TCAnetwork

The Christian Animation Network

A Division of The Children's Adventist Network

An Animated Approach To The Plan of Salvation

"...And a little child shall lead them" Isaiah 11:6

678 Kensington Avenue West
Severna Park, Maryland 21146

Phone: 410-975-0802 and Fax: 410-647-0945

WWW.TCAN.ORG

Table of Contents

1.0 Executive Summary

The Christian Animation Network is the alternative in cartoon animation. It's sole purpose is to create, produce and distribute Christ centered animated videos. The unique qualities of TCAN's creativity expand its market to embrace our children as well as the young at heart.

What you see today as The Christian Animation Network's multi-talented corporate structure evolved from a strong, fundamental desire to see all the children of God, young and old saved into the kingdom of heaven. The founders of TCAN were children themselves when they first began designing and producing animated cartoons. Over the past 20 years they've created some of the most fascinating characters in secular animation today. Now the founders, along with other talented individuals on the TCAN's team roster, have children of their own. It is TCAN's mission by the grace of God to teach and proclaim "this message" to all the world. What initially began as an expression of creativity has become a passion and a commitment to provide biblical truths without compromising our fundamental Christian beliefs as Seventh-Day Adventists.

TCAN embraces the challenge of combining the "Bible" and the "art" of animation, by producing unique Bible study guides to thoroughly explain The Plan of Salvation. While The Christian Animation Network has the potential for a broad international base, the United States is our initial primary target market.

Being wholly owned and operated by Seventh-Day Adventist business persons. We have taken on the responsibility and desire to make a difference for all mankind and especially our global community of children . In these last days, more than ever, our youth need our support, understanding and guidance in all biblical and religious matters. For these reasons, we are especially determined to proclaim "...this gospel of the kingdom, ...in all the world for a witness unto all nations" Matthew 24:14. We believe and are convicted that this golden opportunity will make the homes more accessible to literature evangelists and lay persons more than ever before. We here at TCAN believe that "with God all things are possible". Matthew 19:26 Christ said, "And whatsoever ye ask in my name, that will I do" John 14:13 So we ask in the name of Jesus Christ that this venture will further the cause of God, bring glory and honor to Him and hasten His return.

1.1 Objectives

• To produce and establish the 1st 60 minute Flash CD-ROM and Video in a series of 27 based on The Plan of Salvation.

• To provide Christ-Centered video animation entitled "Bibleos"(VHS) and CD-ROM focused on the 27 doctrines of the bible.

• To establish a board of directors which consist of but not limited to educators, theologians, graphic artists, musicians and literature evangelists.

• To establish and organize a distribution network through literature evangelists, publishers and book centers across America.

• To establish an interactive online web site that will be used for the introduction and further study of the Bible lessons. This web site will include the latest in audio and video streaming through Flash technology.

1.2 Mission

The Christian Animation Network was formed in March 2000 with the sole purpose to teach children the Plan of Salvation through Jesus Christ. Our focus and emphasis will be children. However, the medium used will also teach adults. We will accomplish this by using the latest technologies available in animation, CD-ROM development and web site design. We will bring to life the Plan of Salvation based on the fundamental doctrines of the Bible.

TCAN's goal is to illustrate these doctrines in the most simplistic format that will educate the viewer and allow them to teach others.

1.3 Keys to Success

Success to us is allowing the Spirit of God to use us to spread the "good news" of Jesus Christ to all the world. Because the vehicle we have chosen is anointed by the Holy Spirit there is no question of its success. For God says, " So shall my word be that goeth forth out of my mouth: it shall not return unto me void, but it shall accomplish that which I please, and it shall prosper in the thing whereto I sent it". Isaiah 55:11

God also says, in Habakkuk 1:5 "for I will work a work in your days, which ye will not believe, though it be told you". And it is upon this promise that we stand sure of what He has given us to do in our day! The Seventh-Day Adventist church has established global communications via radio, satellite broadcasting, and the internet. The church also has an established infrastructure of schools, medical centers, clinics, publishing houses, book centers and literature work.

These routes of distribution will be key in implementing the deployment of these audio/visual tracks.

