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“BECOMING THE LARGEST TICKET BROKERAGE COMPANY IN THE USA”
506c OFFERING
JOIN THE NES TEAM!
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This Presentation includes and is based, inter alia, on forward-looking information andstatements that are subject to risks and uncertainties that could cause actual results to differ.These statements and this Presentation are based on current expectations, estimates andprojections, which generally are identifiable by statements containing words such as“expects”, “believes”, “estimates” or similar expressions.
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Although equities.com believes that its expectations and the Presentation are based uponreasonable assumptions, it can give no assurance that those expectations will be achieved orthat the actual results will be as set out in the Presentation.
equities.com is making no representation or warranty, expressed or implied, as to theaccuracy, reliability or completeness of the Presentation, and neither equities.com nor any ofits directors, officers or employees will have any liability to you or any other persons resultingfrom your use of the information contained herein. This Presentation was prepared uponspecial request and the information contained within will not be updated in this Presentation.The following slides should be read and considered in connection with other informationprovided by the company.
Not for public distributionFORWARD LOOKING STATEMENTS
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“NES is a Nevada company”
“The Ticket Brokerage industry is experiencing explosive growth through 2017. The industry is a $6.5 billion dollar industry with major growth opportunities”
National Entertainment Specialists, Inc.
“We were formed for the purpose of executing a classic “buy and build”
Roll-up acquisition strategy”
What we
are?
What are we doing?
What about our
industry?
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WHAT IS A TICKET BROKERING COMPANY AND WHAT DO THEY DO?
Ticket broker companies are in the business of buying and reselling tickets primarily for sporting and entertainment events. This highly fragmented industry consists of approximately 1,000 U.S. entities, many of which cater to a limited metropolitan or geographic clientele.
Most ticket brokers are small businesses averaging 8 to 16 employees, and reporting annual sales from $2 to $25 million a year.The online ticket industry is poised to experience an estimated 140% growth by 2020. This is driven by the evolution of mobile ticketing, increases in disposable income, sports betting, and the construction and upgrade of the live event infrastructure.
A broker typically buys tickets from many diverse sources, including online and physical box offices, individual ticket holders, venues, artists, players, teams, and other brokers. Upon acquiring tickets, brokers then sell their inventory to individual fans, corporations, and to other brokers.
Typically, brokers charge high rates for premium tickets and for tickets to sold-out events. Many tickets are sold for two or three times face value. On average, brokers realize gross margins of 25% to 35% percent on sales.
THE FRAGMENTED TICKET BROKERING INDUSTRY HAS EXPERIENCED EXPONENTIAL GROWTH OVER THE LAST 10 YEARS MAKING IT A:
$6.5 BILLION A YEAR INDUSTRY
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What is a “Roll-up” business acquisition strategy?
A “Roll-up” is a technique used by investors and companies where multiple small companies in the same market are acquired and merged.
• Principal aim is to reduce costs through economies of scale• Increases the valuation multiples a business can command as it acquires
greater scale• Rationalizes competition in crowded and fragmented markets, where there
are often many small participants but room for only a few to succeed
• An investor faced with an opportunity to invest in two competing companies may reduce risk by simply investing in both and merging them. Roll-ups are often part of the consolidation process as new market sectors begin to mature
• Builds a full-capability company, when it would be too costly or time consuming to develop the missing pieces through internal expansion
• Blending companies into 1 often makes the combined company much more attractive for investment, mergers and acquisitions or an initial public offering
• Kraft Foods is a very early example of a rollup in the dairy industry• Waste Management was the most notable rollup made during the 1970’s and
1980’s. It’s acquisition of 133 small-time haulers quickly made it into the largest waste disposal company in the United States
• AutoNation was also a successful rollup effort in the car dealership space spearheaded by Wayne Huizenga founder of Waste Management
What does a “Roll-up” do?
What is objectives and effects of a
“Roll-up”?
How is a “Roll-up” strategy beneficial to an investor and
the Company?
Examples of successful Roll-up
strategies
Why is it so valuable to the growth and valuation of the stock of a company?
The characteristics that can make a rollup attractive is when there are many small players in a fragmented markets or where technology can play an essential role in revitalizing industries with small margins but where technology can impact growth and profits
What is a few of the characteristics that
make a Roll-up attractive?
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WHY A CONSOLIDATION OR “ROLL-UP” STRATEGY IN THE TICKET BROKERAGE INDUSTRY?
