SEC Info - Platinum Studios, Inc. - 8-K - For 6/12/08

TABLE OF CONTENTS

TABLE OF CONTENTS	I

COMPANY PROFILE	1

DATE OF VALUE	1
BUSINESS OVERVIEW	1
PRODUCTS AND SERVICES	2
Definition of Industry	2
Products	2
LOCATIONS AND FACILITIES	3
BUSINESS STRATEGY	3
Character Development	3
Sales and Distribution	4
CUSTOMERS AND CONSUMERS	6
PROPERTY AND EQUIPMENT	6
Fixture and Equipment	6
Licensing Rights	6
COMPANY ORGANIZATION AND STRUCTURE	8
Ownership	8
Executive Management	9
Management	10
Employees	10

FINANCIAL ANALYSIS	11

*Income Statements (Schedule 1)*	11
*Balance Sheets (Schedule 2)*	12
SUMMARY	14
Schedule 1: Income Statements	15
Schedule 2: Balance Sheets	16

INDUSTRY ANALYSIS	17

INTRODUCTION	17
U.S. FILM ENTERTAINMENT MARKET	17
Industry Growth	17
Number of Films Released	18
Comic Book Adaptation Movies	18
Industry Concentration	19
U.S. AND INTERNATIONAL LICENSING MARKET	20
Industry Growth	20
Character Licensing Growth	21
U.S. DIGITAL PUBLISHING INDUSTRY	21
U.S. COMIC BOOK PUBLISHING INDUSTRY	23
Industry Growth	23
Comic Book Market Shares	23
U.S. VIDEO GAME INDUSTRY	24
Industry Growth	24
SUMMARY	24

COMPETITION ANALYSIS	26

ECONOMIC ANALYSIS	28

INTRODUCTION	28
THE U.S. ECONOMY	28

Growth	28
Unemployment	29
Consumer Confidence	29
Personal Income	30
Disposable Income	31
FORECASTS FOR THE U.S. ECONOMY	32
The Anderson Forecast	32
The Livingston Survey	32
The Congressional Budget Office Survey	32
THE EUROPEAN ECONOMY	33
European Growth	33
European Unemployment	33
FORECASTS FOR THE EUROPEAN ECONOMY	34
The Euro-area GDP Growth Projection	34
European Economic Forecasts	34
SUMMARY	35

VALUATION ANALYSIS	36

INTRODUCTION	36
DEFINITION OF FAIR MARKET VALUE	36
DATE OF VALUE	37
RISK/REWARD PROFILE	37
METHODOLOGICAL APPROACHES	40
Schedule 3: Projected Cash Flows for Licensed Film Division	43
Schedule 4: Method 1: Discount Cash Flow for Licensed Film Division	45
Schedule 5: Method 2: Market Multiplier Method for Licensed Film Division	51
Schedule 6: Fair Market Value of Intellectual Property in the Licensed Film Division	53
Schedule 7: Projected Cash Flows for Joint Venture Film Division	54
Schedule 8: Method 1: Discount Cash Flow for Joint Venture Film Division	56
Schedule 9: Method 2: Market Multiplier Method for Joint Venture Film Division	57
Schedule 10: Fair Market Value of Intellectual Property in the Joint Venture Film Division	59
Schedule 11: Projected Cash Flows for Film Fund Division	60
Schedule 12: Method 1: Discount Cash Flow for Film Fund Division	62
Schedule 13: Method 2: Market Multiplier Method for Film Fund Division	63
Schedule 14: Fair Market Value of Intellectual Property in the Joint Venture Film Division	65
Schedule 15: Projected Cash Flows for Direct to DVD Division	66
Schedule 16: Method 1: Discount Cash Flow for Direct to DVD Division	68
Schedule 17: Method 2: Market Multiplier Method for Direct to DVD Division	69
Schedule 18: Fair Market Value of Intellectual Property in the Direct to DVD Division	71
Schedule 19: Projected Cash Flow for Digital Publishing Division	72
Schedule 20: Method 1: Discount Cash Flow for Digital Publishing Division	74
Schedule 21: Method 2: Market Multiplier Method for Digital Publishing Division	76
Schedule 22: Fair Market Value of Intellectual Property in the Digital Publishing Division	78
Schedule 23: Projected Cash Flow for Video Network Division	79
Schedule 24: Method 1: Discount Cash Flow for Video Network Division	81
Schedule 25: Method 2: Market Multiplier Method for Video Network Division	82
Schedule 26: Fair Market Value of Intellectual Property in the Video Network Division	84
Schedule 27: Revenue Multiplier Method for Print Publishing Division	85
Schedule 28: Projected Cash Flow for Licensed Video Games Division	87
Schedule 29: Discounted Cash Flow Method for Licensed Video Games Division	89
Schedule 30: Discounted Cash Flow Method for Licensing and Merchandising Division	91
Schedule 31: Conclusion of Fair Market Value of the Intellectual Property	92
Exhibit 1: Licensed Film Division Assumptions	97
Exhibit 2: Time of Cash Flows from Ultimates – Licensed Film, Film Fund, Joint Venture	98
Exhibit 3: Time of Cash Flows from High Budget Action Film	99
Exhibit 4: Time of Cash Flows from High Budget Comedy Film	100

Exhibit 5: Time of Cash Flows from High Budget Thriller Film	101
Exhibit 6A: Development of Equity Discount Rate	102
Exhibit 6B: Development of Rate of Return on Debt	103
Exhibit 6C: Development of Weighted Average Cost of Capital	104
Exhibit 7: Capital Structure per Film Fund, LLC Agreement	105
Exhibit 8: Joint Venture Film Division Assumptions	106
Exhibit 9: Time of Cash Flows from Low Budget Action Film	107
Exhibit 10: Time of Cash Flows from Low Budget Comedy Film	108
Exhibit 11: Time of Cash Flows from Low Budget Thriller Film	109
Exhibit 12: Time of Cash Flows from Horror Film	110
Exhibit 13: Film Fund Division Assumption	111
Exhibit 14: Time of Cash Flows from Film Fund	112
Exhibit 15: Direct to DVD Division Assumption	113
Exhibit 16: Time of Cash Flows from Ultimates – Direct to DVD	114
Exhibit 17: Time of Cash Flows from Direct to DVD Films	115
Exhibit 18: Traffic Analysis of Digital Publishing Division	116
Exhibit 19: Revenue and Cost Assumptions of Digital Publishing Division	117
Exhibit 20: Growth Assumptions of Digital Publishing Division	118
Exhibit 21A: Development of Equity Discount Rate	119
Exhibit 21B: Development of Rate of Return on Debt	120
Exhibit 21C: Development of Weighted Average Cost of Capital	121
Exhibit 22: Revenue and Cost Assumptions of Video Network Division	122
Exhibit 23: Growth Assumptions of Video Network Division	123
Exhibit 24: Time of Revenues from Licensed Video Games	124
Appendix A-1: Comic Book Adaptation Movies	125
Appendix A-2: Comic Book Adaptation Movies: Action – High Budget	126
Appendix A-3: Comic Book Adaptation Movies: Comedy – High Budget	127
Appendix A-4: Comic Book Adaptation Movies: Thriller – High Budget	128
Appendix A-5: Comic Book Adaptation Movies: Action – Low Budget	129
Appendix A-6: Comic Book Adaptation Movies: Comedy – Low Budget	130
Appendix A-7: Comic Book Adaptation Movies: Thriller– Low Budget	131
Appendix A-8: Comic Book Adaptation Movies: Horror	132
Appendix A-9: Comic Book Adaptation Movies: Low Budget All Genres	133
Appendix B: Horror Movies	134
Appendix C: Film Library Deals	136
Appendix D: Direct to DVD Movies	137
Appendix E: User Generated Content Sites Deals	138
Appendix F: General Content / E-Commerce Sites Deals	139
Appendix G-1: Video Game Unit Sales	140
Appendix G-2: Video Game Unit Sales: Comic and Manga Titles Released from 2004 - 2006	141
Appendix H: The Process of Business Valuation and Diligence Procedures	142

APPRAISERS CERTIFICATION AND CONTINGENT AND LIMITING CONDITIONS	144

iii

COMPANY PROFILE

DATE OF VALUE

Many events both within and outside a business’ control can cause significant changes in its value. These changes may occur in, but are not limited to, company management and financial performance, competitive pressures, industry and economic conditions, and investor perceptions. Therefore, the first step in a business appraisal is to determine the precise date of value. The date of value utilized herein is March 31, 2008.

BUSINESS OVERVIEW ¹

Platinum Studios, LLC was founded and operated as a California limited liability company on November 20, 1996. On September 15, 2006, Platinum Studios, LLC filed with the State of California to convert Platinum Studios, LLC into Platinum Studios, Inc., (“Platinum” or the “Company”) a California C corporation. As of February 1, 2008, Platinum became a publicly traded company (ticker symbol: PDOS.OB) on the Over The Counter Bulletin Board (“OTCBB”).

Platinum controls a library consisting of 5,622 characters and is engaged principally as a comics-based entertainment company adapting characters and storylines for production in film, television, publishing and all other media. With characters that have appeared in comics in 25 languages and in more than 50 countries, the Company’s library is continually expanding.

Platinum is working to become the leading independent comic book commercialization producer for the entertainment industry across all media platforms including film, television, direct-to-DVD, digital media, publishing, and video games, creating merchandising vehicles though all retail product lines. This would allow the Company to maximize the potential and value of its content creator relationships and acquisitions, story development and character/franchise brand-building capabilities without investing significant capital.

The depth, breadth, and versatility of Platinum’s library provide a rich field for the growth of lucrative entertainment franchises. Among the 84 comic book adaptation movies since 1978 to present, 22.8% of the movies produced at least 1 sequel. With the potential to create film franchises and spin-offs, this enables the Company to produce more film projects derived from the same characters.

¹ Obtained from Platinum’s Form 10-K filed on March 31, 2008, and the Company’s website.

PRODUCTS AND SERVICES

Definition of Industry

Platinum is engaged principally as a comics-based entertainment company adapting characters and storylines for production in film, television, publishing and all other media. The Company derives revenues from a number of sources in each of the following areas: Print Publishing, Digital Publishing, Film entertainment, and Merchandise/Licensing. After researching the Company’s products, SP&H determined that there are three Standard Industrial Classification (“SIC”) Codes which the Company could be classified under. These SIC Codes include the following²:

SIC Code 2721 – Periodicals, which primarily engages in publishing periodicals, or in publishing and printing periodicals;

SIC Code 7812 – Motion Picture and Video Tape Production, which primarily engages in the production of theatrical and nontheatrical motion pictures and video tapes for exhibition or sale, including educational, industrial, and religious films; and

SIC Code 7379 – Computer Related Services, Not elsewhere classified, which primarily engages in supplying computer related services, not elsewhere classified.

Platinum’s current and future prospects are largely dependent on the conditions of the industries listed above. These industries are impacted by macroeconomic conditions such as GDP growth, personal and disposable income, unemployment and consumer confidence. As such, SP&H has performed an analysis of the economies in which Platinum markets and intends to market its products (see Economic Analysis section on page 28). Furthermore, we have performed an analysis of the industries listed above (see Industry Analysis section on page 17).