However, there are some basic keys to insure our success:

1. Keeping God first in all that we do.

2. Establish a solid and committed team of literature evangelists and lay workers.

3. Utilize all media outlets available for advertising and marketing.

2.0 Company Summary

The Christian Animation Network was formed in March 2000 out of an established corporation that professionally designed and produced cartoon animation.

The management team of TCAN is a dynamic group of professionals representing over 50 years of combined experience in movies, television animation, licensing, merchandising, finance and marketing management. To further compliment our organizational structure is a wealth of talent from a creative team of artists, authors, songwriter and music producers. These artists, along with the management team, bring to bear a powerful compilation of creative vision to The Christian Animation Network.

TCAN's target market group include both children and adults in the United States. TCAN also plans to establish a distribution network within the foreign mission field. This will be accomplished once the U.S. distribution network plan is operational.

2.1 Corporate Structure

The Following is the corporate staff structure of The Christian Animation Network:

2.1.1 The Eternal God

Need we say more?

2.1.2 Harvey L. Palmer, Co-Founder & President

Mr. Palmer is the creator and author of Muscle Dogg" the flagship character of his former company Animated Tune Factory, Inc. A super hero that advocated health and fitness. This character was used nationally by the Muscular Dystrophy Association to help raise money for Jerry's Kids. Mr. Palmer's talents are varied and unique. He has written, composed and produced vast libraries of musical themes for individuals and corporations.

Mr. Palmer and partner William L. Cheatham III launched a cartoon T-shirt campaign during college, marketing his primary characters, Muscle Dogg" and Flex the Flea". This venture proved to be very successful and was the catalyst for former company Animated Tune Factory, Inc.

Mr. Palmer was also the Marketing Director of the Emmy Award winning company, Ages, Inc., a small boutique animation company specializing in computer animation and virtual reality arcade centers.

Among his other talents he is also a songwriter, producer, arranger and composer. He has worked with some of the music industry top secular recording artist and musicians. As the Co-President of The Christian Animation Network, Harvey L. Palmer is committed to the cause of God.

2.1.3 William L. Cheatham III, Co-Founder/COO

Mr. Cheatham began his career in animation in the marketing and development of Muscle Dogg" in 1983. Since that time, he was responsible for developing new product lines for the former company Animated Tune Factory, Inc.. Mr. Cheatham was also responsible for research into the future projects for Animated Tune Factory, Inc., its products and markets, particularly in the areas of licensing, producing a half-hour show, and marketing comic books.

Mr. Cheatham and Mr. Palmer have spent thousands of hours creating and designing characters for their former company. Mr. Cheatham is determined to use his creative and administrative talents towards winning souls for Christ.

2.2 Company Ownership

The Christian Animation Network is a privately owned by Harvey L. Palmer and William L. Cheatham III.

2.3 Start-up Summary

The Short-Term goal of TCAN is to produce and distribute Bibleos Video 1 in the Bibleos Series. This CD-ROM/Video introduces Jesus Christ and begins the animated tour into The Plan of Salvation. We plan to have a small Administrative Staff of 3. We are seeking financial capital to underwrite the cost of Bibleos 1 and Administrative expenses for the 1^st year.

Of course the Long-Term goal is to produce and distribute the other 26 Bibleos. However, we anticipate the revenue generated from Bibleos 1 will fund the subsequent Bibleos CD-ROM/Videos and Administrative expenses.

TCAN is seeking funding to underwrite the 1^st CD-ROM/Video and Administrative expenses. The total Start-Up Requirement is $754,500.00. The 1^st CD-ROM/Video is 1 hour in length which doubles the regular cost of the production and packaging. The other Bibleos CD-ROM/Videos will be 30 minutes in length.

In turn for the financial capital invested, TCAN is offering the Investor and/or Investors 10% of the Net Profits generated from ALL Bibleos sales for the 1^st 3 years. Other deals, offers and percentages can be negotiated with prospective Investor and/or Investors.

Start-up Plan

Start-up Chart

2.4 Company Locations and Facilities

The corporate office will be located in Columbia, Maryland. This office will also serve as the studio for animation and story design and development. The animation production facility to be annouced.

