half your media is wasted. we know which half

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1 HALF YOUR MEDIA IS WASTED DIA Copyright All Media Count, 2012 © ALL MEDIA COUNT Investment Proposal 2012

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Page 1: Half your media is wasted. We know which half

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HALF YOUR

MEDIA IS

WASTED

DIA

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ALL MEDIA COUNT Investment Proposal 2012

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We know which half

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IN 1 MINUTE (CLICK NUMBERS TO JUMP TO SECTION)

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Brands waste a lot of money on advertising because of poor media data.

That’s a huge opportunity for us

because we can identify media waste better than any other company can.

Our cross-media analytics system is great, advertisers love it,

and other companies in this space have nothing like it.

But we aggravate the media agencies

because our activity is contrary to their business model.

Ironically, exit is likely to be via trade sale to one of the media agency groups,

triggered by raising advertisers’ expectations of them and disrupting their business.

To pull that off, we need to talk to a lot of advertisers, and do so quickly

so are seeking 300K for 10.5%, primarily for marketing, sales and client service.

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READY?

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IF COMPANIES COULD

REACH MORE PEOPLE WITH THEIR ADS, THEY WOULD

MAKE MORE MONEY

BUT THEY HAVE A PROBLEM WITH media

Click here to return to contents page

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HALF of their media investment is wasted.*

And we can prove it.

And fail to reach the rest They saturate too few people

with too much advertising

* “Half my advertising is wasted, but I don’t know which half”.

Quotation attributed to both John Wannamaker and Lord Leverhulme in the early 20th century.

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Why are advertisers so wasteful?

Most media are NOT WELL MEASURED in China

The metrics for each media type are INCOMPATIBLE – like

apples and oranges

1

2

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BUT IN A MARKET WHERE…

BAD can be GOOD Click here to return to contents page

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55 B US$ spent on ads and media

China’s 2,000 top advertisers

waste US$ 9 to 10 billion.

2011 2014 We’re known us as “the half wasted”

company and have converted 150 to 200 of

China’s top advertisers.

By helping clients confidently re-allocate more than half of their media spend,

our Waste Analysis and related on+offline

analytics services create over US$ 150

million of value for our customers

We also have business coming from other media research,

smaller advertisers, agencies and media owners.

THIS WASTE IS OUR

OPPORTUNITY…

.

THIS is what we are targeting. 9

…AND ALSO THE ESSENCE OF OUR

POSITIONING

And want to MOVE their money to

less wasteful media

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We’ve ALREADY BUILT and are SELLING a Waste Analytics solution.

It is kind of

but looks really cool

C O M

P L I

C A

T E D

Click here to return to contents page

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“Ap

ples to

oran

ges”

的意思是把两件完全不同的东西拿来相提并论.

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A SHORT EXPLANATION OF WHAT WE DO:

Audience data from

DiFfEReNt

media used to be incompatible.

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The audience experience is not the same

Measurement technologies for one could not be used for others

So the data for each was incompatible Ɣ ƕ Ƃ

1

2

Because …

3

They are physically different

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We fix that.

We M A K E the data about these experiences compatible.

And we do it across more than a D O Z E N media types

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Maybe an analogy will help…

Data from different media are like chemical elements. They do not naturally mix.

But at an A T O M I C level they can be joined together.

At AMC we B R E A K

D O W N media behaviors to an “atomic” level

then

that data in any way a client needs.

N R E C O M B E I

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THE EFFECTS OF OUR INNOVATION ARE IMPRESSIVE BUT NOT NECESSARILY POSITIVE FOR EVERYONE INVOLVED (MORE ABOUT AGENCIES LATER).

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We know:

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HOW MANY PEOPLE SEE AN AD CAMPAIGN

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HOW MANY TIMES THEY SEE IT

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AND WHERE THEY SEE IT

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Therefore we

also know:

HOW MUCH the client is

over-spending

1

WHICH media are least and

most wasteful

2

THE sites, programs, publications

that are helping or hindering Reach

and Impact (we name names)

3

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Interested in a REAL EXAMPLE of what

clients actually GET from this?

