L3 Video Content Protection, Distribution & Monetization

2 “We help video content owners make more money and make it faster, by enabling secure, viral distribution worldwide.”

 MPAA (Motion Picture Association of America) says Hollywood loses 40% of revenue ($4 billion) to Piracy  And Piracy is on the rise – a rock-solid solution is required  Content-Owners give their content to intermediaries losing up to 80% of potential revenue  Most try YouTube distribution – sometimes coupled with physical DVD shipping  Premium content (e.g. new movies and eLearning) limited to Ad- supported streaming sites (including YouTube) – No Pricing Power  Those who try to self-distribute spend significant amounts on bandwidth, servers and custom DRM solutions 3

4 Content Owners Friction LargeSmall Revenue loss due to Piracy (at each step of distribution) Internet distribution is limited to streaming customers with robust bandwidth Giving up their rights in various geographies to distributors Inability to self-distribute and market content Inability to price variably in various geographies, thus limiting reach Cost of repurposing content for various devices and platforms Censorship requirements in different markets

5 In simple terms  Video rights owners have to either  Accept piracy of their content (from DVDs, YouTube, Tivo etc.)  Spend lots of money on Servers, CDNs, and eCommerce (> $5,000 per month)  Sell out to Netflix, Hulu and other such aggregators (and sacrifice their own brand) OR  Use “L3”

 The mission of Layer 3 Media’s (L3) is to smoothen the movie/video distribution chain through disruptive innovation  Protect content owner’s interest ▪ Piracy-proof the content ▪ Enable content monetization  Easy Content Accessibility to audiences globally ▪ “Viral”/”Social” distribution (Build on current eco-system) ▪ Computers, tablets, Mobile phones, TV – All devices ▪ Enable value added services such as sub-titles to enable intermediaries ▪ Watch content free with relevant ads  Address ground realities of infrastructure ▪ Download & Play or Streaming or Torrent or Physical distribution 6 Cable TV/DTH ePVR (Enhanced Personal Video Recorder) Enhanced Cell Phone Cellular Network Other Devices L3 Content Desktop Software L3 is the world’s first LEGAL TORRENT system

 Viral distribution/Content Marketing  Rock solid copy-protection  Easy Payment methods for end customers (including “free-with- ads”)  A Cross-platform solution  Scalable platform to address Global demand of content  Control for Content Owners 7

+ L3 = + or L3 MobileTV Desktop Owner

 Market Segments in order of focus  Independent Film and documentary makers  Small Studios and distribution companies in India and other countries  How-To video makers (Cooking, Musical Instruments, Exercise videos etc.)  Other Semi-Professional content (migrate from YouTube)  Music Videos  Large Film Distribution companies (including Netflix, Hulu…)  Formal eLearning distributors/creators  Large Studios (Sony, Disney...) 9

 Global market estimated at almost $1 trillion (TAM) and can be grown by this platform  Video creation and consumption rising due to lowered technology barriers  Recent SOPA and PIPA bills in the US Congress attest to how seriously business and government are taking threat of Piracy  Without protection, unfettered distribution cannot happen 10

 Entertainment Piracy alone accounts for at least $6 billion worldwide ($4B Hollywood)  We can reduce this by 25% over 5-7 years giving us…  Expected share of market in 5-7 years of $2 billion (top-line collections) giving $200MM in revenue with margins over 75%  Long term, as this platform becomes mainstream, we can capture much more  Growth can only be explosive as adoption will be viral 11

 Anil Gupte  IIT Kharagpur alumnus  Ran a Computer Aided Design Training and Consulting business from 1989 to 1993 with Fortune 100 clients  Founded iCinema – one of the first streaming video sites ever (1997)  Morphed above into maxNetwork – a service oriented business model with better revenue/profit  Grew above business 680% from 2000 to 2004 then sold it  Introduced the first Personal Video Recorder in India (2006)  4 US Patents received + 1 more in pipeline 12

 Amit Abhyankar  IIM Lucknow Alumnus  12 years of experience in Media and Entertainment  As MD of Outreach Motion Pictures has experience of distribution across all platforms - Theatrical, Digital, Satellite and Home Video  Has worked as Executive Producer/Director and many other roles in all aspects of Film-making  As Founder/Director Outreach Media Services specialized in Management of Brands for Companies and Image for Individuals  Most recent film – “Jana Gana Mana” (Producer/Director) received Best Director and Best Film (Rural) in India (Maharashtra) 13

 Wipro Wharton Global Innovation Challenge – Category Winner  DST-Lockheed Martin India Innovation Growth – Winner  Economic Times Power of Ideas Competition – Winner (~$40,000 seed investment by CIIE, IIM Ahmedabad)  4 US Patents issued, 1 pending 14

15 STREAMINGDOWNLOAD ADS IN OFFLINE MODE DRMVIRAL SOCIAL DISTRIBUTION MARKETING COMPONENT PRICING FLEXIBILITY L3 YY Y YYY Y Y YouTube Y Y Amazon Plus YYY Netflix Y Distrify YYY Hulu Y iTunes YYY Roku Y Ooyala YY DTH (Satellite) Y

 L3 is the only secure, multi-pricing, download- cum-streaming-cum-torrent distribution model for video  Almost all our competitors can also become our customers  Fundamental differentiation – L3 content is protected before it leaves the content-owner’s hands  L3 is the only platform where ads can be dynamically inserted into content in online as well as offline mode 16

