up action figure, roughly 15cm in when assembled.
Sydney Opera House cardboard Finger-puppets are a popular toy puzzle, 15cm when assembled with children, as we have seen with our own families. They fit well inside plastic capsules. 5cm.
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 21 Floor Space & Staffing Needs
Floor Space Requirements
In order to plan the layout of a new Hologram Entertainment Centre, we utilise the following measurements, depending on which systems/facilities we are planning to install: 1. A single Hologram Room is 5m x 4.5m, and 2.9m high. 2. A two-player Hologram arcade machine is 4m x 1.8m, and 3.1m high. 3. A one-player Hologram arcade machine is 2m x 1.8m, and 3.1m high. 4. A birthday party room is 2.64m x 3m, and 2.5m high, and will fit eight children.
Staffing Requirements
On a school day one staff member is sufficient to run the Centre. This means that our staffing expenses are extremely low compared to other kinds of retail businesses. On non-school days (Saturday, Sundays, public holidays etc.) we employ two staff members due to the increased number of customers. The staff’s duties are to explain to people what the Centre is, take payment, give them glasses and wands, and lead them into their Hologram Room. Staff also take payment for any toys or merchandise at the front of the store. The requirements of the front desk role are relatively simple and can even be fulfilled by high-school students!
Afterwards the staff member asks how their session was and gives them a brochure about other content that will be coming out soon. If there is a quiet time staff dust and clean (cleaning is minimal as there is no food or mess).
22 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS Floor Space & Staffing Needs Sample Floor Plan (Westfield Carindale)
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 23 Staff Sales Pitch
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One important issue that needs to be resolved with our Hologram Entertainment business is that when customers wander past in front of it, although they are attracted by the colourful decorations and screens showing the entertainment titles, they often don’t understand what the actual entertainment experience looks like or how it works. We have found through experience that is very important that staff approach potential customers directly and explain to them how our Hologram Entertainment Centre works and how exciting the Holograms really are.
The most common and important question the customers ask is: “What is it?” How well your staff answer this question is crucial to the success of your business, because this is the only opportunity you will get with that customer to convey the value of the attraction. Our staff learn the following simple script:
- “It uses some of the world’s best Hologram technology to make dinosaurs that are very lifelike.”
- “You and your family do ten different things in a dinosaur adventure.”
- “You pick up holographic grass to feed a brontosaurus.”
- “You fly through the air with the pterodactyls.”
- “The dinosaurs are real life sized so some of them are seven metres tall, but don’t worry if they step on you, they’re made out of laser light, so you won’t get hurt!”
24 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS Staff Sales Pitch “Dinosaur World” P.O.S. Revenue Data
The figures below are the raw revenue figures from our Point of Sales system for the first 3 months of operation of our “Dinosaur World” Hologram Entertainment Centre on the Gold Coast, before we had to close for a few months due to COVID-19.
NOTES: 1. We made an average of $17,000 revenue per week from a 150sqm space 2. Our Holographic Entertainment Centre made double what it cost to run 3. $200,000 revenue in first 3 months 4. Our expenses for the first 3 months were about $100,000 5. These figures prove that the business is profitable and sustainable.
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 25 Social Media & Advertising Strategy
Euclideon Holographics has a holistic Social Media and Advertising strategy that we use to bolster our revenue and attract new customers to our Holographic Entertainment Centres.
The efficacy of our strategy has been proven by the excellent revenue our Holographic Entertainment Centre has generated - over $200,000 in 3 months, from a small floor space in a shopping mall, with no huge and expensive media campaign. Normally when a business is new and needs to attract new customers, a large, expensive media campaign is seen as the way to start. However, the great thing about Social Media is that, when used correctly, it can act as a very cheap but also very powerful force multiplier in terms of brand awareness and we have created a new strategy that is very cost-effective and powerful.
The majority of our paid advertising will take place on the internet and Social Media. We will give away four promotional sessions a month as prizes in Social Media competitions, this incentive is used to get thousands of “Likes” and “Shares”. In addition, we do YouTube advertising in each region with 6-second commercials, these are a very cheap form of advertising that generally costs less then 1c per advertisement.
In addition to these forms of advertising there are numerous times in the dinosaur adventure where people are encouraged to pose for a photo, the real purpose of this is because many people put their photos on Social Media which encourages their friends and family to visit and builds great brand awareness. Many of our 5-star product reviews on Google and Facebook include these images, which is a great outcome.
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26 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS Social Media & Advertising Strategy Merchandise & Toy Sales
Star Wars, Iron-Man and Harry Potter - what do all of these Hollywood movies have in common? Amazingly, they all made more money from merchandise sales than from actual movie tickets! In fact, many of these movies have made over $10 Billion from merchandise sales.