Click here to return to contents page

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23 An AB-Inbev brand

WASTE ANALYTICS FOR

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TV

Online

Newspaper

Outdoor

Bus LCD

Bus shelter Radio

More than 95% of beer

drinkers saw it

The average beer drinker

saw it more than 100 times

SUMMER 2011

CHENGDU

SPENT ABOUT 20,000,000

RMB (US$3 million)

THE CAMPAIGN

SATURATED THE CITY

7 TYPES OF MEDIA USED

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This flat part is waste

Per

cent

age

who

hav

e se

en th

e ca

mpa

ign

at le

ast 1

0 tim

es

Accumulated Reach and Spending (across all media types)

Cumulative cost (000 Rmb)

MORE EXPLANATION ABOUT THE CHART Each dot on the curve is a media vehicle – a website, a newspaper, a TV program etc. In this chart, all media for the campaign are shown. Each vehicle has a price, so when one is added to the campaign, it increases the cost, shown on the horizontal axis. And by adding more vehicles, the campaign may be seen by more people, shown by the vertical axis. But once the ad is already being broadcast in several places, it gets harder and harder to reach fresh audience, so the audience increase for each new vehicle reduces. After a while it’s impossible to get any new audience because we’re close to saturation; almost everyone has already seen the campaign. The dots are ordered according to best value-for-money: the ones which have a large audience compared to their price are shown on the left. Dots on a flat part of the curve are waste.

The client was able to SEE MEDIA WASTE for the first time.

good.

It shows the client’s money is

building more audience

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SO WHAT ?

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With AMC’s data.

THEY DID NOT NEED TO

SPEND 20,000,000 RMB

They could have got the

same result for

12,000,000

We also tell clients lots of other stuff about what sites and

networks and programs they should use and audience

figures and CPM and ROI and blah blah but it all pretty

much revolves around identifying media waste.

And spend the other

8,000,000 where it will

work better

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WE CHARGE

175,000 Rmb (US$27,000) FOR WASTE ANALYTICS FOR ONE CAMPAIGN IN ONE CITY

AB-INBEV HAS SINCE BOUGHT OUR DATA IN SHANGHAI FOR A YEAR @800,000 RMB (US$123,000)

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We can do this

for any ad campaign

in any city

across any mix of media.

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WE ARE THE ONLY COMPANY THAT CAN DO THIS STUFF

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EVEN THE MEDIA AGENCIES CAN’T DO IT

So they don’t like us [IF YOU’RE GETTING IMPATIENT, CLICK HERE TO FIND OUT WHY]

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Is that it?

YOU MAY BE WONDERING :

NOT QUITE.

THE INNOVATIONS THAT ENABLE US TO IDENTIFY MEDIA WASTE YIELD 5 TYPES OF PRODUCTS & SERVICES.

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[UGLY DIAGRAM ON NEXT SLIDE]

Click here to skip it

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SIMULATION 1

DAILY INDIVIDUAL

MEDIA DATA

CLIENT’S MEDIA PLAN

OFFLINE MEDIA

BEHAVIOUR (SURVEY)

MEDIA EQUALIZING

FACTORS

SIMULATION 2

RATE CARD & CLIENT’S

DISCOUNT INFO

2. WASTE

ANALYTICS

ONLINE MEDIA BEHAVIOUR

(PLUG-IN)

CONSUMER OBSERVATION

PUBLISHED STUDIES

SITE INSPECTIONS

3. CAMPAIGN PLANNING

1. AUDIENCE

STATS

4. AD & BRAND

TRACKING

MEDIA- NEUTRAL TRAFFIC

DATA

PROPRIETARY PLANNING SOFTWARE

5. CUSTOMIZED

RESEARCH

PROPRIETARY

DATA COLLECTION

SYSTEM

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Looks like a lot.

Not just media waste.

So why do we keep going on about media waste ?

Click here to return to contents page

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Because it’s sexy and helps us look unique

AMC

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NUMBER OF MEDIA TYPES THAT CAN BE INTEGRATED

BR

AN

D S

TREN

GTH

(

Aw

aren

ess

x R

epu

tati

on

) THE TROUBLE IS, ALL MEDIA

RESEARCH COMPANIES SAY

THEY’RE UNIQUE.

