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Contracts with Partners.

The contract with Mega:
Lumacom provides the displays under the joint venture with all costs (including the sign) being borne by the joint venture and the resulting net advertising revenue equally shared by Lumacom and Mega profile.
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This from the Totius contract:
1. Lumacom will retain 75% ownership, and therefore profit share from advertisings and sales revenue. Working capital for the new company is provided by the investment of the joint venture partner. *Prior* to
the calculation of profit share in Lumacom NA, Lumacom will also receive a continuous royalty payment stream of 25% on gross advertising revenues generated from advertisers on installed signs, and will retain the lucrative manufacturing rights for the region".

Comment: The combination of 75% in the joint venture and 25% on gross advertizing revenue will mean that LUM may get close to 90% of the NET PROFIT?

2. "The agreement also allows the Totius Group to increase its shareholding in Lumacom NA to 50% for a further cash payment of US$250,000, with the royalty stream to Lumacom remaining 25%".

Comment: I would say that the sum of the royalty of 25% on Gross revenue and 50% of NET profit will result in a LUM profit of close to 70% of the NET PROFIT?

3. " In addition, and of substantial interest to Lumacom under this Agreement, is the option granted to the Totius Group to purchase the North American manufacturing license of Lumacom's proprietary
technology for a cash payment of US$1.5million.
At that time, the Totius Group will increase its shareholding to 70% in Lumacom NA and the royalty stream will reduce to 15% of gross advertising revenues".

Comment: So, LUM will get a 15% royalty of of gross advertizing revenue as well as 30% of the Joint venture's NET Profit.

I haven't done the numbers but would surmise that the sum of these 2 incomes would be close to 50% of NET profit?

It appears that LUM wanted some cash up front quickly and Totius would select item 3 pretty soon, I would say.
There was an incentive to built more screens. If only a couple were built then "penalty clauses" came in.

Gerry