Short: Acorn International

(NYSE : ATV)

McIntire Investment Institute

Analyst Presentation

Prepared by Chuhan Wang April 7, 2010

Outline

• Industry and Company Overview

• Fundamentals and 52 week Chart

• Thesis Points

• VAR Summary• VAR Summary

• Catalysts

• Risks

• Final Recommendation

Industry and Company Overview

TV direct sales programs, often referred to as TV infomercials, in

combination with a nationwide distribution network to market and sell

products and services to consumers.

China's TV direct sales only accounts for 0.1% of the Country's total

retail sales.retail sales.

Companies in this industry often operate as integrated multi-platform

marketing company that develop, promote, and sell consumer products

and services in the China.

Acorn International, Inc. is founded in 1998 and is headquartered in

Shanghai, China. Acorn markets its own proprietary products and

services, as well as third-party products and services.

Cont. Industry and Company Overview

TV Direct Sales Platform

include catalog sales, Internet sales, through print media and radio, and

customer loyalty programs, the core is significant TV air time presence.

Nationwide Distribution Platform

further extends the media effect on the ground through local and print

media and increases availability of products on a local/regional level. media and increases availability of products on a local/regional level.

ATV typically grant distributors the exclusive right to distribute selected

products and services in their respective territories.

Joint Sales and Marketing Services

generate TV direct product and services sales revenues. In addition,

receive additional payments from their joint sales partners based on

sales of featured products or services through their own distribution

channels.

ATV: the Fundamentals

Market Cap: 148.68M

Current stock price:5.04

Beta: 1.15

52-Week Low : 3.08

52-Week High : 7.30

% Held by Insiders: 0.59%

% Held by Institutions: 1.20%

Price/Book : 0.73

Enterprise Value : -9.59M

P/E : 12.24

Total Cash Per Share : 5.454

Total Cash: 161.53M

Total Debt : 3.25M

52-Week Chart

Thesis Points

• Products=bubbles in the air

• Competitors are “bigger fish”

• Illusions are not real• Illusions are not real

• Questionable management team

• Destroy the reputation=suicide

• Little analyst coverage, inefficient and we

have an edge!

Products=bubbles in the air

--but what if it breaks?

Acorn International

Ozing - English Learning

Babaka –Posture Correction

Cobor -Skincare Cosmetics

ER-Energy Release

YYD-Oxygen Generating

Ozing, Ozing, Magical Ozing,say the spell twice and you get 100 on test

Competitors are “bigger fish”

The Sharks and the fish

Illusions are not real

Acorn International 橡果国际

Growing complaints surfacing

Who’s who in the story

-questionable management team

James Yujun Hu

chairman of the board of directors and chief executive officer of ATV

1996 to 1998, Mr. Hu served as the executive vice president at TVS

David Chenghong He vice president

Mr. He served as CFO at TVS prior to joining ATVMr. He served as CFO at TVS prior to joining ATV

Tingtao Han

CEO of Yiyang Yukang cell phone company

And also8

Ella Man Lin vice president

Used to be: manager of the human resources department at TVS

Kevin Guohui Hu vice president

Used to be: general manager in charge of media and assistant president at

TVS

Destroy the reputation=suicide

•Less confident in buying without

seeing

•Easy to be attracted by Celebrities

on Commercials

•Never come back again if got hurt

And Acorn shouldAnd Acorn should

•Reputation is the key to the profits

•38% (from 72%) depends on

returning customers

But Acorn8.

•Really bad after-sales services

•Exaggerating effects

•Lying about bonus

Misperception

- what makes Acorn a big Short

1. Potential new products are market-leader-to-be, and will

drive up Acorn’s 2010 profit

2. The price is low enough to buy in again

3.Tons of cash sits on top of little debt is a growing sign3.Tons of cash sits on top of little debt is a growing sign

4. The impairment loss with the acquisition of

YiYangYuKang and failure of marketing mobile phone

headsets is bottoming

5.Strong and experienced management team

6. Loyal consumers and high satisfaction

7. The former CFO Jordon Wang left out of family issue,

and has nothing to do with the 2009 Q4 loss

VAR Summary

Contact listHuasongHuasong Ma Ma

Archiater in PLC China 306 Hospital, Professor

over 20 years’ experience, expert in campylorrachis scoliosa

Lily Yan WangLily Yan Wang

Experienced English teacher in Advanced English class in

Beijing No.8 Middle School

ZhiyingZhiying PengPeng

Executive manager of BTV based infomercial company

Professor Professor WilkieWilkieProfessor Professor WilkieWilkie

Survey of Students at New Oriental and middle school Survey of Students at New Oriental and middle school

English ClassEnglish Class

Myself , and my family memberMyself , and my family member

GaihuaGaihua SunSun

Medical Expert in the “professional inventing and developing

team” of BaBaKa

ChenghongChenghong HeHe

VP, CFO of ATV,

JingwuJingwu Ma Ma

Secretary of Tingtao Han, the CEO of Yiyang Yukang

Survey on Ozing

used an

Ozing beforestill using it find it helpful

would recommend

it to others

New

Oriental 67% 5% 1.7 3%

* "find it helpful" is based on average grade, with :1=not helpful at all,

2=sometimes not helpful, 3=ok, 4=somewhat helpful, 5=very helpful

Middle

School42% 7% 2 4%

Catalysts

•Their product causes serious health issues and

attract regulatory attention from the public

•Spend much cash on financing new products and

potential acquisitionpotential acquisition

•Quarterly earnings of 2010 miss their aggressive

estimates

•Issue FY guidance ,and revenue guidance below

Analyst Estimates for the company

Risks

What save them for a last breath?

1.Hiring Highly competent CFO/Managers

2.Mask takes longer than expected to fall

offoff

3.Acquisition of highly profitable products

4.Savvy advertising

Final Recommendation

I maybe wrong8.

MII should wait and see the 2nd and 3rd

quarter report and reevaluate ATV’s position

I maybe wrong8.

•Maybe I just talked to the wrong person?

•Maybe only unsatisfied consumers like to share

their unpleasant experience?

Short: Acorn International

(NYSE : ATV)(NYSE : ATV)

McIntire Investment Institute

Analyst Presentation

Prepared by Chuhan Wang April 7, 2010