Products³

Platinum is a comic-based entertainment company, focused on adapting it character library to film, television, publishing (both print and digital), video games, merchandising, licensing and other media. Its library consists of 5,622 characters in various genres, including science fiction, fantasy, horror, mystery, romance, comedy, crime, action, and family.

After launching its first graphic novel in December 2006, Platinum has published over 40 comic books and graphic novels for distribution throughout the U.S.⁴

Platinum also owns and operates www.DrunkDuck.com, a user-generated website and one of the industry’s leading web-comic communities.⁵

² U.S. Department of Labor, Standard Industrial Classification (SIC) System Search.

³ See Business Strategy section, page 3, for a detailed description for the Company’s plan to commercialize its products. In addition, please refer to the License Rights section, page 6, for a more detailed description of the genres and a sample of well- known character names.

⁴ Platinum’s Form 10-K as of December 31, 2007.

⁵ Company’s website.

In December 2007, Platinum partnered with Comflix Studios, Inc. to create www.splastk.com (“Splastk”), the first web-syndicated on-demand video network featuring free comic book inspired animated content.

Since 2006, Platinum annually organizes The Comic Book Challenge, an online talent search contest for new and aspiring comic book creators. In 2007, entrants represented nearly two dozen countries, triple the number of countries in 2006.⁶

LOCATIONS AND FACILITIES

Platinum’s headquarters are located at 11400 W. Olympic Boulevard, 14th Floor, Los Angeles, California, which consist of approximately 12,400 square feet. The Company entered into a five year lease term in 2006, expiring on August 31, 2011. The lease payments are as follows:

Time Period	Annual Lease Payment
September 1, 2006 – December 31,2006	$	127,429
January 1, 2007 – December 31, 2007	$	387,383
January 1, 2008 – December 31, 2008	$	402,878
January 1, 2009 – December 31, 2009	$	418,993
January 1, 2010 – December 31, 2010	$	435,753
January 1, 2011 – August 31, 2011	$	298,147

Source: Platinum’s Form 10-K filed on March 31, 2008

BUSINESS STRATEGY⁷

Character Development

Platinum is focused on adding titles and expanding its library with the primary goal of creating new franchise properties and characters. In addition to in-house development and further acquisitions, Platinum is developing content with professionals outside the realm of comic books. The Company has teamed up with screenwriters, producers, directors, movie stars, and novelists to develop entertainment content and potential new franchise properties. Every project is designed for eventual adaptation to all media platforms, including film and television, digital publishing, print publishing, video games and merchandising licensing.

⁶Per Mr. Scott Rosenberg, Chairman and CEO of Platinum Studios, Inc., as quoted in “Platinum Studios Presents The Comic Book Challenge 2008”, Business Wire, March 13, 2008.

⁷Obtained from Platinum’s Form10-K filed on March 31, 2008.

Sales and Distribution

Film Entertainment

Platinum is pursuing a multi-pronged approach to create feature films: 1) licensing characters and stories to third-party producers and/or affiliated major studios for production; 2) securing outside financing to produce the Company’s own slates of films; 3) entering into joint ventures with other studios; and 4) producing direct to DVD films.

Platinum has film and television development deals with several major film producers, and in 2007 the Company successfully sold one property, Unique, to Disney Studios, with the anticipation that it will go into production in 2009. Additionally, effective as of June 2007, Platinum entered into a 2-year option agreement with DreamWorks, in association with Universal Pictures, Paramount Pictures, and Imagine Entertainment, to acquire the film production rights to its property Cowboys & Aliens, the #1-ordered graphic novel in the U.S. in 2006,⁸ with the goal to produce a feature film. This film’s production is anticipated to begin pre-production sometime within the next 24 months.⁹

Platinum also intends to develop television programming using the following approaches: 1) continue the Company’s strategy of licensing characters and stories to third-party producers for sale to broadcast and cable television networks; and 2) secure third-party financing to produce the Company’s own specials and series.

Digital Publishing

Platinum owns the following sites which it uses to distribute digital content:

www.platinumstudios.com– homepage

www.platinumstudioscomics.com– features news on Platinum’s comic books and serves as a distribution channel for comic books

www.pt78mobile.com – a mobile storefront for distribution of digital content

www.drunkduck.com– a web-comics site to host the digital distribution of the Company’s printed comics and a resource for independent comic book creators to post new material

www.kisscomicgroup.com– homepage of the Kiss comic books

www.comicbookchallenge.com– homepage of Platinum’s annual comic book creator talent search

⁸ Entertainment Weekly, January, 2007.

⁹ Platinum’s Form 10-K as of December 31, 2007.

Video Network

In December 2007, Platinum partnered with Comflix Studios, Inc. to create Splastk, the first web-syndicated on-demand video network featuring free comic book inspired animated content. As of the end of 2007, Splastk’s web traffic was at 6 million uniques and over 100 million page views per month.¹⁰

Print Publishing

Platinum has established four channels to sell products:

Direct to comic book store: For its first year of publishing, Platinum established a distribution agreement with Top Cow Productions to list the Company’s titles in Diamond Comic Distributors’ wholesale catalog for retail comic book stores. While this was the primary distribution chain for the Company’s comic books, however, Platinum recently established a direct contractual relationship with Diamond Comic Distributor for the listing of the Company’s properties, giving the Company more flexibility regarding the types and number of products that the Company could offer to this direct market;

Online: Platinum also distributes products to consumers and retailers via the Company’s Web store and comic book site www.PlatinumStudiosComics.com;

Traditional book retail stores: Platinum also distributes products through established distribution companies, such as the Company’s arrangement with Ingram, the leading wholesale distributor of book products. Ingram has agreed to distribute Platinum’s KISS 4K books to book stores and libraries, such as Borders, Barnes & Noble, Hastings and newsstands; and

International distributors: Platinum has established relationships with international publishing entities to distribute translated versions of the Company’s completed series of comic books to over 100 countries throughout the world.

Licensing and Merchandising

Platinum intends to pursue opportunities via the following channels:

General merchandising agreements with third parties in each major territory where films, television and new media will be released;

Collectible merchandising: cultivating the worldwide collector market by allowing licensees in other countries to license abroad;

Licensing the characters to customized advertising campaigns and/or media purchase campaigns;

Licensing the characters to video game producers and distributors;

¹⁰ Per Mr. Scott Schneider, CEO of Comflix Studios, Inc., as quoted in “Splastk - First Web Syndicated Comic Book Fueled Video Network”, PR Newswire, December 17, 2007.

Leveraging individual partners and licensees’ efforts together globally and locally to create critical mass, including promotions, contests, and third-party advertising on radio, television and new media; and

Leveraging its relationships with hundreds of comic book publishers and distributors worldwide for the distribution of the characters in print form.

CUSTOMERS AND CONSUMERS

Platinum has been dependent upon a small number of licensing transactions with major studios and television/cable networks. The comic book characters generally appeals to young adult males ages 18 to 35. However, consumers for Platinum’s planned film and online products are expected to be multiple target audiences, primarily in the U.S. and Europe.

PROPERTY AND EQUIPMENT

Fixture and Equipment

The following table indicates the net book value after accumulated depreciation of the Company’s fixtures and equipment as of December 31, 2007.

Property Plant & Equipment	Value

Office Equipment	$	10,804
Furniture and Fixtures		118,140
Computer Equipment		151,220
Software		91,292
Leasehold Improvements		20,557
Less: Accumulated Depreciation		(134,883	)

Net Book Value	$	257,130

Source: Platinum’s Form 10-K filed on March 31, 2008

There is no independent appraisal of fixtures and equipment available to SP&H.

Licensing Rights

Platinum’s library consists of 5,622 characters in various genres, including science fiction, fantasy, horror, mystery, romance, comedy, crime, action, and family. In addition to a broad spectrum of more than 1,000 characters developed in-house, Platinum also acquired the rights to the characters and storylines of Italian-based SBE Publishing’s Horror/Sci-Fi Universe, and French-based Hexagon Comics, as well as U.S.-based Top Cow and Barry Ween. Platinum’s library comprises of the following characters:

Universe of Characters	Origins	# of Characters

SBE Horror / Sci-Fi	Europe		1,048
Awesome Comics/RIP Media	North America		404
Top Cow Comics	North America		573
Hexagon Comics	Europe		702
Platinum Studios Macroverse	Worldwide		1,200+
Platinum Studios Acquisitions	Worldwide		1,680+

Total			5,622

Source: Provided by management.

The following describes the Company’s library of characters in more detail:¹¹

SBE Horror/Sci-Fi

Characters: 1,048

Dylan Dog acquired from SBE: 319 characters

Legs Weaver acquired from SBE: 271 characters

Nathan Never acquired from SBE: 456 characters

On the SBE properties, the Company has acquired all right, title and interest in and to all 3 properties (Dylan Dog, Legs Weaver, and Nathan Never), excluding only comic book print publication rights. Platinum originally had 10 years in which to produce a motion picture or television program based on these properties to preclude a reversion of rights. In connection therewith, on February 29, 2008, Platinum received a notice of reversion; however, the Company has 12 months from the date of such notice to commence principal photography on a picture, whereupon reversion rights would be terminated. The Company has a reasonable belief that it will commence principal photography on a picture by February 28, 2009 thereby terminating any reversion rights.

Awesome Comics/RIP Media

Characters: 404

Platinum has all rights worldwide, not including print comic publishing rights. Platinum has the exclusive right to enter into agreements related to the licensing of motion picture rights and allied/ancillary rights until the date upon which Platinum Studios’ CEO, Mr. Scott Mitchell Rosenberg, is no longer at least one of the following: (a) an executive officer of the Company; (b) a member of the Board of Directors of the Company, or (c) holds at least 30% of the outstanding capital stock of the Company.

¹¹Per Platinum’s Form 10-K filed on March 31, 2008.

Top Cow

Characters: 573

Platinum has all rights for film and television worldwide. Publishing is excluded and certain non-film ancillary rights subject to preexisting deals (certain properties only) are also excluded. Platinum has the exclusive right to enter into agreements related to the licensing of motion picture rights and allied/ancillary rights through January 30, 2010. The rights can be extended through January 30, 2011 with an additional payment of $350,000 on or before June 30, 2010.

Hexagon Library from Mosaic Multimedia

Characters: 702

Platinum has all rights worldwide, not including print comic publishing rights, contingent on verification of chain-of-title and European legal documentation. Platinum has the exclusive right to enter into agreements related to the licensing of motion picture rights and allied/ancillary rights through January 1, 2014. The rights can be extended through January 1, 2016 with an additional payment of $196,000 on or before June 1, 2011. Platinum can also have the rights in perpetuity with a payment of $600,000 by January 1, 2016. The agreement requires the formation of an LLC co-owned by Mosaic Multimedia and Platinum Studios with Platinum acting as manager.

Platinum Studios Macroverse

Characters: 1,200+

Platinum has all rights worldwide, in all media.