At Euclideon Holographics we recognise that Merchandise & Toy Sales is a very important aspect of any retail family-orientated business. It is a universal fact that children love to buy merchandise after they have finished playing a game or watching a movie - toys allow them to use their imagination in a more creative away after they have finished experiencing the entertainment. In some ways our Hologram “Dinosaur Adventure” entertainment title is like a giant advertisment for merchandise.
We have found that merchandise can add around 10% to our revenue from Hologram Entertainment Centres. Merchandise arranged in an eye-catching fashion around the front of our Entertainment Centre also doubles as a powerful lure to attract new customers - it is human nature to be attracted to shiny things. We have created a variety of different kinds of attractive branded “Holographic” merchandise like place-mats (featuring an optical illusion effect), key-hangers with sparkling liquids inside them, etc. Naturally we will extend this range with more themed merchandise to match our future Hologram Entertainment Titles.
To keep costs down, we order merchandise in bulk. We are generally able to mark up merchandise between 3 to 6 times, resulting in a healthy profit margin.
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AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 27 But What About COVID-19?
Click HERE to watch a video about our response to COVID-19
In the aftermath of COVID-19, customers will be keen to visit our Hologram Entertainment Centres thanks to our amazingly hygienic and safe setup! Our hygiene strategy is as follows:
1. All of our Hologram Rooms, Arcade Machines and Birthday Party rooms will be fitted with Ultra-Violet light tubes. These will activate after the rooms are cleared. They kill 99.9% of airborne viruses and bacteria.
2. All of our “wands” and 3D glasses are manufactured from hard plastic that is easy to disinfect (unlike “Virtual Reality” headsets with their huge foam pads that press on your face!). We are creating Ultra-Violet sterilisation boxes for these devices to be super safe.
3. Fortuitously, our Hologram Rooms already offer an enclosed, 4m x 5msocially-isolated space that only family groups enter one at a time, unlike traditional arcades or cinemas.
Euclideon Holographics expect that our Entertainment Centres will be very popular after the pandemic, for the following reasons:
1. Few people will want to use traditional arcades with their hundreds of tactile, germ- bearing surfaces and large, open rooms filled with thousands of people (the opposite of our small, isolated Hologram Rooms).
2. Few people will want to visit cinemas, with their large open spaces crammed with people and spongy germ-magnet seating.
It is important to consider that after the COVID-19 pandemic, few people will wish to go on expensive overseas holidays, stay in luxury hotels etc. However, families will still want to be entertained and they will overwhelmingly choose cheaper forms of entertainment, like Family Entertainment Centres.
28 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS But What About COVID-19? Competitor Analysis - U.S. Summary of Unites States Competitors: April 2020 This section will discuss the entertainment attraction market in the US, and present some of the major competitors. Whilst these companies do not have Hologram devices, they are competitors in the sense that they are also in the entertainment market, and they are competing for the same customers as we are.
The Entertainment business is doing very well for everyone involved and is hugely successful. Investors are putting a lot of money into this industry at the moment and many of the large Family Entertainment Chains are adding hundreds of new stores. This section will be looking at the success of others in this industry. Interestingly, all of these chains started in Texas, where we will be opening our first Holographic Entertainment Centre too!
It is unknown why all major family entertainment center chains began and are headquartered in Texas - lower corporate taxes may play a role, or better access to investment capital. Personally we have choosen Dallas, Texas as our headquarters because our US Head of Operations lives there and knows the area well, but seeing that all other groups are also headqaurted there is a good sign for us.
Dave & Buster’s Entertainment, Inc. (PLAY)
Dave and busters is a chain of American family entertainment centres, combined with a food restaurant. Their major expansion has taken place between 2014 – 2020, opening an additional 32 stores in 2019.
Started 1982 in Dallas, Texas. Headquarters in Dallas, Texas 137 locations of different sizes. Made $1.2 Billion revenue in 2019
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 29 Chuck E. Cheese
Chuck E. Cheese is a chain of family entertainment centers that focuses on birthday parties and children under 15.
They have 525 stores in the US with and additional 87 stores across South America and Canada. In 2019 they made $912 Million in revenue. They also began in Irving Texas, where they are now headquartered.
Their main point of differentiation was animatronic characters that performed every 30 minutes. In 2014, they removed the animatronic characters, and swapped the “tickets” you win for a card reader system, they also redesigned hoping to capture more of an older audience, their revenues have increased by around $60 million a year from their redesign.