3.0 Products

TCAN has realized its artistic and creative vision of helping spread the gospel by proposing to create and produce fundamental animated Bible stories; entitled Bibleos. Bibleos will illustrate through animation the fundamental doctrines of the Bible. These Bible stories and characters will be developed to allow children to see and understand the only hope that is found in Jesus Christ. And also prepare them for His return. We our committed to providing positive and progressive images and biblical themes especially for children. These Bible characters creatively introduce children to a variety of Bible stories that will enable them to grow closer to Christ. These animated Bible stories will also train our youth to be witnesses and enable them to share the gospel of Jesus!

One thing you will NOT find in the portfolio of TCAN, is a cast of mundane, cookie-cutter characters! The cast of Bibleos Bible characters used will help illustrate each of the fundamental doctrines. As our world grows old and worn from sin we need to revitalize our youth with this message of hope. TCAN is committed to challenging children to learn of Christ and by doing so will thus enable them to make a difference in their family, neighborhood and community.

3.1 Product Description

The primary product of TCAN is the 30 minute animated Bible video entitled Bibleos based on the fundamental doctrines of the Bible . Each of these videos will utilize state-of-the-art technology. The lessons contained in each of the videos will not only teach but illustrate the doctrines in such a way that the child would NEVER forget the message. We firmly trust that these videos will draw children into a closer understanding and relationship with Christ.

And in addition to the videos we are producing an Interactive CD-ROM which can be used to go into deeper study of the doctrines presented in the video. At the end of each of the CD-ROM will be an interactive question and answer section. Each of the videos and CD-ROM will be filled with wonderful music and songs written to have children reflect on what they've learned. Also the CD-ROM can be used as a stand alone item for music.

Lastly, there will be a coloring work book that will also help with the learning of these precious and present truth doctrines.

The external packaging of each of these products are also key. The most colorful illustrations will be used to create within the customer a desire to look beyond the wrapper to the content. At the end of each video a trailer of additional reading materials will be presented

3.2 Competitive Comparison

As stated before there are many animated Bible videos and CD-ROMS available in the market today. This fact is unimportant as it relates to the mission given by Christ, "Go ye therefore, and teach all nations..." Matthew 28:19 However, there are none that teach or illustrate the fundamental doctrines of the Bible. Many of these media mediums are full of error. Bibleos offer children a pure thus saith the lord in an animated format. Parents and grandparents who are truly looking for accurate Bible based media for their children now can find it! And to those who have yet to hear the gospel, Bibleos bring hope and life found only in Christ.

Bibleos takes all fundamental Bible doctrines and places them in an animated medium which has been used for years to entertain children. But now we are focused more on teaching then entertaining. We are going to teach the gospel to children. Not just principals but doctrine. Nothing like this exists in the market today.

To differentiate ourselves from all the others, we stress quality and accurracy contained in each Bibleos video and CD-ROM.

3.3 Sales Literature

We will prepare a simple brochure to accompany the literature evangelist and Bible worker. This brochure will thoroughly explain Bibleos. We plan on making these brochures as attractive as the product itself. The timing and budget is included in our main plan milestones.

3.4 Sourcing

The cost of each Bibleos video/CD-ROM is approximately $250,000.  The cost of the CD-ROM and Video decreases as the number of CD-ROM and Video increases. The source for the production has not been identified at present. Identification of that source will be made available just prior to the production of the videos and CD-ROM.

3.5 Technology

The technology that TCAN has decided to utilize is AWESOME! Its called Flash Technology. By using this technology it allows us to create beautiful animation which can also be used in production of the interactive CD-ROM. Flash technology allows us to keep within our budget for production. Flash also allows the same technology to be out sourced to our interactive websites TCAN.ORG and TCAN.NET.

3.6 Future Products

In the future TCAN plan to develop and distribute bi-products of Bibleos in the following format:

1. Fully illustrated flash cards and study guides.

2. Color illustrated pocket sized Bibleos tracts.

4.0 Market Analysis Summary

Our primary target market is children under the age of 15. There are tens of millions of children who need to hear and understand the Plan of Salvation as it is found in Christ. We are compelled that these Bible doctrines wonderfully illustrated through animation will open the door of that home or business office that would otherwise be closed to the gospel. And will also provide an evening wedge for that important visit by the literature evangelist and Bible worker.