Don’t they?

AMC China’s media

research & data market = 1.4 B Rmb

(US$215 million).

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So what do we mean by

unique

?

{ }

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Click HERE for a more legible version

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We built the tools to solve this problem because they didn’t exist before

my炒媒体 (“My Fried Media” our data collection

software ) WITH FULL CONTROL OVER THE CODE WE CAN DELIVER FASTER, CHEAPER AND MAKE IT DO PRETTY MUCH WHATEVER WE WANT WITH MINIMAL RISK OF DATA LEAKAGE OR THEFT

data simulation algorithms USING A DETAILED MEDIA HABITS PROFILE FOR EACH RESPONDENT, WE ACCURATELY SIMULATE THEIR DAILY MEDIA USAGE ACROSS THOUSANDS OF MEDIA CONTACT POINTS.

e.p.g. crawler A WEB ROBOT WHICH VISITS EVERY TV STATION’S WEBSITE, READS THEIR DAILY PROGRAMMING INFORMATION AND CONSTRUCTS A UNIFIED ELECTRONIC PROGRAM GUIDE.

online activity recorder WE CAPTURE SITES THAT A PERSON VISITS, HOW OFTEN AND HOW LONG

THEY STAY. BECAUSE IT’S FROM THE SAME RESPONDENTS, OUR ONLINE DATA IS FULLY COMPATIBLE WITH TV DATA.

applbox (our cross media planning software) DEFINE YOUR TARGET, SET CAMPAIGN SCOPE, CHOOSE YOUR FORMATS.

APPLBOX HELPS YOU EVALUATE AND OPTIMIZE MORE THAN 15,000 MEDIA VEHICLES ACROSS 13 MEDIA TYPES AND KNOW – INSTANTLY – THE CROSS

MEDIA REACH FOR ANY CAMPAIGN CONFIGURATION.

lots of other things DATABASES OF MEDIA SPECS, OWNERS, PRICES. HOURS AND HOURS OF

VIDEO FOOTAGE. THOUSANDS OF PHOTOS OF BILLBOARDS, BUS-RIDERS, SHOPPERS, SUBWAY RIDERS – PEOPLE USING ALL KINDS OF MEDIA.

Applbox user interface

My炒媒体

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AND WE HAVE A UNIFYING PHILOSOPHY OF HOW ALL THIS MEDIA STUFF FITS TOGETHER

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What makes us unique is that we have a

SUPERIOR PRODUCT

Which is why a former senior planner at Carat recently said…

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“THERE’S NOTHING THAT EVEN COMES CLOSE TO

AMC’S SYSTEM AT ANY

OF THE AGENCIES. IT

SHOULD BE ON ALL

THEIR DESKTOPS.”

Click here to return to contents page 44

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Then why

isn’t it?

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Because: MEDIA AGENCIES ARE NOT STRUCTURED TO WORK ACROSS MEDIA

(UNLIKE US)

1

TV DEPARTMENT

ONLINE DEPARTMENT

OUTDOOR DEPARTMENT

PRINT DEPARTMENT

Click here to return to contents page

Silos

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OUR MEDIA-NEUTRAL DATA FACILITATES A SHIFT WHICH

ADVERTISERS WANT BUT WHICH AGENCIES ARE NOT

GEARED FOR.

2

Resistance to

Trends

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THE MORE AGENCIES SPEND (WASTED OR NOT) THE MORE

THEY MAKE.

3

A BONUS PAID BY CLIENT TO AGENCY IF A

CAMPAIGN ATTAINS IT’S TARGETS FOR

COMMUNICATION AND POSSIBLY SALES

TYPICALLY 2% TO 5% OF ALL MONEY

SPENT IN MEDIA, WHETHER WASTED

OR NOT.

VARIES GREATLY (UP TO

10% IS COMMON). PAID

BY THE MEDIA VENDOR

TO THE AGENCY OR

MEDIA BUYER. USUALLY

THIS IS UNDECLARED

AND NOT REFUNDED TO

CLIENTS.