Main Event Entertainment
A family entertainment center that in most regards is similar to Dave & Busters. They also began in Texas, their headquarters are in Plano, Texas. They have 43 locations across America. The company was started by the Australian entertainment company Ardent Leisure. Revenue in 2018 was $97 Million.
30 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS Rainforest Cafe
24 restaurants, revenue of around $108 million a year, also started in Texas with headquarters in Houston.
Rainforest Café is often considered a good example of a business that is very poor at expansion. All their stores do very well yet they have failed to expand quickly across the US, and have only opened 3 stores outside of North America and even they were through external operators.
Top Golf
Very different from normal golf. The venue gives a group of friends a small booth where they are served food, whlst they hit golf balls out to targets. The golf balls have microchips in them to register the players’ success.
Also headquarted in Dallas, Texas. They have 52 locations but have done most of their expansion in the last 7 years. Their 2016 revenue was $756 million, with the belief that they will reach $1 Billion revenue by 2022.
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 31 Competitor Analysis - Australia
Summary of Australian Competitors: April 2020 This section will discuss the entertainment attraction market in Australia, and present some of the major competitors. Whilst these companies do not have Hologram devices, they are competitors in the sense that they are also in the entertainment market, and they are competing for the same customers as we are.
The Entertainment business is doing very well for everyone involved and is hugely successful. Investors are putting a lot of money into this industry at the moment and many of the large Family Entertainment Chains are adding hundreds of new stores. This section will be looking at the success of others in this industry.
TIMEZONE
TIMEZONE is one of the biggest brands across Australia and New Zealand.
- Beginning with one store in Perth, they have expanded to have over 250 stores with around 15 new stores opening each year.
- Their flagship store in Surfer’s Paradise (Queensland, Australia) is reported to make around $11 million a year (Source: Juan Jibe, Store Manager). - In 2017 Timezone spent $110 million to buy AMF Bowling’s 50 stores and turned them into Timezone stores. - In 2018 TEEG invested $216,000,000 to buy 50% of Timezone.
https://en.wikipedia.org/wiki/Timezone_(video_arcades)
https://www.afr.com/street-talk/timezone-owner-taps-funds-for-300m-recap- 20190516-p51nxn
32 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS Funlab
- Owns 25 stores - Brands include: Sky Zone, B. Lucky & Sons, Archie Brothers, and Strike Bowling - In 2016 Next Capital bought 70% of the business for $43,200,000. - Next Capital reports that Funlab made over $72 million revenue last year.
https://www.fun-lab.com/
https://www.afr.com/companies/retail/next-capital-mulls-exit-options-for-funlab- owner-of-strike-bowling-20190207-h1ayj1
iPlay
- Now has 17 locations - Makes around $14 million in revenue per year. - Whilst Timezone and Funlab have collected investment, iPlay’s business has expanded entirely from the profits of its previous Centres.
https://www.iplayaustralia.com.au/
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 33 MillionLife Million Life has 16 arcades. They are very different from other arcades because they only have crane games. Million Life has opened all its stores in just 9 months. They average around $5,760 a week per store. The entire business makes around $5,040,000 a year, with expenses predicted to be around $3,240,000.
What we can learn from this business? Crane games are becoming increasingly popular. The advantage of a crane game is that a customer gets excited because they know that they are playing to win a certain prize, alternatively at Timezone people get points on a card that they then take to a prize counter.
With Timezone’s system people do not know what the points are worth until the end, and they are not aiming for a certain prize. We agree with this logic and so we have created toy vending machines that have been built directly into our devices. Every 1,000 points a toy is given, or in a two-player game the winner gets a toy. Such toys cost around 20c-30c; the cost of a two-player game is around $3 ($1.50 each player). The Global Entertainment Attraction Industry - There are 35,000 family Entertainment Centres in America. - There are 22,000 family Entertainment Centres in Europe. - There are 64,000 family Entertainment Centres in Asia. (Source: Alex Orban, Head of Business Development at Namco America)
The Right Thing at the Right Time In the past three years many large retail shopping chains have been closing down because more and more people prefer to buy directly over the internet. Malls worldwide are very concerned about their future. Traditionally malls have been around 80% retail and 20% food, however many malls have taken the view that they should be 50% retail and 50% food and entertainment. Movie theatres, bowling, and computer game arcades have served the entertainment industry well, but the public is hungry for something new. Hologram entertainment seems to be the right thing at the right time.
The Recipe for Repeat Customers The most important question in the entertainment industry is “are people having fun?”. Hologram entertainment is a communal activity, it’s something to do with your friends and family. People enjoy watching their friends scream as they jump off cliffs, get stomped on, or get eaten. The biggest part of the entertainment is people watching each other. Customers often return to play “Dinosaur World” a second or even third time, with some attending every week just to have the experience again.