17 Year 1Year 2Year 3Year 4Year 5 TOTAL COLLECTIONS $ 1,403,764 10,450,755 63,729, ,188, ,376,642 Business Growth % 644%510%200%100% Costs Q/Q Growth% 100% Technology Outsourced Development Tech Salaries $ 114,480 $ 576,630 $ 1,443,600 $ 2,196,000 $ 2,824,800 Recruitment Cost $ 67,294 $ 238,501 $ 391,507 $ 783,014 $ 1,566,029 Overheads $ 57,240 $ 208,315 $ 721,800 $ 1,443,600 $ 2,887,200 Professional Services IP/Patents $ 45,000 $ 20,000 $ 40,000 $ 80,000 Regulatory Compliance/Advice $ 7,000 $ 16,216 $ 31,544 $ 63,088 $ 126,175 Legal/Copyright/Compliance $ 32,000 $ 57,656 $ 112,156 $ 224,312 $ 448,624 Infrastructure Servers/Hardware $ 8,000 $ 14,414 $ 28,039 $ 56,078 $ 112,156 Marketing Content Sourcing $ 41,364 $ 205,636 $ 1,138,723 $ 2,277,447 $ 3,036,596 Viewers $ 349,230 $ 1,512,331 $ 1,134,602 $ 2,269,204 $ 5,673,010 Commission to Mktg Partners $ 35,094 $ 130,634 $ 318,647 $ 637,294 $ 1,274,589 Sponsorships/Promotions $ 138,000 $ 10,000 $ 80,000 $ 160,000 $ 320,000 Other Transaction Fees $ 52,641 $ 391,903 $ 2,389,854 $ 4,779,708 $ 9,559,416 Contingency (FX and others) $ 47,367 $ 179,112 $ 390,524 $ 781,047 $ 1,562,094 Management cost $ 96,000 $ 172,969 $ 867,750 $ 1,735,500 $ 3,471,000 TOTAL COSTS $ 1,130,710 $ 3,934,317 $ 9,068,746 $ 17,446,292 $ 32,941,688 L3 REVENUE $ 348,302 $ 2,593,044 $ 15,812,568 $ 47,437,704 $ 94,875,407 Profit/Loss $ (788,152) $ (128,801) $ 6,749,454 $ 30,042,676 $ 62,001,544 Taxes - - 1,737,042 8,997,423 18,580,116 PAT 4,648,704 21,029,873 43,401,081

18 Year 1Year 2Year 3Year 4Year 5 Collections 1,403,764 10,450,755 63,729, ,188, ,376,642 L3 Revenue 348,302 2,593,044 15,812,568 47,437,704 94,875,407 Marketing Costs 360, ,345 2,975,614 5,951,228 11,553,463 Personnel Costs 471,024 1,035,082 2,458,275 4,225,350 6,883,501 Other Costs** 104, ,613 2,647,872 5,295,745 10,591,490 Profit/Loss $ (788,152) $ (128,801) $ 6,749,454 $ 30,042,676 $ 62,001,544 ** Primarily Transaction Fees

 Equity funding of ~$1.1 Million needed  20% equity offered  Estimated Year 5 PAT~$45 Million  Estimated Company valuation in year 5 $900 Million (PE = 20) or higher  Investors ROI estimated to be 180X in five years (earlier exit possible) 19

Contact: Anil Gupte

(Additional Details) 21

 Distribution on DVD, Internet and other media in a single format  No need for separate process or format for Internet distribution, Broadcast or DVD/CD  “Morphing” copy-protection  A unique key & algorithm required on each machine, so that even if one “pirate” cracks the encryption, the “crack” cannot be reused  Also, algorithms and keys keep changing to create a moving target for pirates  Patented technology 22 L3 Video File Cable TV/DTH ePVR (Enhanced Personal Video Recorder) Internet Peers Physical Media Servers

 Content owners or anyone else can add value to the L3 content  Example: Subtitles in any language can be added to the L3 file ▪ Expands the market exponentially ▪ Incremental revenue for such value added service is tracked separately and goes back to the entity that built the value-added feature 23 And we will have a little house with big windows + = Opportunity

 Monetize content  Extra revenue with not much incremental cost  Significantly lower risk of piracy  Global customer reach  Access established, new and uncharted geographies  A vibrant distribution channel  More efficient than all existing distribution networks  Most cost efficient  Peer to peer virally distributable  Through any media  Can also be hosted on L3 owned sites 24

 Content ownership remains with owner  Don’t have to sell the internet rights  Owner can place it on any medium and send it anywhere  Secure the content before its distributed  Superior encryption with L3 patented technology  Gives complete pricing flexibility to content owners  Maximize returns through dynamic pricing ▪ Content not selling well in one market can be re-priced to make more attractive  Complete control on pricing ▪ Expands the market by creative pricing  Can block any geography 25

 Assured collection  Payments received through Credit Cards, Net Banking, PayPal  L3 is no extra cost for content owners  Owner uses the “free” L3 software to encrypt and distribute content from any source  Users/audience pay a transaction fee to L3  “Not new” content can also be monetized  If broadcast rights sold, one can still earn money from Internet or DVD distribution  No lawyers and accountants involved  Save cost and time 26

 Increased availability and access to content  End customer finally has the ability to decide what kind of experience he/she wants  Choice of watching on computer or TV ▪ Internet downloaded content can be watched on TV or computer  Choice of watching with ads or without ads  Choice of paying or not paying ▪ No ads or with ads  Choice of how much violence/sex to be shown  Choice of passing on the download to others without piracy guilt ▪ Torrent, USB, CD, DVD etc. 27

 Pay only if Ads play  Micro-targeted advertisements  Age  Sex  Geography  Time of the year/day  New ads on re-runs  Detailed reporting 28

 Wider distribution and quicker break-even  Encourages Content-creators to experiment  Good content once produced will continue to accrue rewards perpetually  More expression of art  Reduced dependence on distribution channels 29