There are many challenges often confronted by Christian families, especially those of the Adventist faith. One of these challenges is finding material that truly helps children understand what we believe as Seventh-Day Adventist.  The other challenge is to find material that can occupy the minds of their children and especially on Sabbath. Material that is in keeping with the observance of the Sabbath. Therefore in addition to our primary target audience we will also focus on the families within the Seventh-Day Adventist church. The reason for our focus on this particular market is elementary. Most, if not all the adult members are familiar with the 27 fundamental Bible doctrines.

According to Richard Rabins, CEO of NewKidCo, one of the leading children's video game publisher reports that in the U.S. alone, there are approximately 43 million children in the under 12 year old marketplace. Analyst projections are that this group's of use of the Internet will grow from the current 25% in 1999 to over 50% by 2003. In addition, the market outside of the U.S. will, over time, be even larger". This information also supports TCAN's plan for its online interactive Internet website.

According to the Minneapolis Star Tribune, the video market is heating up on the web. Also the Star Tribune reports that the online video market is unfolding rapidly as video sales in that market have soared, totaling $9.3 billion in 1997 alone. The report does not break down the different areas of video product but it is a good indicator that the video market for children is booming!

4.1 Market Segmentation

The animation home video industry is often segmented according to demographics (i.e., age and video product type). We prefer segmenting by age and adhering to one product type that being Christian animation video.

Market Analysis (BAR) Chart

4.2 Target Market Segment Strategy

There are approximately 12 million Seventh-Day Adventists world wide. This group of Christians are under served with regards to Bible based video product which support their religous beliefs and convictions. This is why we have selected this market in particular. Currently there are NO Bible based animation videos geared towards Seventh-Day Adventist and we are confident that such a product would be welcomed by this market if it were available. The strategy for reaching this target group would be implemented via the established infrastructure within the denomination. This will be addressed in the Strategy and Implementation section.

By targeting this group of Christian believers we see the potential for enormous financial growth that will help in spreading the gospel. The revenue derived from this well established market can and will assist in the developing of additional programs produced by TCAN in teaching children and young adults the doctrines of the Bible. The revenue generated can also help to financially support literature evangelists and Bible workers.

As it has been previously noted in the Market Analysis section of this plan, that the video animation industry is growing and doing quite well. And that the Christian retail industry is performing at approximately $3 billion a year and growing. We see the the two markets (Under 14 years of age and 15 years of age and up) as a great market for three main reasons:

• One there is a steady growth in the market for Bible based videos.
• Secondly the overall video industry is breaking new profit records in online and retail sales.
• The third reason which is the most important reason is the need to get this message out to all the people.

There are many video manufacturers and producers who are distributing videos but many of them for the sole purpose of entertainment. And sadly, many of these videos are filled with great error! Thats why we are committed to getting our product into this market to help teach and educate our children and young adults on real Bible truths.

Market Analysis Table

Market Analysis (Pie) Chart

4.2.1 Market Needs

There is a great need for the kind of product that we are offering. Since our primary target market is children 14 years of age and under we will focus on supplying the need of this group. In addition to the primary target market our strategy will also focus on the secondary target market segment which we believe will readily see the value of this product and be willing to pay to have this product. Thats why we strongly believe the members of the Seventh-Day Adventist church will see and understand the need for a product of this caliber.

It is our belief that all need to understand the Plan of Salvation and could benefit from the lessons contain within this animated series.

4.2.2 Market Trends and Growth

The home video market for animation in America has basically grown out of nowhere during the last ten years. It started largely with cheaply produced videos of minor television cartoons and old, public-domain theatrical shorts. Today, virtually all of the best animated features ever made in America are available on video, with an increasing number of high-quality features being produced especially for video release by Disney and other top studios.

According to George Johnston of the Hollywood Reporter, "When animation historians look back on significant trends of the 1990s, they may conclude that the decade's most important contribution was in made-for-video animation. And, as is so often the case, the success of made-for-video animation took many in the industry by surprise".

While research showed VCR penetration in the United States at about 90 million, the results astounded even Disney. It didn't take a magic genie (rocket scientist) to figure out that the company had discovered a new gold mine.

Among the major U.S. animation studios, Disney is not alone in recognizing the potential of made-for-video animation. According to Universal Home Video president Louis Feola, "We recognized the opportunity for feature-length direct-to-video animated movies back in late 1991. Early in the process, we recognized that the marketplace would be open to quality, direct-to-video feature-length animated product.