34 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS How To Join This Opportunity
1. Seek your own independent financial advice to see if this opportunity is right for you. 2. Email [email protected] for the Investor application form. 3. We will complete an investor background check on you (a requirement of our Board). 4. You and Euclideon Entertainment will both sign the agreement 5. Deposit the money in the Euclideon Entertainment bank account. You will receive your share certificates within 30 days. 6. Your Centre will be built within 70 days (barring unforeseen problems as per Agreement). 7. Euclideon Entertainment will look after all operations. You will receive regular updates. 8. Locations of new Centres will be announced 30 days before signing a lease so that share holders will have a chance to voice their opinion on the new Centre location. 9. After opening, dividends will be paid according to the terms of the agreement. 10. You may visit any Centre for free with your friends or family according to the terms outlined in the agreement. 11. At the end of your first year we will have a discussion with you regarding whether you would like to increase your investment in Euclideon Entertainment.
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 35 Important Financial Figures (Part I) Holoverse Dinosaur World
Revenue of Dinosaur World in First Three Months: $200,000
Current Predicted Income for Dinosaur World This Year: $800,000
When We Add 50% Revenue For HoloSports, Hologram Arcade Machines & Birthdays: $1,360,000
Estimated Annual Expenses: $300,000 to $350,000 Longer opening hours may add an additional $50,000 to these expenses. This figures is comprised of $100,000 rent, staff @ $21/hour with 1.3x overhead. Open 80 hours per week. More expenses are detailed later in this document.
Predicted Profit for Dinosaur Centre: NOTE: Sales taxes & local taxes vary from country to country - you $1,000,000 need to add those to these figures.
36 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS Important Financial Figures (Part II) Session Costs $32 Per Person Hologram Session + 3 Arcade Credits $100 Per Family Hologram Session + 3 Arcade Credits Per Person $25 Per Person 16 Arcade Game Credits
Cost to Setup A Small Hologram Entertainment Centre: $200,000 2 Hologram Rooms Predicted Revenue: $450,000 Predicted Expenses: $300,000 Profit: $150,000
Cost to Setup A Large Hologram Entertainment Centre: $420,000 3 Hologram Rooms, 6 Arcade Machines + Others Predicted Revenue: $1,200,000 Predicted Expenses: $350,000 Profit: $750,000
Cost To Setup First Dinosaur Centre (Established 2019): $266,000 The existing Dinosaur World Centre has 4 Hologram Rooms. Each cost $40,000 to purchase from Euclideon Holographics. On top of this, another 40% was required for the setup costs of the Centre.
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 37 Yearly Return Potential
These figures show what an investor may get based on the existing Dinosaur Centre financial figures as of 1 March 2020.
Our existing Dinosaur World Centre has 4 Hologram Rooms. Each cost $40,000 to purchase from Euclideon Holographics. On top of this another 40% cost is added for the setup of the Centre. So the cost to build our current Dinosaur World Centre was: $266,000
An investor would invest this amount and own 40% of the profits from this Centre. The Centre made $200,000 in the first 3 months, and is expected to make $800,000 in a standard year. From this we deduct $350,000 expenses and sales taxes, leaving profits of $370,000. Financial returns to investor according to current performance:
$148,000 Per Annum 55% Return on Investment
To this we hope to have 50% additional revenue from our new HoloSports experience being added. New revenue with HoloSports is estimated to be $1,200,000 with $710,000 profit. Estimated Financial returns to investor once HoloSports has been added: $284,000 Per Annum 106% Return on Investment
38 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS Worksheet: Cost Calculations (1 of 3)
8,000,000 This Investor Worksheet is designed to be filled out by the Investor in order to determine the earning potential of their own Holographic Entertainment Centre.
Existing “Dinosaur World” Centre (Gold Coast) 1 Our existing “Dinosaur World” Centre has 4 Hologram Rooms. It makes around $1,200 on a school day, around $2,500 on a weekend day, and around $4,000 on a school holiday day. Dinosaur World on the Gold Coast is predicted to earn around $800,000 to $1.3million, based on existing first three month figures. We have made $200,000 in the first three months without adding HoloSports or any Hologram arcade machines. Expenses are predicted to be around $300k to $350k. as such profits are presumed between $450k to $950k.