Platinum Studios Acquisitions

Characters: 1,680+

Platinum has all rights worldwide, in all media.

COMPANY ORGANIZATION AND STRUCTURE

The following sections discuss Platinum’s organization, including its ownership, management, and employees.

Ownership

On January 10, 2008, the Securities and Exchange Commission declared effective the Form SB-2 registration statement originally filed by Platinum on September 4, 2007. Under the Form SB-2, Platinum provided a prospectus to offer the resale by the selling stockholders of up to 66,255,825 shares. On January 18, 2008, Platinum commenced a private placement for the sale of up to 15,000,000 shares of the Company’s common stock at a purchase price of $0.15 per share, for an aggregate purchase price of up to $2,250,000. As of February 1, 2008, Platinum became a publicly traded company (ticker symbol: PDOS.OB) on the Over The Counter Bulletin Board (“OTCBB”). For the quarter ended March 31, 2008, the stock prices per common share reached a high of $0.23 and a low of $0.09. The number of outstanding shares, as of March 31, 2008, was 216,921,227, which indicated a market capitalization of $34.7 million. Platinum successfully raised approximately $5.0 million from the initial private placement offering (“PPM”) and plans to raise additional $2.2 million in a second private placement round.

The following table displays the Company’s shareholders and the number of shares held on a fully diluted basis as of January 9, 2008:

Name	Ownership Percentage			No. Shares

Common stock resale offering		24.4	%		Up to 49,047,250
Charlotte Rosenberg		8.6	%		17,208,575
Total Common Stock offered		32.92	%		Up to 66,255,825

Scott Rosenberg		63.7	%		128,250,000
Brian Altounian		9.2	%		19,940,000
Helene Presky		3.7	%		8,000,000
Total Executive Shareholders		76.6	%		135,000,000

Total		100	%		Up to 201,255,825

Source: Platinum’s Form 10-K filed on March 31, 2008

Executive Management

As of January 9, 2008, the executive management, where indicated, was comprised of the following individuals:

Scott Mitchell Rosenberg – Chairman & Chief Executive Officer

Mr. Rosenberg founded Platinum Studios, LLC in 1996 and has served as the Chairman of Platinum Studios. As founder and head of Malibu Comics, Mr. Rosenberg produced the Men In Black comic book, which he took to Sony to become a billion-dollar film franchise. Malibu was bought by Marvel Comics in 1994. Mr. Rosenberg’s salary was $34,615 in 2006 and $300,000 in 2007.

Brian Kenneth Altounian – President, Chief Operating Officer and Director

Mr. Altounian has been Chief Operating Officer since June 2005, and was appointed to serve as President in September 2006. Mr. Altounian's background included business development, finance, operations and administration for a variety of start-ups, Fortune 100 companies, and public and private organizations. Mr. Altounian had worked extensively in the entertainment and high-tech industries. Mr. Altounian’s salary was $63,961 in 2005, $299,039 in 2006 and $300,000 in 2007.

Jill Zimmerman – Director

Ms. Zimmerman served as a director since September 16, 2006. Ms. Zimmerman was Vice President at the Alford Group, a consulting firm based in Evanston, Illinois. Ms. Zimmerman previously served as a Crisis Program Supervisor and Director of Development at Alternatives, Inc. a non-profit corporation from November 1994 through May 2005.

Helene Pretsky – Corporate Secretary and General Counsel

Ms. Pretsky has served as the Company’s general counsel since January 2006 and its corporate secretary and Executive Vice President since October 1 2006. Ms. Pretsky, a securities/corporate attorney with expertise in intellectual property, had focused her twenty-year legal career on representing start-up, early-stage revenue companies in the high-tech, emerging technologies and entertainment industries. Ms. Pretsky’s salary was $161,187 in 2006, and $200,000 in 2007.

Management

In addition to executive management above, the following table lists the names and titles of Platinum’s key managers:

Name	Title	Joined Platinum in

Norman Lambert	Executive Vice President, Business Development	2006

Sean O’Reilly	Head of Publishing and Animation	2007

Richard Marincic	Director of Film/Television Department	2004

Dan Forcey	Vice President, Content Development	2007

Zachary Pennington	Vice President, Creative Design	2006

Source: Platinum’s Form SB-2 filed on January 10, 2008.

Employees

As of March 22, 2008, Platinum had 23 full-time and 3 part-time employees.

FINANCIAL ANALYSIS

SP&H analyzed Platinum’s audited financial statements for the fiscal years ending December 31, 2002 through 2007 (See Schedules 1 and 2).

Income Statements (Schedule 1)

Total Revenues

The following chart displays Platinum’s Total Revenues from 2002 through 2007:

Source: Audited financial statements for 2002 through 2006,

10-K as of December 31, 2007.

Total Revenues increased from $334,800 in 2002 to $1,956,054 in 2007 at an annual compound rate (“ACR”) of 42.3%. As of the date of value, Platinum had been dependent upon a small number of licensing transactions with major studios and television/cable networks. Total Revenues in 2007 was $1,956,054 compared to $180,500 in 2006. The increased Total Revenues was primarily attributable to an increase in option fee revenue of $860,500 and first look revenue of $450,000.

Cost of Revenues

Platinum did not incur any Cost of Revenues from 2002 though 2006. In 2007, Cost of Revenues increased to $278,442, representing 14.2% of Total Revenues.

Total Operating Expenses

The following graph represents Platinum’s Total Operating Expenses from 2002 through 2007:

Source: Audited financial statements for 2002 through 2006,

10-K as of December 31, 2007.

Total Operating Expenses increased from $541,209 in 2002 to $6,302,399 in 2007 as the Company expanded its operations. The majority of Operating Expenses was due to Salaries, as the Company actively recruited executives and other talents to help exploit the Company’s library of comic book characters.

Operating Income (Loss)

Platinum had Operating Losses from 2002 through 2007, as low as -$21,730 in 2004 and as high as -$4,624,787 in 2007. This was due to the establishment and expansion of the business.

Net Income (Loss)

Platinum had Net Losses from 2002 through 2007, as low as -$354,472 in 2004 and as high as -$5,192,815 in 2007. This was due to the establishment and expansion of the business.

Balance Sheets (Schedule 2)

Assets

Total Current Assets increased significantly from $15,137 in 2002 to $28,027 in 2003, declined to $8,141 in 2004, and then rose to $449,138 in 2006 but decreased to $237,792 in 2007. The large decrease occurring between 2006 and 2007 was due to an approximately $326,990 decrease in Cash.

Property Plant & Equipment accounted for $36,632 in 2002, declined to $10,408 in 2004, and then rose to $268,981 in 2006 but decreased to $257,130 in 2007.

Character Development Costs increased from $148,573 in 2002 to $563,921 in 2004 as the Company expanded its library of characters.

Total Assets grew from $201,827 in 2002 to $583,455 in 2004, decreased to $514,720 in 2005, and then rose to $1,141,088 in 2006 but decreased to $802,301 in 2007 as a result of the factors discussed above.

Liabilities

Total Current Liabilities decreased from $1,137,271 in 2002 to $128,564 in 2004 and grew to $3,798,650 in 2007. During the period under review, Current Liabilities consisted mainly of Accounts Payable, Accrued Expenses and Short-term Notes Payable. Total Non-Current Liabilities increased from $5,065,305 in 2002 to $9,664,312 in 2005 and decreased to $2,698,338 in 2007 as the Company repaid the uncollateralized loans received from Rosenberg IP in 2004. As a result of the factors described above, Total Liabilities varied between $5,672,224 and $9,664,312 during the period under review.

Shareholders’ Equity

Total Shareholders’ Equity was composed of Common Stock, Additional Paid-in Capital, and Retained Deficit. As Platinum was a start-up company and generated Net Losses from 2002 through 2007, Total Shareholders’ Equity was negative during the period under review.

The Company’s December 31, 2007 Form 10-K states that Platinum plans to seek additional financing in order to execute its business plan, but there is no assurance the Company will be able to obtain such financing on terms favorable to the Company or at all. These items raise substantial doubt about the Company’s ability to continue as a going concern, which is mentioned in the independent auditors’ cover letter to the audited financial statements for fiscal year 2007.

Since Platinum had minimum Revenues and significant Net Losses during the period under review, and the Company’s business plan is to generate significant film entertainment and online revenues in the next several years through active exploitation of its comic book character library, we have given limited consideration to Platinum’s historical financial performance as a basis for our valuation. However, our valuation takes into account the risks of the Company not obtaining adequate financing and its ability to continue as a going concern.

SUMMARY

Platinum’s Total Revenues increased at an ACR of 42.3% from 2002 through 2007. Platinum did not incur any Cost of Revenues from 2002 though 2006. In 2007, Cost of Revenues represented 14.2% of Total Revenues. Total Operating Expenses increased during the same period as the Company actively recruited executives and other talent. Platinum had Operating Losses and Net Losses from 2002 through 2007, due to the establishment and expansion of the business.

Total Assets grew at an ACR of 31.8% from 2002 through 2007. Total Liabilities varied between $5,672,224 and $9,664,312 during the same period. Total Shareholders’ Equity was negative due to Net Losses from 2002 through 2007.

The Company’s December 31, 2007 Form 10-K stated that Platinum plans to seek additional financing in order to execute its business plan, but that there is no assurance the Company will be able to obtain such financing on terms favorable to the Company or at all.

We have given limited consideration to Platinum’s historical financial performance as a basis for our valuation since the Company’s business plan is to generate significant film entertainment and online revenues in the next several years through active exploitation of its comic book character library.

Schedule 1

Platinum Studios, Inc.

