|
|
Accounts Receivable – A/R are conservatively projected with 45% of A/R collections occurring in a 1-29 day period and the remaining 55% in a 90-120 day period. The majority of A/R will be outstanding from the distribution company, which receives payment directly from retailers and will subsequently remunerate 3S. Because of the extended nature of A/R in the industry (typically 60 days), 3S will utilize A/R Financing to assist its cash position in the first 27 months of operations. A 3.5% A/R financing fee is incorporated in the financial model. The size, strength and reliability of 3S’s distribution partners will provide a traditional financial institution or an A/R factor with the proper security to create a working relationship for 3S’s paper.
Inventory – Inventory for album releases and upcoming product has been conservatively projected. Despite the fact that lead times for manufactured products are approximately two weeks, 3S’s financial model calculates inventory purchases in the following manner: 30% - 60 days prior to sale and 70% - 30 days prior to sale. The majority of the pre-recorded music product will be stored with the manufacturer and shipped directly to the distributor’s fulfillment/distribution centers. A small amount of sample (1,000 – 2,000 units) and promotional products will be kept on hand at 3S corporate offices.
Accounts Payable- For purposes of this financial model, A/P is separated into two categories: Manufacturing A/P and Artist Royalty/Mechanical A/P. Adhering to the conservative approach, the model is constructed with Manufacturing A/P being paid in the same month that the expense is incurred. Artist Royalties will be accumulated and paid biannually, in August and February.
Project Production Budgets – These vary depending on the genre of the project. Established relationships and affiliations in the industry enable 3S to produce its projects over a 90-day period, for approximately half the typical cost paid by a major label record company. Projects produced through 3S require $120,000 while some while require as little as $50,000.
Marketing & Promotion Budgets – These vary depending on the particular genre of music. Projects produced and released from 3S will be allocated approximately $775,000 while some projects will utilize as little as approximately $250,000. Marketing budgets will be expired through the course of 12-month marketing campaigns.
E-Mail
me at BramigeB@hotmail.com