Important Values Required For Calculations 2 1. There are 175 non-school days and 190 school days in a calendar year in Australia (other countries may vary) 2. Our POS revenues show that, on average, a non-school day will make 3 times more than a school day 3. A normal shopping mall e.g. Westfield has a utilisation rate of 61 hours/week (incl. weekends) 4. In Australia, 35% of the population is from 5 years old to 28 years old
Potential Earnings Formula (By Demographic) 3 1. What is your potential number of customers in an area? Equation: Number of people that frequently go to the mall. 2. Multiply that number by the 35% in the target demographic 3. Multiply by the number of times you think they will return. 4. Multiply by how many of the target demographic you think will actually attend. 5. Multiply by $32 per session average fee
E.g. Chermside has 439,600 people in its area X 35% = 153,860. X 2 returns per person= 307,720. X 25% will actually attend = 76,930. X $32 per session average = $2,461,760 AUD potential earnings. This figure will help you to decide how big your Entertainment Centre should be.
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 39 Worksheet: Cost Calculations (2 of 3)
Maximum Earnings Formula 4 1. Number of hours mall is open (typically 61hrs) X 2 for 2 sessions per hour (28 minutes each). Choose 61 hours or 91 hours, depending on your lease agreement etc. 2. Multiply by number of rooms (e.g. 4) 3. Multiply by average price per session ($65 on Gold Coast) 4. Multiply by 52 weeks in the year
e.g. Calculation for 61hours a week: (standard mall operating hours) 61hrs X 2 sessions = 122. X 4 rooms = 488. X $65 session price = $31,720. X 52 weeks per year = $1,649,440.
e.g. Calculation for 91.5hours a week: (open at 10am close at 11pm) 91.5hrs X 2 sessions = 183. X 4 rooms = 732. X $65 session price = $47,580. X 52 weeks per year = $2,474,160.
Staff Expenses Formula 5 1. Number of hours open per week 2. Multiply by 52 weeks per year 3. Multiply by cost of a staff member 4. Multiply by 1.30 (this includes superannuation plus overtime payments)
min wage 7.25 +30% overhead - $10 manager wage e.g. In Australia in 2020 the cost of an employee is: under 17 years of age = $13.79 per hour after 3 months = $14.31 17 years of age = $ 16.30 after 3 months = $16.91 18 years of age = $ 18.81 after 3 months = $19.53 19 years of age = $21.31 after 3 months = $22.13 20 years of age and over = $25.08 after 3 months = $26.03
40 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS Worksheet: Cost Calculations (2 of 3) Worksheet: Cost Calculations (3 of 3)
Other Expenses Formula 6 1. The average rent in a Westfield Shopping Mall is $1,000 (ranges from $400 - $1,200) 2. You are going to need at least 25sqm per room plus at least 10sqm for reception
An average Centre is expected to be around 120 square meters, with larger Centres being around 250 square meters: EG: 800 x 120sqm = $96,000
Other expenses include: POS: $3000 p/a, Advertising: $8,000 p/a, Utilities: $8,400 p/a, Accounting: $5000 p/a, Maintenance: $4000 p/a, Insurance: $3000 p/a. These additional expenses add up to: $31,400
e.g Expenses for 61hours a week: (standard mall operating hours) = $213,998 e.g Expenses for a 91.5hours a week: (open at 10am close at 11pm) = $257,292
Daily Earnings Breakdown (Seasonal) 7 In any entertainment business there are busy times , and quiet times. It is standard practice to divide the over all expenses according to the estimated income of these times. This gives a far more accurate picture of weather the business is running on track. The information below spreads out the operating expenses according to the proportion of revenue expected on various days.
This type of daily earnings breakdown is commonly used in the shopping mail/retail industry to monitor daily takings - for example, just because an entertainment outlet does not break even on a Monday, does not mean that it is unprofitable, because it may earn 4 or even 6 times more on a Saturday or a Public Holiday.
Seasonal Ratio: Different days have different seasonal earnings. In order to accurately estimate revenue and expenses on different types of days, we use the following ratio: Divide the figure you want to make seasonal into 20 pieces. Multiply by 5 for School Days Multiply by 7 for Medium Non-School Days (Weekend days - Saturday, Sunday) Mutiply by 8 Pieces for High Non-School Days (Non-Religious Public Holidays)
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 41 Worksheet: Daily Earnings Breakdowns
Daily Earnings Breakdown (Seasonal) 8 Seasonal Day Ratios (For Revenues & Expenses): Divide one of the figures above by 20 to get the Ratio Value (RV). RV x 5 x 190 School Days RV x 7 x 100 Medium Non-School Days RV x 8 x 75 High Non-School Days (Non-Religious Public Holidays)
“Maximum Per Day” is based on an average price of $50 per session. Our Gold Coast Centre average is $65 per session, and can go as high as $100.
At present our Gold Coast Centre makes around $1,200 on Dchool Days, $2,000 on Medium Non-School Days, and $3,800 on High Non-School Days. The ratio is slightly different because the Gold Coast is a tourist destination and is generally open late at night, whereas this document is made for Shopping Malls which generally shut earlier, and school days are expected to make less revenue.