Income Statements

For the Years Ending December 31,

	2002					2003					2004					2005					2006					2007
	(1)					(2)					(3)					(4)					(5)					(6)

Total Revenues	$	334,800		100.0	%	$	120,667		100.0	%	$	677,406		100.0	%	$	162,500		100.0	%	$	180,500		100.0	%	$	1,956,054		100.0	%

Cost of Revenues
Fees		-					-					-					-					-				$	171,229		8.8	%
Merchandising		-					-					-					-					-					10,217		0.5	%
Other		-					-					-					-					-					96,996		5.0	%
Total Cost of Revenues	$	0		0.0	%	$	0		0.0	%	$	0		0.0	%	$	0		0.0	%	$	0		0.0	%	$	278,442		14.2	%

Gross Profit	$	334,800		100.0	%	$	120,667		100.0	%	$	677,406		100.0	%	$	162,500		100.0	%	$	180,500		100.0	%	$	1,677,612		85.8	%

Operating Expenses
Operating Expenses (excluding Depreciation)		-					-					-				$	1,607,672		989.3	%	$	3,168,078		1755.2	%	$	5,176,142		264.6	%
Research and Development		-					-					-					243,833		150.1	%		764,282		423.4	%		960,396		49.1	%
Depreciation and Amortization		-					-					-					7,436		4.6	%		73,486		40.7	%		165,861		8.5	%
Total Operating Expenses	$	541,209		161.7	%	$	633,568		525.1	%	$	699,136		103.2	%	$	1,858,941		1144.0	%	$	4,005,846		2219.3	%	$	6,302,399		322.2	%

Operating Income (Loss)	$	(206,409	)	-61.7	%	$	(512,901	)	-425.1	%	$	(21,730	)	-3.2	%	$	(1,696,441	)	-1044.0	%	$	(3,825,346	)	-2119.3	%	$	(4,624,787	)	-236.4	%

Other Expenses
Loss on Disposition of Assets	$	(13,849	)	-4.1	%	$	(10,098	)	-8.4	%	$	(4,829	)	-0.7	%	$	0		0.0	%	$	(33,260	)	-18.4	%	$	(24,000	)	-1.2	%
Interest Expense		(396,009	)	-118.3	%		(299,771	)	-248.4	%		(327,913	)	-48.4	%		(390,288	)	-240.2	%		(391,745	)	-217.0	%		(544,028	)	-27.8	%
Other Income		0		0.0	%		0		0.0	%		0		0.0	%		5,814		3.6	%		2,571		1.4	%		0		0.0	%
Other Expenses		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%		(25,000	)	-13.9	%		0		0.0	%
Total Other Expenses	$	(409,858	)	-122.4	%	$	(309,869	)	-256.8	%	$	(332,742	)	-49.1	%	$	(384,474	)	-236.6	%	$	(447,434	)	-247.9	%	$	(568,028	)	-29.0	%

Net Income (Loss)	$	(616,267	)	-184.1	%	$	(822,770	)	-681.9	%	$	(354,472	)	-52.3	%	$	(2,080,915	)	-1280.6	%	$	(4,272,780	)	-2367.2	%	$	(5,192,815	)	-265.5	%

Sources: Platinum Studios, Inc. Audited Financial Statements for the periods ending December 31, 2002 through 2007.

SANLI PASTORE & HILL, INC.

Schedule 2

Platinum Studios, Inc.

Balance Sheets

As of December 31,

	2002					2003					2004					2005					2006					2007
	(1)					(2)					(3)					(4)					(5)					(6)
Assets

Current Assets
Cash	$	8,380		4.2	%	$	20,642		9.5	%	$	0		0.0	%	$	11,843		2.3	%	$	331,435		29.0	%	$	4,445		0.6	%
Accounts receivable		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%		44,695		5.6	%
Other receivable		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%		20,000		2.5	%
Prepaid expenses		6,757		3.3	%		7,385		3.4	%		8,141		1.4	%		89,347		17.4	%		105,603		9.3	%		109,124		13.6	%
Deposits		0		0.0	%		0		0.0	%		0		0.0	%		1,561		0.3	%		0		0.0	%		0		0.0	%
Retainers		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%
Inventory		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%		59,528		7.4	%
Stock offering costs		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%		12,100		1.1	%		0		0.0	%
Total Current Assets	$	15,137		7.5	%	$	28,027		12.9	%	$	8,141		1.4	%	$	102,751		20.0	%	$	449,138		39.4	%	$	237,792		29.6	%

Property and Equipment
Office equipment	$	65,218		32.3	%	$	65,218		29.9	%	$	65,218		11.2	%	$	69,633		13.5	%	$	10,804		0.9	%	$	10,804		1.3	%
Furniture and fixtures		22,347		11.1	%		22,347		10.2	%		22,347		3.8	%		24,108		4.7	%		107,317		9.4	%		118,140		14.7	%
Computer equipment		53,855		26.7	%		22,350		10.2	%		12,226		2.1	%		37,974		7.4	%		105,054		9.2	%		151,220		18.8	%
Software		0		0.0	%		0		0.0	%		0		0.0	%		3,345		0.6	%		85,576		7.5	%		91,292		11.4	%
Leasehold improvements		0		0.0	%		0		0.0	%		0		0.0	%		23,728		4.6	%		20,557		1.8	%		20,557		2.6	%
Total Property and Equipment		141,420		70.1	%		109,915		50.4	%		99,791		17.1	%		158,788		30.8	%		329,308		28.9	%		392,013		48.9	%
Less: Accumulated depreciation		(104,788	)	-51.9	%		(88,318	)	-40.5	%		(89,383	)	-15.3	%		(96,819	)	-18.8	%		(60,327	)	-5.3	%		(134,883	)	-16.8	%
Net Property and Equipment	$	36,632		18.2	%	$	21,597		9.9	%	$	10,408		1.8	%	$	61,969		12.0	%	$	268,981		23.6	%	$	257,130		32.0	%

Character Development Costs
Projects in process	$	104,521		51.8	%	$	160,126		73.4	%	$	552,724		94.7	%	$	0		0.0	%	$	0		0.0	%	$	0		0.0	%
Completed Projects		44,052		21.8	%		7,329		3.4	%		11,197		1.9	%		0		0.0	%		0		0.0	%		0		0.0	%
Net Character Development Costs	$	148,573		73.6	%	$	167,455		76.8	%	$	563,921		96.7	%	$	0		0.0	%	$	0		0.0	%	$	0		0.0	%

Other Assets
Web Sties	$	0		0.0	%	$	0		0.0	%	$	0		0.0	%	$	0		0.0	%	$	64,000		5.6	%	$	40,000		5.0	%
Long Term Deposits		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%		39,404		3.5	%		39,118		4.9	%
Intangible Assets
Character Library - Top Cow		0		0.0	%		0		0.0	%		0		0.0	%		350,000		68.0	%		350,000		30.7	%		350,000		43.6	%
Character Library Amortization - Top Cow		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%		(30,435	)	-2.7	%		(121,739	)	-15.2	%
Net Intangible Assets		0		0.0	%		0		0.0	%		0		0.0	%		350,000		68.0	%		319,565		28.0	%		228,261		28.5	%
Other		1,485		0.7	%		985		0.5	%		985		0.2	%		0		0.0	%		0		0.0	%		0		0.0	%
Total Other Assets	$	1,485		0.7	%	$	985		0.5	%	$	985		0.2	%	$	350,000		68.0	%	$	422,969		37.1	%	$	307,379		38.3	%

Total Assets	$	201,827		100.0	%	$	218,064		100.0	%	$	583,455		100.0	%	$	514,720		100.0	%	$	1,141,088		100.0	%	$	802,301		100.0	%

Liabilities and Stockholders' Equity

Liabilities

Current Liabilities
Bank overdraft	$	0		0.0	%	$	0		0.0	%	$	5,852		1.0	%	$	0		0.0	%	$	0		0.0	%	$	89,665		11.2	%
Line of credit		1,000,000		495.5	%		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%
Accounts payable		134,145		66.5	%		105,653		48.5	%		109,802		18.8	%		131,131		25.5	%		231,849		20.3	%		663,848		82.7	%
Accrued expenses		3,126		1.5	%		0		0.0	%		12,910		2.2	%		64,352		12.5	%		192,118		16.8	%		788,868		98.3	%
Loans payable to member		0		0.0	%		253,308		116.2	%		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%
Deferred revenue		0		0.0	%		0		0.0	%		0		0.0	%		175,000		34.0	%		750,000		65.7	%		100,000		12.5	%
Short-term notes payable to shareholder		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%		1,004,078		88.0	%		1,889,908		235.6	%
Related party payable		0		0.0	%		0		0.0	%		0		0.0	%		20,000		3.9	%		243,079		21.3	%		193,079		24.1	%
Capital leases payable, current		0		0.0	%		0		0.0	%		0		0.0	%		6,441		1.3	%		55,820		4.9	%		73,282		9.1	%
Total Current Liabilities	$	1,137,271		563.5	%	$	358,961		164.6	%	$	128,564		22.0	%	$	396,924		77.1	%	$	2,476,944		217.1	%	$	3,798,650		473.5	%

Long Term Liabilities
Accrued interest due to member	$	0		0.0	%	$	0		0.0	%	$	0		0.0	%	$	1,067,465		207.4	%	$	75,031		6.6	%	$	60,479		7.5	%
Deferred Revenue		486,667		241.1	%		502,367		230.4	%		625,000		107.1	%		750,000		145.7	%		0		0.0	%		0		0.0	%
Due to Related Party		0		0.0	%		0		0.0	%		20,000		3.4	%		0		0.0	%		0		0.0	%		0		0.0	%
Long-term portion of capital lease obligations		0		0.0	%		0		0.0	%		0		0.0	%		13,591		2.6	%		148,721		13.0	%		106,395		13.3	%
Long-term debt payable to member		4,578,638		2268.6	%		6,180,235		2834.1	%		6,987,872		1197.7	%		7,436,332		1444.7	%		3,326,107		291.5	%		2,531,464		315.5	%
Total Long Term Liabilities	$	5,065,305		2509.7	%	$	6,682,602		3064.5	%	$	7,632,872		1308.2	%	$	9,267,388		1800.5	%	$	3,549,859		311.1	%	$	2,698,338		336.3	%

Total Liabilities	$	6,202,576		3073.2	%	$	7,041,563		3229.1	%	$	7,761,436		1330.3	%	$	9,664,312		1877.6	%	$	6,026,803		528.2	%	$	6,496,988		809.8	%

Stockholders' Equity (Deficit)

Common stock, $.0001 par value, 500,000,000 shares authorized, 158,056,000 issued, and outsatnding at December 31, 2006	$	0		0.0	%	$	0		0.0	%	$	0		0.0	%	$	0		0.0	%	$	15,806		1.4	%	$	20,126		2.5	%
Additional paid in-capital		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%		(628,741	)	-55.1	%		3,750,782		467.5	%
Members equity/ (deficit)		(6,000,749	)	-2973.2	%		(6,823,509	)	-3129.1	%		(7,177,981	)	-1230.3	%		(9,149,592	)	-1777.6	%		0		0.0	%		0		0.0	%
Retained earnings/ (deficit)		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%		(4,272,780	)	-374.4	%		(9,465,595	)	-1179.8	%
Total stockholders' equity/ (deficit)	$	(6,000,749	)	-2973.2	%	$	(6,823,509	)	-3129.1	%	$	(7,177,981	)	-1230.3	%	$	(9,149,592	)	-1777.6	%	$	(4,885,715	)	-428.2	%	$	(5,694,687	)	-709.8	%

Total Liabilities and Stockholders' Equity	$	201,827		100.0	%	$	218,054		100.0	%	$	583,455		100.0	%	$	514,720		100.0	%	$	1,141,088		100.0	%	$	802,301		100.0	%

Sources: Platinum Studios, Inc. Audited Financial Statements for the periods ending December 31, 2002 through 2007.

SANLI PASTORE & HILL, INC.

INDUSTRY ANALYSIS

INTRODUCTION

Many factors can contribute to the outlook for an industry. In addition to the intensity of competition, the health of an industry may be shaped by demand from its customer base. Looming technological developments, the constant threat of substitute products or services, and broad economic factors may also play a role in any industry’s future.

To evaluate Platinum Studios, it is necessary to analyze the industry conditions under which it operates. Platinum operates as a comic-based entertainment company, whose core business is bringing comic book projects to feature film and television. The Company derives its revenues from the following sources: (1) film entertainment; (2) merchandising and licensing; (3) digital publishing; (4) print publishing; and (5) video games. Therefore, in the following sections, SP&H analyzed the U.S. (1) film entertainment market; (2) merchandising and licensing market (U.S. and international); (3) digital publishing industry; (4) comic book publishing industry; and (5) video games industry.