Non-aligned

interests

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SO GENERALLY,

IF THE CLIENT SPENDS LESS

THE AGENCY MAKES LESS

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AND WHERE WE ARE GOING

WHERE WE’VE BEEN

WHERE WE ARE NOW

WHICH GOES SOME WAY TO EXPLAINING

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51 * Multinational consumer products company has requested anonymity concerning this trial

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but we have to be nice to them because

one of those lucky agencies

is likely to be…

Click here to return to contents page

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Mr. Right

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Yes, that’s our most likely

exit

strategy:

Acquisition by a media agency group

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[Failing that, by a market research company or group. We’re telling the agency story because it’s more likely.]

Mostly by Ipsos

They pay 5-6 times earnings (more for AdMaster, it is said)

Mostly by WPP

Most of these deals: 80-120 staff, US$3-5 million revenue 10%-20% profit is normal

Complete or partial acquisition of comparable businesses Deals in Media/Marketing Services in China 2009-2011

Media agency group

Research agency

Other acquirers

WPP Group Companies

Other Media groups

Other Research

Ipsos

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THE PROBLEM RIGHT NOW WITH THIS EXIT STRATEGY IS…

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THE AGENCIES USUALLY ignore US.

[OUR DATA MAKES THEM LOOK BAD AND WE DISRUPT THEIR BUSINESS MODEL]

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SOLUTION IS…

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Positioning AMC in the minds of

advertisers as an impartial and

uniquely trustworthy judge of

agency performance.

Giving advertisers the expectation they

should demand more from

their agency.

Showing advertisers how much their

agency wastes and that AMC knows

how to spend the money

better

1

2

3

Click here to return to contents page

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THAT ONE OF THEM SEEKS TO CONTROL US BY ACQUISITION

Which takes us to a tipping point where…

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or an inflection point where…

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WE ARE NOW IN TRIAL

WITH ONE SUCH

ADVERTISER

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AND DOING WORK, TRIALS OR IN DISCUSSIONS WITH OTHERS

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Of course, we are optimistic. But the timing of an inflection point, especially if it pivots on a few clients, is

So, in parallel, we push towards a tipping point

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But unless we get investment, our current

won’t get us to a tipping point very soon

PIPELINE (mid range) Where we Without With

are now investment investment

Client Stage Q1 2012 EOY 2012 EOY 2012

Have talked, met. Interest uncertain 13 17 107

Multiple meetings. Proposal likely 7 16 185

Proposal issued 3 8 178

Contracted, completed or W.I.P 1 3 54

Anticipated Revenue (US$) $218,000 $1,214,000

Notes: Now working with AB-Inbev and in discussions with Coke, Adidas, AdChina, Posterscope, Millward Brown We are also in a full-scale trial with another major advertiser that has requested anonymity In the “with investment” scenario: 1) Average deal value is ~US$50,000 2) Hire four sales people 3) Approx. US$285,000 spend on Sales & Marketing in 2012

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So we need to talk to

A D V E R T I S E R S

Of which there are

T H O U S A N D S

And we need to get our message to them

AGAIN and AGAIN and AGAIN Click here to return to contents page 67

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In other words, our brand needs to be much

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0

2

4

6

8

10

12

0 100 200 300 400 500 600

Ave

rage

dat

a co

llect

ion

co

st p

er p

roje

ct (

00

0 U

S$)

Number of projects and YEAR

1

Not just because it means more customers. It’s also because we

our media data and have lower production costs. So our profitability and…

-USE RE

2011 2012 2013 2014

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But that still leaves us with a problem.

How hard can that be to solve?