Amount We Want Must Make On School Must Make on Medium Non- Must Make on High Non- To Make Days School Days School Days
$150,000 $197 $525 $800 $180,000 $236 $525 $960 $216,000 $284 $756 $1,152 $270,000 $355 $945 $1,440 $320,000 $421 $1,220 $1,706 $370,000 $486 $1,295 $1,973 $500,000 $657 $1,750 $2,600 $600,000 $788 $2,100 $3,210 $700,000 $919 $2,450 $3,640 $800,000 $1,051 $2,800 $4,160 $1,000,000 $1,3140 $3,500 $5,200
Max. Rev. Per 8 Hour Day Max. Rev. Per 10 Hour Day Max. Rev. Per 12 Hour Day Rooms Revenue Rooms Revenue Rooms Revenue 1 Room $800 1 Room $1,000 1 Room $1,200 2 Rooms $1,600 2 Rooms $2,000 2 Rooms $2,400 3 Rooms $2,400 3 Rooms $3,000 3 Rooms $3,600 4 Rooms $3,200 4 Rooms $4,000 4 Rooms $4,800 5 Rooms $4,000 5 Rooms $5,000 5 Rooms $6,000 6 Rooms $4,800 6 Rooms $6,000 6 Rooms $7,200 7 Rooms $5,600 7 Rooms $7,000 7 Rooms $8,400
42 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS Worksheet: Daily Earnings Breakdowns Investment Structure Structure of the Shareholding Entity Euclideon Holographics owns a subsidiary company called Euclideon Entertainment Pty Ltd. It is Euclideon Entertainment that will own and operate the Entertainment Centres.
Rather than having many different Entertainment Centres that are all individually owned, many Entertainment Centres will be owned by one company called Euclideon Entertainment. Every time a new Centre is opened, new additional shares will be created and sold to investors. This money will be used to create and set-up the new Centre.
For every share issued to an investor, an additional 1.5 shares will be issued to Euclideon Holographics because Euclideon Holographics will continue to supply regular new content and will sell all equipment to Euclideon Entertainment at cost price. Because of this Euclideon Holographics will always own 60% Euclideon Entertainment.
Some may question this practice, but it is the same as if Euclideon Holographics continued to open new Centres and each time they sold off 40% of the shares for each Centre.
Advantages of All Centres Being in One Company In traditional franchise models there are constant territorial disputes. Either a territory is too small so a neighbouring store is taking your returns, or a territory is too big so the company is missing out on profits that it could have had. By joining all investors together in one entity, we have removed the difficulties of territorial disputes.
Traditionally in a franchise model, many people may have Centres that are performing well, while a few Centres may be performing poorly. To a franchisee who has a poor performing Centre this can be devastating. By putting all Centres together and sharing the profits, all our investors have a significantly better chance of avoiding disappointment and financial harm.
As one company, that is 60% owned by the equipment manufacturer, it is in Euclideon Holographics’ best interests to give the company every support it can and produce good quality content in the fastest time period.
Price wars severely damage many businesses. As one company there can be no price war with different Centres dropping the price of their attractions. If prices do drop, it will be according to what the region can pay, but it will not cause an unfair advantage or disadvantage to any individual within the company.
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 43 Information on Intended Use of Funds Of investment monies received: 60% will be used to purchase equipment from Euclideon Holographics at the following discounted prices:
Hologram Rooms: $40,000 (AUD) (normally around $150,000) Hologram Two-Player Arcade Machines: $20,000 (AUD) (normally around $75,000) Hologram One-player Arcade Machines: $12,000 (AUD) (normally around $40,000) Giant Touchscreen Machines: $5,000 (AUD) (normally around $25,000)
With the remaining 40% being used for the following expenses: - Decoration of the Centres - Installation of equipment - Lease negotiation - Lease bond if applicable - Staff training - Any other expense involved with the set-up of the new Centre
All remaining funds will be put into the Euclideon Entertainment treasury to support later expenses. It is important to take note of the fact that traditional arcade Centres typically cost at least $6,000,000 (AUD) to establish, due to the high price of arcade machinery. Euclideon has found a way to produce arcade machinery at a fraction of this cost.
Operation of the Centres and Board Representation The investors are only expected to make a financial contribution, there is no expectation that they will set-up the Centres, arrange staff, rent, or manage the individual Centres. All such duties will be executed by the Euclideon Entertainment company who will be controlled by Euclideon Holographics through joint staff, as well as control of the board.