U.S. FILM ENTERTAINMENT MARKET

Industry Growth

The U.S. film entertainment industry is largely located in California, which includes Hollywood, and accounts for about 70.0% of total domestic film production.¹² In general, the films made in Hollywood dominate the domestic and international film market. The following graph shows U.S. box office revenues from 2001 to 2007:

Source: Theatrical Market Statistics 2007, Motion Picture Association of America.

¹²Motion Picture and Video Production, IBISWord Industry Report, October 2007.

U.S. box office revenues increased from $8.1 billion in 2001 to $9.6 billion in 2007, at an ACR of 2.9%. U.S. box office revenues grew significantly in 2001 and 2002, at growth rates of 8.8% and 14.1%, respectively. In 2003, U.S. box office revenues decreased slightly by 1.2%, and increased slightly by 0.5% in 2004. U.S. box office revenues declined 4.2% in 2005, after which revenues rose 3.5% to reach $9.1 billion in 2006. In 2007, U.S. box office revenues were at a new all-time record of $9.6 billion.

Number of Films Released

The following graph illustrates the historical growth of the number of U.S. films released from 2001 to 2007:

Source: Theatrical Market Statistics 2007, Motion Picture Association of America.

The number of films released increased from 483 in 2001 to 603 in 2007, at an ACR of 3.8%. Growth rates ranged from a low of -3.5% in 2002 to a high of 11.6% in 2004.

Comic Book Adaptation Movies

The following graph shows U.S. box office revenues of comic book adaptation movies from 2002 to 2007:

Source: Box Office Mojo, www.boxofficemojo.com.

U.S. box office revenues of comic book adaptation movies increased from $780.9 million in 2002 to $888.6 million in 2007, at an ACR of 2.6%. Annual revenues during the same period ranged from $505.0 million in 2006 to $888.6 million in 2007, while annual growth rates were lowest in 2003 at -30% and highest in 2007 at 76%. The year 2002 included the release of Spider Man and Men in Black II. As movie making technology becomes more easily accessible, the production of comic book movies has become more popular. This has also helped the success of independent movies such as 30 Days of Night.

In regards to the comic book market, the Company’s Form 10-K states the following:

The comic book market is highly sought after by the entertainment industry for the purpose of mining for new material. As proof of this appeal, two recent trade articles have pinpointed the virtues of comics publishing as a credible source of new material in Hollywood. Daily Variety and Hollywood Reporter have each reported separately that the big moneymakers are fresh concepts and comic books. “Among the better averages were pics based on comic books: There were only 13 such films, and the $2.8 billion total means that each comic book hit averaged a $215 million gross. Which explains why Hollywood is so hot to film comic books."¹³

Industry Concentration

According to Box Office Mojo, an online movie publication and box office tracker, the movie releases of six film distribution companies typically accounts for approximately 80% of box office revenues in the U.S.¹⁴. The following table provides market share data for major distributors in 2007:

¹³How to make box office gold, Marc Graser, Daily Variety, 07/06/2007.

¹⁴Box Office Mojo, http://www.boxofficemojo.com

Distributor	Market Share

Paramount		15.5	%
Warner Bros.		14.7	%
Buena Vista		14.0	%
Sony/Columbia		12.9	%
Universal		11.4	%
20th Century Fox		10.5	%
New Line		5.0	%
Lionsgate		3.8	%
MGM/UA		3.8	%
Fox Searchlight		1.4	%
Miramax		1.3	%
Rogue Pictures		0.8	%
Total major distributors		95.1	%
Others		4.9	%
Total		100.0	%

Source: Box Office Mojo.

The industry is forecasted to grow at an average annual rate of 3.7% over the next five years, 2008 through 2012.¹⁵

U.S. AND INTERNATIONAL LICENSING MARKET

Industry Growth

According to License! Global Magazine, the U.S. remained the largest market, accounting for 65% of the total worldwide retail sales of licensed merchandise in 2006.¹⁶ The following graph shows worldwide retail sales of licensed products from 2001 to 2006:

Source: 2007 Industry Annual Report, License! Global Magazine.

¹⁵Motion Picture and Video Production, IBISWord Industry Report, October 2007.

¹⁶ 2007 Industry Annual Report, License! Global Magazine.

Worldwide retail sales of licensed products increased from $165.6 billion in 2001 to $187.4 billion in 2006, at an ACR of 2.5%. After a dip in 2001, worldwide retail sales of licensed products increased by 4.3% in 2002, and then decreased slightly by 0.5% in 2003. From 2004 to 2006, revenues continued to grow, with growth rates of 1.5%, 3.2%, and 3.6%, respectively.

Character Licensing Growth

Character licensing is the largest category in the total worldwide retail sales of licensed products. The following graph shows worldwide retail sales of licensed products from 2001 to 2006:

Source: 2007 Industry Annual Report, License! Global Magazine.

Worldwide character licensing revenues increased from $38.5 billion in 2001 to $42.7 billion in 2006, at an ACR of 2.1%. Overall, character licensing revenues mirrored the trend of the total worldwide licensing revenues. After a dip in 2001, character licensing revenues increased by 4.4% in 2002, and then decreased by 2.3% in 2003. From 2004 to 2006, revenues continued to grow, with growth rates of 1.8%, 2.9%, and 3.8%, respectively.

U.S. DIGITAL PUBLISHING INDUSTRY

With the advent of significant technological improvements, the digital publishing industry has grown substantially since late 1990. The increasing popularity and availability of electronic books are being driven largely by the proliferation of portable devices and software that made it possible for one to conveniently download and read content via the Internet. According to the International Digital Publishing Forum, eBooks represents the fastest growing segment of the publishing industry.¹⁷ The following graph shows U.S. trade wholesale eBooks sales from 2002 to 2007:

¹⁷ http://www.idpf.org.

Source: International Digital Publishing Forum.

U.S. wholesale eBooks sales increased from $5.8 million in 2002 to $31.8 million in 2007, at an ACR of 40.6%. U.S. wholesale eBooks sales experienced significant growth in 2003 and 2004, with growth rates of 26.7% and 31.0%, respectively. After moderate growth in 2005, U.S. wholesale eBooks sales rose 108.7% to reach $22.6 million in 2006. In 2007, U.S. wholesale eBooks sales reached $31.8 million, with a growth rate of 40.7%.

According to Standard & Poor’s, internet advertising is the fastest growing of all direct marketing channels, driven largely by advertisers’ desire to tap into the rapidly growing online retail market. The following graph shows U.S. internet advertising revenues from 2000 to 2007:

Source: Internet Advertising Revenue Report, Internet Advertising Bureau and PricewaterhouseCoopers.

U.S. internet advertising revenues increased from $8.1 billion in 2000 to $21.1 billion in 2007, at an ACR of 14.7%. Growth rates in 2001 and 2002 were negative due to poor economic conditions and the dotcom crash. From 2003 through 2007, U.S. internet advertising revenues experienced substantial growth, during which period growth rates varied from 21.7% to 35.2%.

U.S. COMIC BOOK PUBLISHING INDUSTRY

Industry Growth

According to Comics Buyer's Guide, one of the longest-running periodical reporting on the comic book industry, the U.S. comics industry saw its seventh consecutive year of increased sales in 2007. The following graph shows the estimated overall U.S. comic book sales from 2001 to 2007:

Source: Comics Buyer’s Guide.

U.S. comic book sales increased from $273 million in 2001 to $680 million in 2007, at an ACR of 16.5%. From 2001 through 2007, U.S. comic book sales experienced substantial growth, during which period growth rates varied from 11.9% to 20.0%.

Comic Book Market Shares

According to Diamond Comic Distributors, the largest comic book distributor that dominates the direct market in the U.S., the comic books published by Marvel and DC Comics account for approximately 70% of its comic book sales to retailers. The following table provides market share data for major comic book publishers as of December 2007:

Distributor	Market Share

Marvel		38.7	%
DC Comics		32.7	%
Dark Horse		5.36	%
Image		3.69	%
IDW		2.38	%
Viz		1.84	%
Tokyopop		1.82	%
Dynamic Forces		1.44	%
Wizard		1.37	%
Eaglemoss		1.02	%
Total major distributors		90.32	%
Others		9.68	%
Total		100.0	%

Source: Comics Buyer’s Guide.

U.S. VIDEO GAME INDUSTRY

Industry Growth

The following graph shows North America video game revenues from 2001 to 2007:

Source: NPD Group – Software revenues.

North America video game sales increased from $6.1 billion in 2001 to $10.0 billion in 2007, at an ACR of 8.7%. The growth rate in 2001 was negative because of poor economic conditions. Video game sales grew 14.3% in 2002. From 2003 through 2006, growth rates of video game sales were moderate and revenues increased from $7.0 billion in 2003 to $8.0 billion in 2006. In 2007, video games sales in North America increased significantly to $10.0 billion, at a growth rate of 25.4%, largely due to the release of video games for new console platforms.

SUMMARY

U.S. box office revenues increased at an ACR of 2.9% from 2001 through 2007. U.S. box office revenues of comic book adaptation movies increased at an ACR of 2.6% from 2002 through 2007. The industry is forecasted to grow at an average annual rate of 3.7% over the next five years, from 2008 to 2012.

Worldwide retail sales of licensed products increased at an ACR of 2.5% from 2001 through 2006. Character licensing is the largest category in the total worldwide retail sales of licensed products, and the revenues increased at an ACR of 2.1% during the same period.

U.S. wholesale eBooks sales increased at an ACR of 40.6% from 2002 through 2007. U.S. internet advertising revenues increased at an ACR of 14.7% from 2000 through 2007.

U.S. comic book sales increased at an ACR of 16.5% from 2001 through 2007. According to Diamond Comic Distributors, the comic books published by Marvel and DC Comics account for approximately 70% of its comic book sales to retailers.

North America video game revenues increased at an ACR of 8.7% from 2001 to 2007.

COMPETITION ANALYSIS

Platinum is a comic-based entertainment company, focused on adapting its character library to film, television, publishing (both print and digital), merchandising, licensing and all other media. Its library consists of 5,622 characters in various genres, including science fiction, fantasy, horror, mystery, romance, comedy, crime, action, and family. Our research and management interviews revealed that the Company had the following main competitors in the entertainment industry¹⁸:

Company	Divisions		Founded		Assets		Revenue		Content Library
					(Billions)		(Billions)
Marvel Entertainment, Inc.		Licensing (consumer products, studio media licensing, destination-based entertainment, promotions, publications); Publishing (comic books based on the Marvel Universe); Toys; Film Production		1933	$	0.82	$	0.49		Over 5,000 characters

DC Comics (Warner Bros. Entertainment, Inc.)		Licensing; Publishing(comic books and graphic novels: Vertigo - mature reader line & WildStorm - cutting edge action line)		1935		n/a		n/a		n/a

Walt Disney Company		Median Network(broadcast television network, television production and distribution operations, Internet and mobile);ABC Television Network(multiple TV and radio stations);Parks and Resorts(theme parks, hotels, retail, and dining);Studio Entertainment;(production and acquisition of motion pictures, direct-to-DVD, musical recordings, and live stage plays);Consumer Products(licenses Disney characters)		1923	$	62.77	$	36.38		n/a

DreamWorks Animation SKG, Inc.		Animation(computer generated animated feature films for theatrical, home entertainment, and TV releases)		1985	$	1.33	$	0.77		n/a

¹⁸Source: Yahoo! Finance, companies’ 10-Ks and 10-Qs. Assets data is obtained from most recent quarter available, and revenue data is for the trailing twelve months.