ü The U.S. primary ticket market for live music and sporting events is an annual $22 billion market, and is largely transacted online
ü The U.S. secondary ticket market is highly fragmented and ripe for consolidation
ü Forrester Research estimated secondary ticket sales will grow 12% annually
ü The top 20% of online ticket sellers will do approximately 80% of the business
ü Top tier brokers include: StubHub – a formal Ticket Exchange, TicketsNow, TicketLiquidator, CoasttoCoast, the TicketCo and a handful of others
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More on why a “Roll-up” strategy is a good company business strategy and a good investment
Another reason why companies do Roll-ups is because of the higher earnings multiple that can be achieved in businesses. Due to the larger scale in comparison to smaller mom and pop operations. Those smaller operations are vulnerable to changing markets and poor access to capital markets
A Roll-up strategy is a solid long term
solution for companies
A recent roll-up is Valeant Pharmaceuticals International that used more than $30 billion to acquire over 100 companies
The scale of a Roll-up strategy can be
immense
NES HAS IDENTIFIED THE PERFECT MARKET SEGMENT TO INITIATE A SUCCESSFUL
“ROLL-UP” BUSINESS MODEL
THE TICKET BROKERAGE INDUSTRY!
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What has NES done and what does it intend on doing?
NES has spent the last 3 years seeking an aggregation of highly successful, regional, non-competing companies in the
secondary ticket sales and special events markets
NES located successful companies whose combined annual revenues are over $82 million dollars
NES, through 3rd party Investment Banking firms performed an extensive due diligence on each of the companies
NES has entered into Letters of Intent to acquire 4 companies. Additionally there are 4 more successful companies which are
waiting for the second round of acquisitions.
The strategic objective is to consolidate within the industry and create the largest public Secondary Ticket Brokerage Company in the United States with the opportunity to eventually move
into the international markets
What was NES’s top priority
What did NES’s efforts on seeking
companies achieve?
What was the next step NES took?
What was the result of the
negotiations with the companies?
What is NES’s strategic
objective?
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NES CONSOLIDATION BUSINESS MODEL
Acquisition Pipeline: The Company believes a revenue base ranging from $300 to $400 million can be acquired under favorable terms in the next 3 to 5 years
Increased use of technology in the acquired companies
Organic growth and enhancing profit margins through operating improvements
Acquisition of select ticket and event management companies
Build volume and margins by establishing national positions in specializing local ticket inventories, increasing online marketing and special events management to build volume and margins. Key elements include:
NATIONAL ENTERTAINMENT SPECIALISTS will create shareholder value by increasing market share through:
Inventory acquisition, control and management: A key acquisition criterion will be identifying and acquiring companies that provide access to high value inventory: sold-out concerts and major sporting events, which often bring margins of 35% or greater.
Internet search engine optimization and marketing: As internet marketing strategy, search engine optimization considers how search engines work and what people search for and can greatly improve online visibility.
POS platform: Ticket Evolution Inc. is a new broker owned ticket exchange founded by the owners of Golden Tickets in Dallas Texas. Ticket Evolution enables an internal inventory ticket exchange for NES subsidiaries, thereby greatly reducing the 15% to 25% fees from tickets purchased through current private exchanges.
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Following the completion of the 506c Offering . . .What will NES do next?
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This is what NES is going to do!
Engage a highly successful professional marketing firm with over 40 years of business history driving accredited and institutional investors from their own marketing database to the NES capital raises. Also their investor marketing campaign should allow NES to secure the required number of shareholders necessary to trade on the Nasdaq stock exchange as a public company.
Investor Marketing Campaign
Engage a Seattle based broker dealer who is going to provide their full proprietary marketing program to raise an additional $10,000,000 in equity from their own professional network of qualified investors. The firm is standing by for this Offering to conclude.
Raise additional capital
A NYC based institution has give solid indications that they will participate in the open market equity raise. In addition, they are interested in debt/mezzanine financing which is their niche market.
Debt and Mezzanine Financing
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THE 506c 2 TIER OFFERING
Minimum Investment
$14,000
Number of Shares Per Unit
8,000 Price Per Share
$1.75
NES is seeking through its 506c Private Placement Offering
Tier 1 - $994,000 in Pre-IPO Equity Capital
Following completion of our initial Tier 1 Capital raise NES will then begin it’s Tier 2 Round to capitalize acquisitions of its 4 Leading Ticket Brokerage Companies Aggregating combined revenues of over $83mm.