Board Representation Euclideon Entertainment is a non-wholly owned subsidiary of Euclideon Holographics. The board will consist of two director-voting seats that will be occupied by representatives from Euclideon Holographics. At Euclideon Holographics’ discretion, they may add additional directors who have relevant skills to improve the growth of the company. For every new director joining the board Euclideon Holographics will also gain another director- voting seat. As such, Euclideon Holographics will remain in control of the Board.
Dividends and Profit Split Whilst it is common for technology companies to reinvest profits into further expansion, this company will work differently. Instead of reinvesting profits, all further expansion will be done through further investment and the issuing of new shares. Profits will be paid as dividends to both investors and Euclideon Holographics according to the ratio of shares they own. This will happen two to four times a year.
44 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS Profit Dilution From Less Successful Centres Let us assume that 10 Centres were opened that each returned a very good dividend to investors. Then the company opened another 10 Centres in less lucrative countries (e.g., India, Indonesia, Russia, South America). If this happened investors would be concerned that their returns would diminish because these less successful Centres had entered the company. Whilst even a 25% return would still be good for a new investor, existing investors would be worse off.
To rectify this problem, we will have more than one Euclideon Entertainment company. This first one will have the purpose of opening Centres in very profitable markets, other Euclideon Entertainment structures will open Centres in less profitable areas. As mentioned, this first Euclideon Entertainment structure will focus on locations perceived to be highly profitable. These profitable markets will be very carefully selected, and Shareholders will have a chance to voice concern before the leases are signed.
Later Euclideon Entertainment companies will be opened to focus on less profitable regions (even though they are less profitable we still expect good returns). Existing Shareholders will have the first right to invest in these new structures that are less profitable if they choose to do so. Such structures may open Centres in other countries, or within different regions within a country, (e.g. Las Vegas vs. Detroit). If additional Centres are funded externally from this structure, they will not be within a 30-minute average travel time of existing Centres funded by this structure.
Concerns Regarding Profit Distribution Strategy Some investors may be concerned regarding the following: 1. If there are three active Centres, 2. Then new investors fund another three Centres, 3. Then these new investors will be Shareholders, 4. And so, before these new Centres are built, the dividends that the new investors receive will halve the profits of the earlier investors.
This problem will be dealt with in the following way: New investors will receive shares when they put money in. But they will not receive their returns until new Centres are opened. The money they invest will be connected to the opening of a specific Centre and they will not receive dividends until their Centre/Centres have opened.
If you are a later investor, you agree that: 1. Euclideon Entertainment will not pay you a dividend until the new Centre that your investment is connected to is opened, and;
2. Once it is opened, your first dividend will be directly in proportion to the time in which your Centre was open before the dividend was paid.
After this first dividend you will be paid your dividends in the same way a normal Shareholder would be.
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 45 Operational Matters Investors Need To Be Aware Of The current Dinosaur World on the Gold Coast will be included as Euclideon Entertainment’s first Centre, and investors will share in its existing profits, in exchange for the cost of the formation of the Centre.
Experienced negotiators formerly employed by Westfield & MIRVAC will hunt for suitable locations for these first ten sites. It is expected that the first site will open 70 days after initial investment, with each new Centre taking 10% less time to open until we reach a Centre opening every 15 days. However, this is an estimate of expansion times and is not binding (for reference Dinosaur World took 25 days to create and open, but this does not include lease negotiation times).
Whilst some figures presented are based on the success of the current Gold Coast Dinosaur Entertainment Centre, no figure in this document should be taken as a guarantee of revenue for the investor. If you are considering investment you should seek independent financial advice before proceeding.
The investor is aware that all businesses have risks associated with them, such risks may vary from region to region. They include but are not limited to: political conditions that may affect profits, inability to obtaining legal permissions for some elements of the business (e.g. it is not legal to win toys as prizes in Japan), unstable supply of prizes or components necessary to continue running all elements of the business. Euclideon Entertainment will keep a good supply of what is needed and will work with all regions to make sure that risks are understood or minimised when entering a new region.
In some countries (e.g. China, India, Russia, and the Middle East) Euclideon Holographics may set-up Entertainment Centres that are not part of the Euclideon Entertainment entity that you are investing in. This may be for legal reasons, or because Euclideon Holographics has partnered with an existing operator in that region.
The investor understands that the company is created to set up new Entertainment Centres. Its activities are global and such Centres will be set up in different locations around the world. Euclideon Entertainment is aware that existing Shareholders would prefer Centres to only be in the most profitable regions as less profitable regions would diminish the investors communal returns. Centres that are funded by this company will only be in the following countries: Australia, New Zealand, USA, Canada, England, Germany, France, Sweden, Norway, Finland, Switzerland, and Austria. Other countries may be added to this list if they have a similar average income.