Company	Divisions		Founded		Assets		Revenue		Content Library
					(Billions)		(Billions)
Lions Gate Entertainment Corp.		Production and Distribution of Film Entertainment(theatrical, TV, home entertainment, family entertainment, video-on-demand, and music content)		1986	$	1.38	$	1.16		8,100 motion pictures 3,800 TV episodes

Time Warner, Inc.		AOL(online advertising services, Internet access subscription services);Cable(video, high-speed data services, and Internet access);Film entertainment (production and distribution of theatrical motion pictures, TV shows, animation and other programming, licensees rights);Networks(domestic and international networks and pay TV programming services);Publishing(magazines and websites)		1985	$	1,338	$	46.48		n/a

Platinum’s main competitors have established superior longevity of operations, depth in management and financial performance and resources. However, the size of Platinum’s character library is comparable to Marvel and DC Comic’s and more diverse with respect with types of genre, and offers story lines of more recently developed characters beyond superhero status. Overall, Platinum operates in a niche but competitive environment. The Company’s competitive strategy is to promote and commercialize its more diverse and newer characters to its multiple target audiences.

ECONOMIC ANALYSIS

INTRODUCTION

An analysis of the economic environment is used in developing reasonable expectations about a business’ future prospects. The economy’s condition may have a significant impact on investment prospects and, therefore, the related valuation of a business. Platinum was a comic-based entertainment company, focused on adapting it character library to film, television, publishing (both print and digital), merchandising, licensing and other media, mainly throughout the U.S. and Europe. Therefore, we analyze the U.S. and European economies in the sections that follow.

THE U.S. ECONOMY

Growth

In the second half of 2007, the U.S. economy began to show signs of a slowdown due to the global credit crunch and mounting sub-prime mortgage concerns. To avert further economic decline and stem a potential liquidity crisis, the Federal Reserve has reduced the Federal Funds rate six consecutive times since the credit crisis erupted in August 2007. The following graph illustrates quarterly Gross Domestic Product (“GDP”) growth in the U.S. from first quarter of 2000 through 2007:

Source: U.S. Department of Commerce, Bureau of Economic Analysis

(measured in 2000-chained dollars)

On an annual basis, U.S. GDP has grown every year from 2000 to 2006. The growth trend appeared to continue through the third quarter of 2007. Despite the growth in GDP on a yearly basis, the growth rate has varied on a quarterly basis, particularly during 2000 and 2001. GDP experienced several quarters of decline throughout 2000 and 2001 as the economy was in the initial stages of recovering from the recession. GDP growth began to accelerate in 2002 and 2003 as the economic recovery began to pick up momentum. During 2004 and 2005, GDP grew at a more stable rate. During 2006 and the first half of 2007, GDP growth began to trend lower as the economy began to stabilize. However, the forth quarter of 2007 posted growth of 0.6% due to weaker economic conditions.

Unemployment

The following chart presents a comparison of the U.S. unemployment rates from 2000 through February 2008:

Sources: U.S. Department of Labor, Bureau of Labor Statistics (www.bls.gov)

*Average monthly data from January to February 2008.

The U.S. unemployment rate increased after the economic slowdown in 2001 to 5.8% in 2002 and 6.0% in 2003. In 2004 it decreased to 5.5%, and continued to decrease to 4.6% in 2006 and 2007 as the economy began to recover. However, the U.S. unemployment rate started to increase in 2008 as a result of a perceived economic downturn.

Consumer Confidence

The Consumer Confidence Index (“CCI”) reflects consumers’ views of current and future business and economic trends and how they expect to be affected by those trends. The CCI is measured by comparing consumer confidence with a base year of 1985 equaling 100. Consumers typically increase their spending when consumer confidence is high or rising. The following chart presents the average annual U.S. CCI from 2000 through February 2008:

Source: NFO Research, Inc. (www.pollingreport.com)

*Average monthly data from January to February 2008.

The average annual CCI decreased from 2000 to 2003 due in part to an economic downturn. In 2003 the CCI dropped to 79.8, its lowest level in the past ten years, before trending upward in 2004. The CCI continued its upward trend between 2004 and 2006, and then dropped significantly to 81.2 in February 2008.

Personal Income

Personal income indicates the total amount of money consumers are earning. The following graph shows U.S. personal income for 2000 through 2007:

Source: U.S. Department of Commerce, Bureau of Economic Analysis

The U.S. personal income grew every quarter from the first quarter of 2000 through the third quarter of 2007, growing from $8,266.2 billion in first quarter 2000 to $11,853.5 billion in forth quarter 2007.

Disposable Income

Disposable income indicates the amount of money consumers are making after taxes have been paid, indicating the amount available for spending or saving. Thus, consumers will spend more on non critical services such as health clubs when disposable income is higher. The following chart presents quarterly U.S. disposable personal income from 2000 through 2007:

Source: U.S. Department of Commerce, Bureau of Economic Analysis

While there was some fluctuation between quarters, disposable personal income grew in every year from 2001 through 2007, reaching higher fourth quarters in each year than in the previous.

FORECASTS FOR THE U.S. ECONOMY

The Anderson Forecast¹⁹

The September 2007 Anderson Forecast projected that:

The U.S. GDP, measured in constant dollars, would increase by 1.8% in 2007, 1.8% in 2008, and 3.0% in 2009.

U.S. unemployment rate would increase to 4.6% in 2007, 5.1% in 2008, and 5.1% in 2009; and

U.S. consumption would grow by 2.7 in 2007, 2.0% in 2008, and 2.6% in 2009.

The Livingston Survey²⁰

The December 2007 Livingston Survey projected that:

The U.S. economy’s output would grow at an annual rate of 1.9% in the first half of 2008 and then increase to an annual rate of 2.8% in the second half of the year;

U.S. unemployment was expected to rise from 4.8% in December 2007 to 5.0% in June 2008 and then decrease slightly to 4.9% by the end of 2008; and

The Consumer Price Index inflation would average 2.8% in 2007, then increase to 3.0% in 2008, and fall back to 2.1% in 2009.

The Congressional Budget Office Survey²¹

In January 2008, the Congressional Budget Office projected that:

Economic growth was forecasted to grow at an inflation adjusted annual rate of 1.7% in 2008, 2.8% in 2009, 3.1% in 2010 through 2013 and then decline to an inflation adjusted annual growth rate of 2.5% from 2014 to 2018;

The Consumer Price Index was expected to grow at an annual rate of 2.9% throughout 2008 and 2.3% in 2009 and 2.2% for the years 2010 through 2018; and

The Unemployment Rate was anticipated to average about 5.1% throughout 2008, increase to 5.4% in 2009 and then decline to 4.9% during 2010 through 2013.

¹⁹ The Anderson School at UCLA. “The UCLA Anderson Forecast For the Nation And California, 3^rd Quarter 2007 – 4^th Quarter 2009.” September 2007.

²⁰ The Federal Reserve Bank of Philadelphia. “The Livingston Survey, December 2007 Release.”

²¹Congressional Budget Office. “The Budget and Economic Outlook: An Update.” August 2007.

THE EUROPEAN ECONOMY

European Growth

The European economy is recovering from sluggish growth experienced in 2001 through 2003. The following graph shows quarterly GDP growth in Europe for the first quarter of 2000 through the fourth quarter of 2007, most recent data available:

Source: European Central Bank Statistical Data Warehouse

On an annual basis, European GDP grew every year during the period under review. However, quarterly growth rates varied widely from 2000 through 2007, dropping from a high point of 4.63% in the second quarter of 2000 to a low of 0.46% in the second quarter of 2003. From the fourth quarter of 2003 through the fourth quarter of 2007, European GDP growth was positive in each quarter, reaching a high of 3.20% during the fourth quarter of 2006. In the fourth quarter of 2007, European GDP grew by 2.21%.

European Unemployment

The following graph displays the unemployment rate in Europe from 2000 through 2007, the most recent data available:

Source: European Central Bank Statistical Data Warehouse

Unemployment rate in Europe increased each year from 7.78% in 2001 to 8.80% in 2004. Since, the European unemployment rate declined to 7.41% in 2007.

FORECASTS FOR THE EUROPEAN ECONOMY

The Euro-area GDP Growth Projection²²

In August 2007, the Directorate General for Economic and Financial Affairs of the European Commission projected that:

GDP in the Euro Area would grow 0.3% to 0.8% in the third quarter of 2007 and 0.2% to 0.8% in the fourth quarter of 2007; and 0.2% to 0.9% in the first quarter of 2008.

European Economic Forecasts²³

In July 2007, the European Commission projected the following for the European Economy:

GDP in the 27 country European Union area would grow by 2.9% in 2007, 2.4% in 2008 and 2009;

Consumption would increase 2.3% in 2007, 2.4% in 2008, and 2.2 in 2009; and

The Unemployment Rate in the European Union, which was 7.9% in 2006, would fall to 7.1% in 2007, 6.8% in 2008, and 6.6% in 2009.

²²European Commission Directorate General for Economic and Financial Affairs. “The Euro-area GDP growth projection.” August 14, 2007.

²³ European Economy 2007. “Economic forecast Spring 2007.” May 7, 2007.

SUMMARY

U.S. Economy

After strong economic growth in the late 1990s and early 2000, the U.S. economy slowed in late 2000 and entered into a recession in March 2001. In 2002 and the first half of 2003, the U.S. economy appeared to be in a state of recovery but was growing slowly. In the second half of 2003 through the end of 2005, the economy grew strongly, indicating an expansion of the U.S. economy. However, in the second half of 2007, the U.S. economy began to show signs of a slowdown due to the global credit crunch and mounting sub-prime mortgage concerns.

U.S. unemployment rate increased after the economic slowdown in 2001 and began to decrease in 2004 and 2005. However, the unemployment rate began to increase in the second half of 2007 due to a perceived economic downturn.

U.S. average annual CCI was at its lowest point in 2003 at 79.8, after which it continued its upward trend between 2004 and 2006, and then dropped significantly to 81.2 in February 2008. The U.S. personal income and disposable personal income grew in every quarter from 2000 through the third quarter of 2007.

U.S. GDP growth is expected at 1.8% in 2007 and between 1.7% and 2.3% in 2008. U.S. unemployment rate is forecasted to range between 4.9% and 5.1% in 2008, and between 5.0% and 5.4% in 2009. The Consumer Price Index inflation is expected to average 2.8% in 2007, then increase to 3.0% in 2008, and fall back to 2.1% in 2009.