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THE 506c 2 TIER OFFERING
Under rule 144 all shares of common stock held in a fully reporting company will require a minimum hold of 6 months from the purchase date of the stock
Tier 2 - $30,000,000 in Pre-IPO Equity Capital
Minimum Investment
$24,500
Number of Shares Per Unit
7,000 Price Per Share
$3.50
Total Pre-IPO Offering Capital Raise
$49,994,000
T
Tier 1 Total Offering Amount $ 994,000
Tier 2 Total Offering Amount $30,000,000
Institutional Mezzanine Funding Round $19,000,000
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NES’s ACQUISITION PIPELINE
The Company has developed a pipeline of targeted ticket brokerage companies that are ready for acquisition.
After acquiring the platform companies, NES will implement an operating strategy to leverage the infrastructure across its newly acquired subsidiaries to improve certain key metrics, including:
üInventory management
üIncreased margins from selling internal inventory
üand increased volume from SEO and other internet marketing technologies.
The Management of NES have developed extensive relationships in the secondary ticket market with ticket brokers and developing technology companies servicing the industry.
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Important financial information on the first round of acquisitions in the NES pipeline
2016 First Round Acquisition Companies estimated EBITDA/Cash Flow
2016 First Round Acquisition Companies
estimated Gross Revenues
NES First Round Acquisition Price for each
company
The chart below outlines:
ü 2016 estimated gross revenues of companies in 1st round
ü 2016 estimated EBITDA/Cash Flow
ü NES’s acquisition pricing for each company
ü Cash and stock for the acquisition
Cash portion of acquisition price
Stock amount and stock pricing of the stock portion of the acquisition price
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Important financial information on the second round of acquisitions in the NES pipeline
2016 Second Round Acquisition Companies estimated EBITDA/Cash Flow
2016 Second Round Acquisition Companies
estimated Gross Revenues
NES Second Round Acquisition Price for each
company
The chart below outlines:
ü 2016 estimated gross revenues of companies in 2nd round
ü 2016 estimated EBITDA/Cash Flow
ü NES’s acquisition pricing for each company
ü Cash and stock for the acquisition
Cash portion of acquisition price
Stock amount and stock pricing of the stock portion of the acquisition price
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Combined first and second round of acquisitions projected financial information
Estimated Combined
EBITDA/Cash Flow for Years 2017 – 2021
Estimated Combined Gross
Revenues for Years 2017 - 2021
Estimated Profit Margin for Years
2017 - 2021
The chart below outlines:
ü First and second round estimated combined gross revenues years 2017 - 2021
ü First and second round estimated combined EBITDA/Cash Flow years 2017 - 2021
ü Estimated growth rate for period 2017 - 2021
ü Estimated Profit Margin for period 2017 - 2021
ü Anticipated Shares Outstanding for period 2017 - 2021
Estimated Growth Rate for Years 2017 -
2021
Anticipated Shares
Outstanding for period 2017 - 2021
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308,436425,628
489,480
687,984791,196MARKET CAPITALIZATION
PROJECTED POTENTIAL
NOW…. LET’S REVIEW THE POST FUNDING PROJECTED NES“MARKET CAPITALIZATION” POTENTIAL OR “ENTERPRISE VALUE”
National Entertainment Specialists Inc. (NES) is an online event-‐‑ticket retailer. The industry's leading competitionconsists mainly of privately owned companies and subsidiaries of large, multifaceted firms -‐‑ the two market leadersbeing TickMaster.com owned by Live Nation Entertainment, Inc. (NYSE -‐‑ LYV) and StubHub.com owned by Ebay.com(NASDAQ -‐‑ EBAY). The industry composition creates a challenge in estimating appropriate earnings multiplecomparable. However, LYV and EBAY trade at market cap/EBITDA of around 9.5 and 11.8 respectively. Because both ofthese are mature firms in the later stages of their growth cycles, an earnings multiple for NES can be conservativelyestimated at 12x.
Post-Funding Valuation - EBITDA Multiple
This chart and projections are for illustrative purposes only and are what, in management’s opinion is a potential results fromconsolidations and operations. It is not guaranteed and should not be construed as the only outcome. Most likely, the futureoutcome will be different than these projections.
All value’s are in $ in 000’s
2020
NES INTEGRATION PROCESSü Board of Directors – Responsible for ultimate oversight, control and approval of Integration Process.