This existing structure spoken of in this document will fund a minimum of 10 Centres before any other structures are used in other regions. This should secure a good ongoing return for existing investors. Euclideon Holographics will sell equipment to the company at the prices shown, these prices will be reassessed each year and if cost of components or production has risen then the price will rise accordingly.
46 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS Increased Yearly Returns As The Business Expands Disclaimer: Modelling uses easy to understand whole numbers. It indicates a Centre costs $200k, and its profits will be $500k. This is for the purpose of illustrating how later investors will increase the returns for earlier investors. These numbers are not to be taken as a guarantee of income, profits, or set-up costs.
The following example demonstrates how later investors will increase the returns of those who invested earlier. This example will use 100% return for ease of showing the calculations. In reality there is no guarantee of 100% return, the return could be 80%, 50%, or lower. The main message is to show how later investors entering at higher valuations will increase the returns of earlier investors. This is due to earlier shares being cheaper - earlier investors are NOT being paid by later investors. Instead, early investors benefit more as the revenue of the group as a whole grows, due to their more valuable shares.
Demonstrative Example If you invested $200k to build the first Centre - for this, you would own 40% of the company. Assuming that the company returned $500k profit - you would receive $200,000 as your yearly return. Summary: One Centre, your yearly return is $200,000
Assume a second investor also invests $200,000 to build a second Centre – you would then dilute to 20% ownership of the company. Now assume that both Centres returned $500,000 profit each – you would then still receive $200k as your yearly return. Summary: Two Centres, your yearly return is $200,000
Assume that, due to the high returns, the company increases the price for new shares that are sold, and so a third investor invests $200,000 to build a third Centre, but they bought their shares at triple the price. This is reasonable as they would still be receiving a 33% return on their money. They will still pay $200,000 but will only receive one third of the shares. Now there are three Centres, each returning $500,000. In the first two Centres shares were sold at $1 each, but in the third Centre we will assume that shares are sold at a price of $3 per share. The company’s total shares are 1,165,000, of which you still have your 200,000. Of the $1.5 million in profits from the three Centres you would receive: $257,510 as your yearly return. Summary: Three Centres, your yearly return is $257,000
Assume that three more people invest $200,000 at the new price of $3 per share - now the company has six Centres, making profits of $3,000,000. The company now has 1,666,660 shares in total, of which you still own 200,000 shares. As such, your yearly returns are now $360,000. It is as though you had a return equal to that of 72% of a Centre rather than the 40% you began with. Summary: Six Centres, your yearly return is $360,000
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 47 Investment Exit Strategy How important is an Exit Strategy?
In most companies, profits are reinvested to grow the company. The shareholders are normally not paid dividends, and eventually investors make money when the company is listed on the stock market.
In the above traditional model an exit strategy is crucial because it’s the only way a person would receive a return on their investment. However in our model, growth is done through adding further investment, and dividend are paid regularly. So, dividends are the main source of income rather then sale of the investment. This allows investors to more directly and quickly benefit from the revenue generated by the company, rather than waiting potentially years for shares to increase in value and then have an uncertain outcome when going to IPO on the stock market.
If a person had shares in this company that supplied a regular income, and they choose to sell those shares, then they would have to go looking for a better investment to spend that money on that would supply a better income stream then this one does. Investments with such high returns are very rare, so finding a better replacement investment may be difficult.
However, situations may still arise were a person would like to sell their investment, so we have supplied a convenient mechanism to do this. This can happen in one of two ways:
1) The shareholder can sell to someone they personally know as a private sale, or; 2) Via our sales share register (explained below).
Normally new investors will be offered new shares to build new Centres, however in the third year of operations, Euclideon Entertainment agrees to open up a register where existing share holders can sell their shares to new investors who are coming in to the company. After the initiation of the register, 15% of new investor money entering the company will be spent on buying out existing share holders who want to sell.
New investors will buy your existing shares at the same price as they would have paid for new shares that would have built new Centres. The advantage to the new investor is that they would prefer to buy your existing shares because then there is no waiting time to set up new Centres before they receive a return.
48 [email protected] euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package AUS Derek Van Tonder Head of Investor Relations
Hi, I’m Derek Van Tonder, Head of Investor Relations at Euclideon Holographics. Please feel free to call any time between 8AM and 5PM Brisbane, Australia time (AEST), Monday to Friday. I am alwys happy to answer any questions.
[email protected] +61 400 789 577
AUS euclideonholographics.com EUCLIDEON ENTERTAINMENT PTY LTD - Investor Info Package [email protected] 49