I'm no expert, but here's a few numbers to think about:
From the last 10Q:
Results of Operations.
(a) Revenues.
The Registrant reported approximately $27,000 and $58,000 of gross income for the three and six months ended June 30, 2004, compared to $37,000 and $79,000 for the three and six months ended June 30, 2003. This represents an approximate 27% decrease for the three and six months ended June 30, 2004 compared to the prior periods. The decreased revenue was due to the change in business focus from consulting services to DVD and video game rentals. Overall, the Registrant reported approximately $(17,000) and $9,000 gross profit (loss) for the three and six months ended June 30, 2004 compared to $37,000 and $79,000 of gross profit in the prior periods. For the three and six months ended June 30, 2004, the Registrant
primarily spent its efforts on redesigning its website and developing its marketing campaign which in effect resulted in an overall decrease in gross income as compared to the prior periods.
(b) Advertising.
The Registrant reported approximately $1,571,000 and $1,675,000
in advertising expenses for the three and six months ended June 30, 2004 compared $-0- in the prior periods. Advertising expenses increased as result of the marketing campaign through television advertising and is anticipated to continue at similar levels in next six to twelve months.
**********************************************************
Now...They had just started the website at the end of May, so they had only a month or so of real operations, and I would wager to say that many, if not most, of their subscribers were in the Trial Period, and so, not getting charged for their service. Yet, they still had a little over 4000 subscribers at that date. Now, the website has improved to a point people are being charged, and revenues should be flowing in at a "regular" rate. So...Have they still got those 4000 subs? I'm guessing yes. I am also guessing that maybe they've increased sub numbers, due to more advertsing (the affiliate program was not operational last quarter, which ended September 30). How many more? Let's say they got 2000 more (paying) subscribers. Let's assume they got 500 in July, 1000 in August and 1500 in September (as word spreads, numbers get larger). Revenues would them be:
July (4000 original subs plus 500 new): 4500*$18=$81,000
August (4500 plus 1000 new): 5500*$18=$99,000
September (5500 plus 1500 new): 7000*$18=$126,000
That gives the last quarter a revenue total of $306,000, or, as I would love to see as a PR headline: More than a 1000%increase in revenues
From the above filing excerpt, we also know that advertising expense, which will be, by far, their largest expense IMO, is about $1.5 million per quarter, and are likely to remain that way for the next couple quarters. So how many subs will it take to bring in enough revenue to pay for that? Well, $1.5 million, divided by 3 is $500K per month. Divide that by $18, and that give us roughly 28,000 subs needed to equal the advertising expense. Assuming, as we did above, that they had 7000 subs as of September 30, they need roughly 21,000 more. How effective will the affiliate program and online banner campaign be? Can we say they will get twice as many subs as they could get so far? That's 14,000 more right there. Can they get subs at 3 times the previous rate? Maybe. We're talking 230 subs a day through the end of the year. How many subs will come from Super Bowl exposure? 75 million people watching...will at least 20,000 of them become subs (.026% of the viewing audience)? More? If so, this company stands a VERY good chance of becoming profitable next year sometime. Just my opinion of course, and I acknowledge this is a VERY simplistic diagram, which doesn't deal with any of the other complexities of the situation besides revenue and advertising (they will be paying affiliates, management and staff, and have other expenses, to be sure)...But you can see the general train of thought here. How many other start ups have you seen hit the ground running so well in their first year? Are the numbers I used above too optimstic? Maybe. Are they too conservative? Maybe (but I doubt it). Use your own guesses, and draw your own conclusions. I know I like the odds. Do you?
Market Data 
Markets 
AI