European Economy

The European economy is recovering from sluggish growth experienced in 2001 through 2003. On an annual basis, European GDP grew in every year during the period under review. In the fourth quarter of 2007, European GDP grew by 2.21%.

European GDP growth forecasts predict GDP growth in the 27 country European Union area to slow to 2.4% in 2008 and 2009.

VALUATION ANALYSIS

INTRODUCTION

We are performing a valuation of the fair market value and fair value of a 100% equity interest in the Intellectual Property. In order to value the Intellectual Property, we must use the standards of fair market value, fair value, and consider all relevant factors.

DEFINITION OF FAIR MARKET VALUE

Fair market value is defined by the American Society of Appraisers as:

The amount at which property would change hands between a willing seller and a willing buyer when neither is acting under compulsion and when both have reasonable knowledge of the relevant facts.

We also considered Statement of Financial Accounting Standards (“SFAS”) No. 157, in which fair value is defined as follows:

The exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability in the market in which the reporting entity would transact for the asset or liability, that is, the principal or most advantageous market for the asset or liability. The transaction to sell the asset or transfer the liability is a hypothetical transaction at the measurement date, considered from the perspective of a market participant that holds the asset or owes the liability. Therefore, the definition focuses on the price that would be received to sell the asset or paid to transfer the liability (an exit price), not the price that would be paid to acquire the asset or received to assume the liability (an entry price).

We also considered the definition of fair market value as defined under Section 20.2031-1(b) of the Estate Tax Regulations and Section 23.2312-1 of the Gift Tax Regulations, which define fair market value as:

The price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of the relevant facts.

In addition, we also considered the factors listed under Appendix H: The Process of Business Valuation and Diligence Procedures, page 142.

DATE OF VALUE

The date of value is March 31, 2008.

RISK/REWARD PROFILE

The following outlines Platinum’s risk/reward profile as of the date of value:

Company Factors

Platinum was established in 1996 and has operated for approximately 11 years.

Platinum’s executive management team has extensive experience.

Platinum is focused on adapting its character library to film, television, publishing (both print and digital), video games, merchandising, licensing and other media. Its library consists of 5,622 characters in various genres, including science fiction, fantasy, horror, mystery, romance, comedy, crime, action, and family.

In addition to in-house development and further acquisitions, Platinum is developing content with professionals outside the realm of comic books. The Company has teamed up with screenwriters, producers, directors, movie stars, and novelists to develop entertainment content and potential new franchise properties. Every project is designed for eventual adaptation to all media platforms, including film and television, digital publishing, print publishing, video games and merchandising licensing.

In 2007 and through the first quarter of 2008, Platinum:

Sold Unique to Disney Studios, with the anticipation that it will go into production in 2009;

Entered into a 2-year option agreement with DreamWorks, in association with Universal Pictures , Paramount Pictures, and Imagine Entertainment, to acquire the film production rights to Cowboys & Aliens, with the goal to produce a feature film; and

Completed a co-production deal on Dead of Night with Hyde Park Entertainment, with anticipated production start date Summer or Fall 2008; and

Completed a co-production deal on Witchblade with Arclight Films and Top Cow Entertainment with anticipated production start date in Fall 2008.

Currently Platinum is in negotiation with several major film studios to co-produce the following titles:

Atlantis Rising

Hunter

Mal Chance

On January 10, 2008, Platinum filed Form SB-2 and provided prospectus to offer the resale by the selling stockholders of up to 66,255,825 shares or 32.92% of the Company’s common stock outstanding. As of February 1, 2008, Platinum became a publicly traded company on the OTCBB. As of March 31, 2008, the number of shares of Platinum’s common stock outstanding was 216,921,227.

Platinum’s Total Revenues increased at an ACR of 42.3% from 2002 through 2007. Platinum did not incur any Cost of Revenues from 2002 though 2006. In 2007, Cost of Revenues represented 14.2% of Total Revenues. Total Operating Expenses increased during the same period under review as the Company actively recruited executives and other talents to help exploit the Company’s library of comic book characters. Platinum had Operating Losses and Net Losses from 2002 through 2007, due to the establishment and expansion of the business.

Total Assets grew at an ACR of 31.8% from 2002 through 2007. Total Liabilities varied between $5,672,224 and $9,664,312 during the period under review. Total Shareholders’ Equity was negative during the period under review due to Net Losses from 2002 through 2007.

Since Platinum had minimum Revenues and significant Net Losses during the period under review, and since the Company’s business plan is to generate significant film entertainment and online revenues in the next several years through active exploitation of its comic book character library, we have given limited consideration to Platinum’s historical financial performance as a basis for our valuation. However, our valuation takes into account the risks of the Company not obtaining adequate financing and its ability to continue as a going concern.

Industry Factors

²⁴ Ibid.

U.S. wholesale eBooks sales increased at an ACR of 40.3% from 2002 through 2007. U.S. internet advertising revenues increased at an ACR of 14.7% from 2000 through 2008.

North America video game revenues increased at an ACR of 8.7% from 2001 to 2007.

Competitive Factors

Economic Factors

U.S. Economy

U.S. GDP growth is expected at 1.8% in 2007 and between 1.8% and 2.3% in 2008. U.S. unemployment rate is forecasted to range between 4.9% and 5.1% in 2008, and between 5.0% and 5.1% in 2009. The Consumer Price Index inflation is expected to average 2.8% in 2007, then increase to 3.0% in 2008, and fall back to 2.1% in 2009.

European Economy

European GDP growth forecasts predict GDP growth in the 27 country European Union area to slow to 2.4% in 2008 and 2009.

METHODOLOGICAL APPROACHES

We determined the fair market value of the Intellectual Property by determining the value of each of the Company’s divisions. For each of the divisions, the following presents an overview of the major production / marketing assumptions as well as references to the supporting schedules, which include independently derived market and industry support for the assumptions used in our valuations.

Unless otherwise indicated, for each of the divisions, we used the following valuation methods to determine the indicated fair market value of the Intellectual Property:

Discounted Cash Flow (“DCF”) Method (income approach)

Market Multiple Method (market approach)

1. Film Entertainment: Licensed Film Division

The Licensed Film Division model assumes that Platinum Studios, Inc. sells theatrical film rights of high budget films (with average budgets of $50 - $65 million) to one of the major Hollywood Studios for a license fee, and retains partial merchandising rights.

The number of projects per year ranges between 1 and 2.

Schedules 3 to 6 present our overall valuation analysis.

Exhibits 1 to 5 provide support for Schedule 3 (Projections).

Appendices A-2 to A-4 provide support for Exhibit 1.

Exhibits 6A to 6C, and 7 provide support for Schedule 4 (DCF Method).

Appendix C provides support for Schedule 5 (Market Method).

2. Film Entertainment: Joint Venture Division

The Joint Venture Division model assumes that Platinum Studios, Inc. forms joint ventures with other studios to produce and distribute low budget films (with average budgets of $15 - $25 million), and Platinum assumes 30% of all costs and profits.

The number of projects per year ranges between 2 and 3.

Schedules 7 to 10 present our overall valuation analysis.

Exhibits 8 to 12 provide support for Schedule 7 (Projections).

Appendices A-5 to A-8, and Appendix B provide support for Exhibit 8.

Exhibits 6A to 6C, and 7 provide support for Schedule 8 (DCF Method).

Appendix C provides support for Schedule 9 (Market Method).

3. Film Entertainment: Film Fund Division

The Film Fund Division model assumes that Platinum Studios, Inc. finances 100% of low budget Indie films (with average budgets of $10 million) via the Film Fund.

The number of projects per year ranges between 0 and 5.

Schedules 11 to 14 present our overall valuation analysis.

Exhibits 13 and 14 provide support for Schedule 11 (Projections).

Appendix A-9 provides support for Exhibit 13.

Exhibits 6A to 6C, and 7 provide support for Schedule 12 (DCF Method).

Appendix C provides support for Schedule 13 (Market Method).

4. Film Entertainment: Direct to DVD Division

The Direct to DVD Division model assumes that Platinum Studios, Inc. finances 100% of Direct to DVD films (with average budgets of $1.5 million) via private financing.

The number of projects per year ranges between 0 and 7.

Schedules 15 to 18 present our overall valuation analysis.

Exhibits 15 to 17 provide support for Schedule 15 (Projections).

Appendix D provides support for Exhibit 15.

Exhibits 6A to 6C, and 7 provide support for Schedule 16 (DCF Method).

Appendix C provides support for Schedule 17 (Market Method).

5. Digital Publishing

The Digital Publishing model assumes that revenues are generated through: Merchandise Sales, Advertising Sales, Gaming Revenues, Subscription Revenues and Syndication Revenues.

Schedules 19 to 22 present our overall valuation analysis.

Exhibits 18 to 20 provide support for Schedule 19 (Projections).

Exhibits 21A to 21C provide support for Schedule 20 (DCF Method).

Appendix E provides support for Schedule 21 (Market Method).

6. Video Network

The Video Network model assumes that revenues are generated through Advertising Sales.

Schedules 23 to 26 present our overall valuation analysis.

Exhibits 22 to 23 provide support for Schedule 23 (Projections).

Exhibits 21A to 21C provide support for Schedule 24 (DCF Method).

Appendix F provides support for Schedule 25 (Market Method).

7. Print Publishing

We utilized the revenue multiplier method, a market-based method, and applied a revenue multiple in the high range to account for expected growth in future revenues and profits.

Schedule 27 presents our overall valuation analysis.

8. Licensed Video Games

The Licensed Video Games model assumed that revenues are generated through license agreements with video game production and distribution studios.

Schedules 28 and 29 present our overall valuation analysis.

Exhibit 24 provides support for Schedule 28 (Projections).

Appendices G-1 to G-2 provide support for Exhibit 24.

Exhibits 6A to 6C, and 7 provide support for Schedule 29 (DCF Method).

9. Licensing and Merchandising

The Licensing and Merchandising model assumes that revenues are generated through license agreements with distributors based on IP in addition to Film Entertainment, Digital Publishing, and Video Games.

Schedule 30 presents our overall valuation analysis.

10. The Comic Book Challenge

We utilized the Cost Approach to determine the indicated fair market value of the Comic Book Challenge.

The following schedules and accompanying endnotes, exhibits and appendices present our valuation analysis.

Schedule 3

Platinum Studios, Inc.