The Hollywood Reporter's home video editor, Scott Hettrick, who has been observing the made-for-video animation trend, says, "If the amount of resources, energy and effort being put into made-for-video projects by studios is any indication, the market will be considerable in a short period of time."

Just as the response to made-for-video animated product took the animation industry by surprise, a variation on the trend, the original animated video or OAV, could also have a similar affect on the future of animation. According to anime expert Fred Patten of Streamline Entertainment, OAVs started accidentally in Japan in the early 1980s when an "animation company tried to get backing for a TV series based on an idea they came up with, but could not. Since they had the presentation already made up, they talked to one of the video companies about subsidizing it as an original video and it caught on."Patten says that now in Japan as many as 30 OAVs per month are released.

Putting an American spin on the OAV phenomenon are some smaller animation companies that are trying to be Davids to the Goliaths of animation.

Addressing the cost-to-return ratio, Jeff Fino CEO/Co-Founder of Wild Brain, Inc. the company who produced Ferngully adds, "I think the financial aspects of direct-to-video are the most appealing. If you think about it, say a direct-to-video movie costs $4 million. it is not unreasonable to project unit sales of four million cassettes. Now if you multiply that by, say, $15 per cassette, that's $60 million. Of course you have production, distribution, advertising costs, etc. Those costs are not as high as theatrical releases, so you don't have the kind of major expenses. I think, if you add even the distribution percentages that studios tend to add, you're still going to have a very healthy profit." Resource: Animation World Magazine, Issue 2.8

Even the animation software tool industry is growing and heating up. According to Wanda Meloni, Principal Market Analyst for M2 Research, the professional animation market has grown dramatically over the past 3 years as software and systems prices continue to drop, making it more affordable for individual animators to enter the market. In 1999 the market for 3D professional animation software reached $152 million and is project to increase to $358 by 2004.

4.3 Industry Analysis

The Bible based animation video industry is quite diverse, ranging from the five major brand-name video producers of mainstream children's video, to half a dozen OEM manufacturers/producers Christian animation videos.

The distribution channels are also varied. Some of the videos are sold through retail channels, but there are direct mail distribution of these animated Bible videos.

According to Entertainment Weekly, Christian video sales rose 41 percent, riding primarily on Bob and Larry, the stars of the famous Veggie Tales. In 1997 alone more than 2.1 million of the Veggie Tale videos were shipped selling at the retail price of $9.99.

Entertainment Weekly also reports that Christian kid's entertainment has exploded. In 1998 alone, sales spiked 22 percent, making it one of the fastest-growing segments of the $3 billion Christian retail industry.

4.3.1 Competition and Buying Patterns

The majority of the video animation industry is responding to the recent increase in religion popularity. Hollywood has instigated this resurgence in religious popularity through the films it has produced in recent years. These film producers not only see the potential for films but has responded by producing scores of Bible based animation videos.

As with most businesses, competition is based on reputation and trends in the market. It can also depend on channels of distribution and advertising. There is no doubt that we would be competing with all the other video animation production houses and distributors if we were in a non Adventist retail chain.

The people within our Seventh-Day Adventist target customer group choose between competing products based on biblical accuracy. Also would rather choose a product they could be assured was approved by the General Conference of Seventh-Day Adventists.

The most important factor that makes the difference for Bibleos is the soundness of the doctrine. Also the familiarity of the message being taught. Another factor is the reason for Bibleos is to teach children the doctrines of the Bible. Customers may choose Bibleos over the other products because of its biblical accuracy. The pricing of these videos will not exceed the industry current prices. We strongly believe that a combination of word of mouth, reputation and visibility will be the secret in long term customer satisfaction.

The least but surely one of the most exciting factors is the artistic illustrations of the doctrines in animation. This has not been done to date.

But as Bibleos relates to the general populous, these videos will compete with the same quality of animation as the other studios. Presented as a teaching tool for children and presented as the ultimate alternative to TV and other secular videos.

Through our literature and Bible workers we have a good indication that the market is in need of a product such as this and that the mission field is ready to receive it.

4.3.2 Main Competitors

The following are a list of the major competitors: Nest Family Entertainment, Hanna-Barbara and Big Idea, Inc.