ü Executive Committee – Develops and approves Integration Plan, identifies and assigns resources, sets priorities, monitors Integration Plan Execution, reports to Board of Directors
ü Integration Task Force (ITF) – Implements NES’s Integration Plan, Assigns team members to Integration Projects, Monitors and Reports progress of Integration Plan
ü Executive Committee – Develops and approves Integration Plan, identifies and assigns resources, sets priorities, monitors Integration Plan Execution, reports to Board of Directors
ü Integration Projects ü Financial Systems, Standards, and Reporting, Professional Services
ü Ticket Broker Systems: Ticket Evolution, SEO, Web Development, PPC
ü Ticket Evolution Point of Sale Internal Exchange
ü Ticket Broker Systems Project Team – Specifies, Designs, and Implements NES’s Ticket Broker Systems, including Ticket Platform, SEO, Web Development and PPC
ü Ticket Evolution External Exchange
ü Financial Systems Team – Specifies, Designs, and Implements NES’s Financial Systems, Standards, and Reporting, and coordinates Professional Services for the Company and its subs
ü Members: Designated financial personnel from subsidiaries
ü Members: Assigned by ITF – with at least one member from each NES subsidiary
ü Ticket Evolution Point of Sale Internal Exchange Project Team – Specifies, Designs, and Implements NES Point of Sale Internal Exchange via Ticket Evolution Exchange
ü Members: Assigned by ITF – with at least one member from each NES subsidiary
ü Ticket Evolution External Exchange Project Team – Specifies, Designs, and Implements NES’s utilization of Ticket Evolution External Exchange
ü Members: Assigned by ITF – with at least one member from each NES subsidiary
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NES MANAGEMENT TEAM
David ClarkInvestor Relations
Stephen L. ParryDirector/President
Gary J. ClarkChairman/CEO
Dave J. ShufflerExecutive Control
Committee
Mark Shaver Director/COO
Learn more about these seasoned professionals ¯
Ram Silverman Executive Control
Committee
Matthew D. Hill Executive Control
Committee
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Gary J. Clark - Chairman and CEO
Mr. Clark spent 10 years in Consumer Products sales with a major InternationalCompany in a field management capacity. Mr. Clark was the founder ofInternational Capital Exchange Inc. Mr. Clark worked with the 4th largestsecurities firm in Hong Kong via US satellite office.
Mr. Clark established program at this time to bring qualified Chinese companies totrade on the US stock Exchanges in which he arranged up to $200,000,000 inbusiness funding.
Mr. Clark spent 25 years as a corporate Vice-President with securities firms suchas Sutro & Co., Paine Webber, and Bateman , Eichler , Hill Richards.
Mr. Clark managed more than $250,000,000 in assets working with PIPE funds,hedge funds, and small equity funds. Mr. Clark is also the founder NationalEntertainment Specialists, Inc. Mr. Clark created the business model to addressthe private ticket brokerage industry and the acquisition opportunities within theindustry.
Mr. Clark recognized that the $6.5 billion-dollar industry represented majoracquisition leverage because the industry is greatly fragmented andundercapitalized making it ripe for consolidation with value.
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Stephen L. Parry - Director and President
Since founding Golden Tickets in 1988, Mr. Parry delivers the strategic andoperational direction for the business in the dynamic ticket brokerage market.Mr. Parry and his Partner opened Golden Sports Tours one year later. Hismarketing experience, personal relationships and deal skills have helped thebusiness grow over the last 28 years to $13 million gross sales.
Mr. Parry’s expertise includes corporate sponsorships, internet and mediacampaigns as well as an intimate appreciation for the demand and supplysophistication for large events.
In 1994, Mr. Parry led an effort together with 50 other ticket brokers to form theNational Association of Ticket Brokers (NATB), with the aim of improvingbusiness standards and enhancing the status of the industry.
Mr. Parry has helped to strategically maneuver the NATB through the majorchanges in the Secondary Ticketing Marketplace. In
Mr. Parry and his partner founded Ticket Evolution in 2010. Currently, (TE) has125 ticket broker investors and currently powers all the transactions made byCheap Tickets and other major Platforms.
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Mark Shaver - Director and COO
Mr. Shaver holds both a B.S. degree in Computer Science and an M.B.A. from theUniversity of Missouri-Columbia.
Prior to founding his wholly owned Ticket Brokerage,, Mr. Shaver started workingin the ticket industry in 2002 and became a partner in a ticket brokeragecompany that year prior.
Mr. Shaver is also a former owner of www.gocleancredit.com, which was soldso that he could concentrate on his own operation
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David Clark - Investor Relations
Since graduating Magna Cum Laude from Fresno State University, Mr. Clark hasspent over forty years on Wall Street and the Commodity Markets. Mr. Clark hasworked with Wall Street, with firms such as Lehman Brothers, Bear Stearns,Merrill Lynch, and L.F. Rothschild.