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SO MUCH TO DO, SO LITTLE TIME. WE NEED HELP

WHICH BRINGS US TO

INVESTMENT

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For this ANGEL round, we are seeking

US$ 300,000

or HKD equivalent

in exchange for

10.5 %

post money

73 Click here to return to contents page

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WHY WHY WHY a US$2.86m valuation? Co

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1. Major R&D is finished

• Proprietary data collection process

• Proprietary data collection software

• Proprietary media planning software

2. Proven market need

3. Acceptable price point

4. Product is being sold to or in trial with leading advertisers

5. Higher profit than industry average

6. Transformational, not incremental, to acquirer’s business

7. Only modestly above our 2008 seed valuation of US$1.58M

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SALARIES SALES & DATA ADMIN & R&D MARKETING CAPEX

AS A GENERAL INDICATION OF

how we’ll use the money EACH FULL BUNDLE BELOW IS 10% OF THE TOTAL SOUGHT

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26%

50%

16%

3% 5%

Adv-Large

Adv-Med

Adv-Small

Agencies

Owners

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WHAT WE WILL SELL REVENUE (M US$) WHO WE WILL SELL TO

24

8.5

1.2

0.05

in 2014

in 2013

in 2012

in 2011

Waste

Tracking

Planning

Custom

Aud.Stats

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MID-RANGE

P&L (USD 000's)31-Dec-11 31-Dec-12 31-Dec-13 31-Dec-14

Total Sales Revenue54 100% 1,214 100% 8,461 100% 23,840 100%

Business Tax (3) -6% (58) -5% (403) -5% (1,135) -5%

Total Cost of Sales(10) -18% (173) -14% (869) -10% (1,613) -7%

Gross Profit 41 76% 983 81% 7,189 85% 21,092 88%

Total Sales and Marketing Expenses(18) -34% (285) -23% (1,187) -14% (2,094) -9%

Total Research and Development Expenses(5) -10% (77) -6% (213) -3% (233) -1%

Total General and Adminstrative Expenses(103) -190% (527) -43% (1,939) -23% (2,786) -12%

Total Operating Expenses(127) -233% (889) -73% (3,338) -39% (5,113) -21%

Income from Operations(85) -157% 94 8% 3,851 46% 15,979 67%

Income Tax - 0% (24) -2% (963) -11% (3,995) -17%

Net Profit (85) -157% 71 6% 2,888 34% 11,984 50%

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[We can send more numbers if you’re interested]

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We can’t guarantee that

YOU’LL GET REALLY RICH because this, like all investment, involves risk.

BUT… IF our revenue is US$20 million at end of 2014 and IF we’re at 45% profitability and IF we do a trade sale at 6x earnings and IF you buy 3.5% of AMC for US$100,000 in this round and IF there’s no further dilution…

YES, THOSE ARE BIG IFS, BUT YOU WOULDN’T BE AN ANGEL IF YOU DIDN’T HAVE THE STOMACH FOR IT, RIGHT?

…you get something like

US$1.89

MILLION

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For this round, we’ll issue new shares in our parent company,

AMC HK Ltd, at a price of HK$181.50 each. Our ownership structure will change from: this to something like THIS

Shares Percent Shares Percent

Mike Underhill 59,190 53.8% 59,190 48.2%

Other Founders 11,310 10.3% 11,310 9.2%

Seed investors 17,881 16.3% 17,881 14.5%

Employee Stock Options 8,325 7.6% 8,325 6.8%

Option Pool (counted as issued) 13,294 12.1% 13,294 10.8%

New shares pursuant to this Offer ~ ~ 12,893 10.5%

Total issued 110,000 100.0% 122,893 100.0%

[Un-issued shares] 890,000 ~ 877,107 ~

Pre-Offer Post-Offer

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ONCE THAT’S DONE, WE’LL GET ON WITH…

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AGGRAVATING MEDIA AGENCIES AND DELIGHTING ADVERTISERS

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Mike Underhill. Founder & CEO 16 years in China researching advertising, media and brands. Founded AMC in 2007. Formerly GM China for advertising and media research agency Ipsos-ASI. Also TNS, Research International. BA. – Psychology, BCA. – Marketing

Black Huang. IT Development Nine years IT development experience. Formerly qunar.com, Asiacom, Ezcross. Architect of AMC’s cross-media planning system. Two years working with AMC. BSc. – Mechanical Engineering.

Hongsheng Xu. Data Processing Six years media panel data management experience. Formerly with CTR home panels. Three years with AMC BSc. – Information Systems

We are

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Email [email protected] or call +86 138105 90017 for

investment information or to…

take our revolutionary planning software for a spin

see a real case study in which a client saves millions

experience our media survey – where most of AMC’s source data comes from