The strength of all three companies is found in their established brand name and funding. They have no apparent weaknesses. It is because of their success the door has been opened to companies such as TCAN.

5.0 Strategy and Implementation Summary

Our strategy is based on serving the customer who buys through retail, Internet, mail order and literature evangelism.

Also:

1. We focus on satisfying the needs of parents with small children and teenagers. Also the need within the literature evangelism market to reach those who have yet to hear the gospel.
2. We focus on follow-on technology that we can take to the masses, not leading edge technology that aims at the experts and volume leaders. 
3. Focus on a carefully selected set of Bible themes, which have not been addressed by other video animation producers and distributors.
4. Focus on our local market of Christians, through the Adventist Book Centers and through other retail Christian Book Centers throughout North America.

5.1 Competitive Edge

Our competitive edge is the format in which we plan to implement these Bible studies. There are literally dozens of Bible videos in the market place. However, there are no Bible videos that teach Bible scripture as well as Bible principles. Christians for the past two decades have requested scripture based Bible teaching videos. The educational quality of Bibleos, packaged with an interactive CD-ROM gives this product a distinguished and unique competitive edge over other Christian animated videos.

Highlights Chart

5.2 Sales Strategy

We need to sell Bibleos and not the company. We sell Bible based animation which incorporate doctrinal teachings.

We not only have to sell the accuracy of doctrine contained in Bibleos but the educational value as well. We also have to sell the "acceptable" entertainment aspect of these videos appropriate for Sabbath keeping. We need to give our customers what they really need. Especially in these days were there is so much error mixed with truth.

The Yearly Total Sales chart summarizes our ambitious sales forecast.

Sales Forecast Table

Sales Monthly Chart

5.2.1 Year Sales

Sales by Year Chart

5.3 Milestones

The accompanying table lists important program milestones, with dates and managers in charge, and budgets for each. The milestone schedule indicates our emphasis on planning for implementation.

What the table doesn't show is the commitment behind it. Our business plan software includes complete provisions for plan-vs.-actual analysis, and we will be holding monthly follow-up meetings to discuss the variance and course corrections.

Milestone Table

Milestones Chart

6.0 Management Summary

TCAN is slow to hire new people in production and management areas. But will always seek individuals who are willing to help spread the "Good News".

Immediate personnel plans calls for one administrative assistant. We will continue to work with part-time people to handle shipping and packaging, errands, phone back-up, etc.

7.0 Financial Plan

TCAN expects the business to grow at a minimal rate of 24% per year. We want to finance growth mainly through cash flow. We recognize that this means we may have to grow more slowly than we might like.

7.1 Important Assumptions

Our financial plan depends on important assumptions. The key underlying assumptions are:

We assume a steady-growth in economy, without major recession.

We assume of course that there are no unforeseen changes in technology to make products immediately obsolete.

7.2 Break-even Analysis

The break-even analysis shows that TCAN has a good balance of fixed costs and sufficient sales strength to remain healthy. Our break-even point is close to 1300 units per month, while our sales forecast for the next year calls for almost 5,000 units per month on average.

Break-even Analysis Table

Sales Monthly Chart

7.3 Projected Profit and Loss

We expect income to hit $2,305,241 for FY 2002, better than forty six (46.32%) percent of sales. It should increase to more than $2.9 million by the third year of this plan, as net earnings increase to more than forty seven (47.46%) percent of sales.

Profit and Loss (Income Statement) Table

7.4 Projected Cash Flow

We expect our Net Cash Flow for FY 2001 to be $1,961,335. And this figure should increase to $2,333,589 in FY 2002 and $2,972,345 in FY 2003. After an initial investment of $754,000 there will be no need for further investment. The initial cost is based on the production of 1 Bibleos CD-ROM/Video.

Pro-Forma Cash Flow Table

Cash Chart

7.5 Projected Balance Sheet

As shown in the balance sheet in the following table, we expect a healthy growth in net worth, from approximately $2,653,835 for FY 2001 to more than $7.9 million by the end of FY 2003.

Pro-Forma Balance Sheet Table

7.6 Business Ratio

Standard business ratios are included in the table. The ratios show a plan for balanced, healthy growth.

Ratio Analysis Table

Click here for Sales Forcast and Pro-Forma Tables