Film Entertainment: Projected Cash Flow for Licensed Film Division ¹

Date of Value: March 31, 2008

	2008		2009		2010		2011		2012		2013		2014		2015		2016		2017		2018
	(1)		(2)		(3)		(4)		(5)		(6)		(7)		(8)		(9)		(10)		(11)
Assumptions:

Action
High Budget		0		2		1		1		1		0		0		1		0		0		1

Comedy
High Budget		0		0		0		1		0		1		1		1		1		1		0

Thriller
High Budget		0		0		1		0		1		1		1		0		1		1		1
Total Projects Began per Year		0		2		2		2		2		2		2		2		2		2		2

Projected Cash Flows:

Revenue from Film License	$	0	$	2,500,000	$	2,500,000	$	2,500,000	$	2,500,000	$	2,500,000	$	2,500,000	$	2,500,000	$	2,500,000	$	2,500,000	$	2,500,000

Gross Receipts
Domestic Theatrical	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
International Theatrical		0		0		0		0		0		0		0		0		0		0		0
Domestic Home Video		0		0		0		0		0		0		0		0		0		0		0
International Home Video		0		0		0		0		0		0		0		0		0		0		0
Domestic Television
PPV		0		0		0		0		0		0		0		0		0		0		0
Pay TV		0		0		0		0		0		0		0		0		0		0		0
Network TV		0		0		0		0		0		0		0		0		0		0		0
Syndicated TV		0		0		0		0		0		0		0		0		0		0		0
International Television
Pay TV		0		0		0		0		0		0		0		0		0		0		0
Syndicated TV		0		0		0		0		0		0		0		0		0		0		0
Domestic Merchandising		0		0		1,217,592		968,056		949,048		1,059,749		644,486		623,030		958,203		617,643		599,348
International Merchandising		0		0		1,301,564		996,886		1,030,393		1,093,682		666,427		642,258		1,038,256		639,584		619,028
Total Gross Receipts	$	0	$	0	$	2,519,156	$	1,964,942	$	1,979,441	$	2,153,431	$	1,310,913	$	1,265,288	$	1,996,459	$	1,257,227	$	1,218,376

Distribution Costs
Domestic Theatrical	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
International Theatrical		0		0		0		0		0		0		0		0		0		0		0
Domestic Home Video		0		0		0		0		0		0		0		0		0		0		0
International Home Video		0		0		0		0		0		0		0		0		0		0		0
Domestic Television Cost		0		0		0		0		0		0		0		0		0		0		0
International Television Cost		0		0		0		0		0		0		0		0		0		0		0
Total Distribution Costs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Publicity Expenses
Domestic Theatrical
Advertising	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Prints		0		0		0		0		0		0		0		0		0		0		0
International Theatrical
Advertising		0		0		0		0		0		0		0		0		0		0		0
Prints		0		0		0		0		0		0		0		0		0		0		0
Total Publicity Expenses	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Negative Costs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Net Profit	$	0	$	2,500,000	$	5,019,156	$	4,464,942	$	4,479,441	$	4,653,431	$	3,810,913	$	3,765,288	$	4,496,459	$	3,757,227	$	3,718,376

Less:

Participations (10% of Net Profit each)
Talent	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Writers		0		0		0		0		0		0		0		0		0		0		0
Total Participations	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Net Profit After Participations	$	0	$	2,500,000	$	5,019,156	$	4,464,942	$	4,479,441	$	4,653,431	$	3,810,913	$	3,765,288	$	4,496,459	$	3,757,227	$	3,718,376

Less:

Content Partners (15% of Net Profit After Participations)	$	0	$	375,000	$	752,873	$	669,741	$	671,916	$	698,015	$	571,637	$	564,793	$	674,469	$	563,584	$	557,756

Contribution Profit from Licensed Films	$	0	$	2,125,000	$	4,266,283	$	3,795,201	$	3,807,525	$	3,955,416	$	3,239,276	$	3,200,495	$	3,821,990	$	3,193,643	$	3,160,620

Source: Exhibits 1 through 5.

Note 1: Assumption: Platinum Studios, Inc. sells theatrical film rights of high budget films to one of the Big Hollywood Studios for a license fee; retains partial merchandising rights.

SANLI PASTORE & HILL, INC.

Endnotes to Schedule 3

Platinum Studios, Inc.

Date of Value: March 31, 2008

Note 1

The Licensed Film Division model assumes that Platinum Studios, Inc. sells theatrical film rights of high budget films (with average budgets of $50 - $65 million) to one of the major Hollywood studios for a license fee, and retains merchandising rights.

To estimate the future cash flows generated by the Licensed Film Division, we estimated each film’s revenues and costs over the first ten years, “ultimates”, based on genre and budget size as presented in Exhibit 1, page 97.

We then estimated the timing of the cash flows in each year, as presented in Exhibit 2, page 98. As such, we developed the cash flows of each individual film in each year based on genre and budget size, as presented in Exhibits 3 to 5, pages 99 to 101.

In addition, we also estimated the number of licensed film deals that Platinum would enter into each year. Among the 84 comic book adaptation movies since 1978 to present, there are 57 original movies and 27 sequels to 13 of the original movies. Based on our calculations:

22.8% of the movies produce at least 1 sequel;

10.5% of the movies produce at least 2 sequels;

5.3% of the movies produce at least 3 sequels; and

5.3% of the movies produce at least 4 sequels.

With the potential to create film franchises and spin-offs, this enables the Company to produce more film projects derived from the same characters. Based on Platinum’s current licensed film deals, interviews with management, and the potential of sequels and spin-offs, we assumed the number of projects per year would range between 1 and 2.

A film’s ultimate revenues consist of theatrical revenues, home video revenues, TV revenues, and merchandising revenues. Costs of a film primarily consist of production costs, distribution costs, and publicity expenses.

Based on the assumptions of the Licensed Film Division model, we determined the revenues generated by the Licensed Film Division consisted of licenses fees and merchandising sales.

Schedule 4

Platinum Studios, Inc.

Method 1: Discounted Cash Flow Method for Licensed Film Division¹

Date of Value: March 31, 2008

	Apr 1 - Dec 31, 2008			2009			2010			2011			2012			2013			2014			2015			2016			2017			2018			Terminal Year - 2019
	(1)			(2)			(3)			(4)			(5)			(6)			(7)			(8)			(9)			(10)			(11)			(12)

Contribution Profit from Licensed Films (Schedule 3)	$	0		$	2,125,000		$	4,266,283		$	3,795,201		$	3,807,525		$	3,955,416		$	3,239,276		$	3,200,495		$	3,821,990		$	3,193,643		$	3,160,620

Less: Overhead Allocation		(187,500	)		(750,000	)		(773,250	)		(797,221	)		(821,935	)		(847,415	)		(873,684	)		(900,769	)		(928,692	)		(957,482	)		(987,164	)

EBITDA from Licensed Films		($187,500	)	$	1,375,000		$	3,493,033		$	2,997,980		$	2,985,590		$	3,108,002		$	2,365,592		$	2,299,726		$	2,893,298		$	2,236,161		$	2,173,456

Less: Depreciation		0			(100,000	)		(100,000	)		(100,000	)		(100,000	)		(100,000	)		(100,000	)		(100,000	)		(100,000	)		(100,000	)		(100,000	)

EBIT from Licensed Films		($187,500	)	$	1,275,000		$	3,393,033		$	2,897,980		$	2,885,590		$	3,008,002		$	2,265,592		$	2,199,726		$	2,793,298		$	2,136,161		$	2,073,456

Less: Taxes (40% tax rate)		75,000			(510,000	)		(1,357,213	)		(1,159,192	)		(1,154,236	)		(1,203,201	)		(906,237	)		(879,891	)		(1,117,319	)		(854,464	)		(829,382	)

Net Income from Licensed Films		($112,500	)	$	765,000		$	2,035,820		$	1,738,788		$	1,731,354		$	1,804,801		$	1,359,355		$	1,319,836		$	1,675,979		$	1,281,697		$	1,244,073

Add: Depreciation		0			100,000			100,000			100,000			100,000			100,000			100,000			100,000			100,000			100,000			100,000
Less: Capital Expenditures		0			(200,000	)		(206,000	)		(212,180	)		(218,545	)		(225,102	)		(231,855	)		(238,810	)		(245,975	)		(253,354	)		(260,955	)

Net Cash Flow to MVIC from Licensed Films		($112,500	)	$	665,000		$	1,929,820		$	1,626,608		$	1,612,809		$	1,679,699		$	1,227,500		$	1,181,025		$	1,530,004		$	1,128,343		$	1,083,119

Terminal Value Calculation
End Year Economic Income (E₀)																																		$	1,083,119
Long Term Growth Rate (g)																																			3.1	%
Terminal Year Economic Income (E₁ = E₀ x (1+g))																																		$	1,116,695
Capitalization Rate (discount rate - g)																																			13.9	%
Terminal Value (V = E₁ / capitalization rate)⁴																																		$	8,028,212

Discount Rate (Exhibits 6A - 6C)²		1.6	%		17.0	%		17.0	%		17.0	%		17.0	%		17.0	%		17.0	%		17.0	%		17.0	%		17.0	%		17.0	%		17.0	%

Present Value Factor³		0.99			0.82			0.70			0.60			0.51			0.44			0.37			0.32			0.27			0.23			0.20			0.20

Present Value of Net Cash Flow to MVIC

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Mr. Brian Altounian
Valuation of IP for Platinum Studios, Inc.
June 12, 2008	*Los Angeles Sacramento*
Page 2 of 6

Mr. Brian Altounian
Valuation of IP for Platinum Studios, Inc.
June 12, 2008	*Los Angeles Sacramento*
Page 3 of 6

Mr. Brian Altounian
Valuation of IP for Platinum Studios, Inc.
June 12, 2008	*Los Angeles Sacramento*
Page 4 of 6

Mr. Brian Altounian
Valuation of IP for Platinum Studios, Inc.
June 12, 2008	*Los Angeles Sacramento*
Page 5 of 6

Platinum Studios, Inc. · 8-K · For 6/12/08 · EX-99.1

Filed On 6/20/08, 1:02pm ET · Accession Number 1144204-8-36070 · SEC File 333-145871

Current Report — Form 8-K
Filing Table of Contents

EX-99.1 — Miscellaneous Exhibit

This exhibit is an HTML Document rendered as filed. [ Alternative Formats ]

	Fair Market Value and Fair Value of Intellectual Property

Film Entertainment

Licensed Films	$	8,750,000

Joint Venture Films		18,457,000

Film Fund Films		23,565,000

Direct to DVD Films		9,314,000

Film Entertainment Total	$	60,041,000

Digital Publishing	$	28,816,000

Video Network	$	42,391,000

Print Publishing	$	812,000

Licensed Video Games	$	29,852,000

Licensing and Merchandising	$	7,991,000

Comic Book Challenge	$	500,000

Total Market Value of Invested Capital	$	170,403,000

Less:
Net Working Capital	$	(1,598,000	)
Property and Equipment	$	(257,000	)
Existing Debt	$	(4,662,000	)
Projected Debt Funding	$	(13,848,000	)

Total Fair Market Value and Fair Value of 100% Equity Interest in Intellectual Property	$	150,038,000

Platinum Studios, Inc. · 8-K · For 6/12/08 · EX-99.1

Filed On 6/20/08, 1:02pm ET · Accession Number 1144204-8-36070 · SEC File 333-145871

﻿Current Report — Form 8-KFiling Table of Contents

EX-99.1 — Miscellaneous Exhibit

This exhibit is an HTML Document rendered as filed. [ Alternative Formats ]

Current Report — Form 8-K
Filing Table of Contents