Mr. Clark has held various titles throughout his career, such as President of anAlternative Investment Platform for Peregrine Financial Group and President ofAsset Management at Sytek, a foreign currency hedge fund at the Chicago Boardof Trade. In addition to representing Wall Street firms, Mr. Clark also worked atthe Chicago Board of Trade.
Mr. Clark’s duties and responsibilities included working with hedge fund managersfor foreign exchange currencies and working in Commodities for PeregrineFinancial Group, responsible for establishing an offshore presence.
For three years, Mr. Clark worked in Nassau Bahamas and served as Director ofthe Alternative Investment Division in which he worked with offshore banks andinstitutions to bring a platform of qualified CTAs to their attention
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Dave J. Shuffler, Executive Control Committee
As co-founder, President and CEO of Shuffler Hill Inc. DBA The Kind Tickets, Mr.Shuffler was instrumental in helping build the Kind Tickets from a two-manoperation selling tickets part time through classified ads, to the largest ticketagency in Orange County, CA. The Kind Tickets has established a nationwideonline presence with up to $6 million in annual sales.
Mr. Shuffler has been a trailblazer in the secondary ticket market providing hisexperience in customer service and marketing, in an industry that lacked theseconcepts. For the past 20 years, Mr. Shuffler has been co-responsible for all day-to-day operations of the business, specifically developing the Kind Tickets visionand business plan, marketing and branding the business. Mr. Shuffler has alsobeen directly responsible for hiring, training, managing and motivatingemployees, acquiring and managing ticket inventory, and developing partnershipsthat allow direct access to ticket inventory of several NFL teams and otherprimary sources.
With over 28 years’ experience in taking smaller companies to the next level, Mr.Shuffler helped take Coastal Safe and Security from a mom and pop businessselling and installing safes on a local level to a major manufacturer landing largenational chain accounts such as Target and Kmart department stores and nationalfast food chains such as El Pollo Loco and Taco Bell. Mr. Shuffler alsospearheaded the development and marketing of a new security division for TheKnow Company, immediately landing Bank of America as the first national chainaccount. This was significant because The Know Company traditionally only dealtwith local fire departments and municipalities
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Matthew D. Hill, Executive Control Committee
As co-founder, Vice President & COO of Shuffler Hill Inc. DBA The Kind Tickets,Mr. Hill in conjunction with Mr. Shuffler was instrumental in helping build The KindTickets. With over 25 years of experience as an entrepreneur, 20 of these yearshave been spent breaking through the street image of the secondary ticketindustry and setting the trend for the current industry standard.
Mr. Hill has been co-responsible for all day-to-day operations of the business i.e.,developing the Company’s infrastructure and vision, negotiating contracts withadvertisers and vendors, Haranguing and managing the webmaster, executingoffice and equipment leases, obtaining legal, accounting and insurance services,managing cash flow, building banking relationships, managing inventory andcompany budget.
Over the past 20 years, Mr. Hill has developed personal relationships with ticketsuppliers and contacts with several primary venues allowing seamless andsometimes exclusive acquisition of ticket inventory. Mr. Hill not only has a knackfor managing money but the foresight to see financial trends and act accordingly.With Mr. Hill’s passion for developing and managing companies and his 25 yearsof preparation, he continues to be a leader and trend setter in the secondaryticket industry.
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Ram Silverman, Executive Control Committee
Mr. Silverman, with the help of a $20,000 loan, co-founded GoldenTickets. Within 3 years, Golden Tickets had become a leader in the secondaryticket market growing the business from $1,000,000 in annual sales to$4,000,000. Since then, annual sales have grown to $11,000,000-$13,000,000yearly on a consistent basis. In 1990, with the help of Mr. Silverman’s businesspartner, Steve Parry, they started a new Sports Tour business called GoldenSports Tours which provides sports packages to all major events. This wasmostly driven by the need of large companies to have access to comprehensivesports packages to be used as incentives for either new customers or employees.Golden Sports Tours has also become a main supplier of these packages to travelagents all across the US.
In 1994, Golden Tickets was one of 50 founding members to participate instarting a trade organization called the National Association of Ticket Brokers(NATB). This association has grown from 50 brokers to well over 200 brokers in18 years. In 2003, Mr. Silverman and his partner built a hospitality housespecifically for the Masters Golf Tournament, a specialty of Golden Tickets calledthe 1018 Club. They opened their doors specifically to Fortune 500 companiesand individuals alike to bring a superior level of hospitality to those attending thetournament.
Mr. Silverman has dedicated the past 28 years building Golden Tickets and afterall these years still has the passion to continually try and figure out new ways togrow Golden Tickets and all of the other business ventures he is involved with.
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PRESENTATION
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